GOVERNMENT OF ACCOUNTING IN NEPAL

Nepalese government accounting is developed on the principle of conventional cash. Some of the shortfalls of Nepalese cash accounting include the treatment of advance payments and inventories as expenditures, the omission of ‘off budget’ transactions, and the lack of provision for recognizing direct payment and commodity grants offered by donors (World bank 2007). The accounting statements and reports are prepared on an annual basis without demonstrating cumulative expenditures incurred or incomes generated for more than a year, transactions made by third parties, receipts and payments on foreign currencies, and correction on errors, among others. Similarly accounting policies, assumptions and explanatory notes are yet to be included in the audited statements, as demanded by the cash basis IPSAS.
The adoption of accrual accounting has been a major government accounting reform agenda in Nepal for more than two decades. The country has been developing the prevailing cash accounting standards by referring to the cash basis IPSAS.