Arthabichar Nepal - Guide to Entrepreneurs, Startups, and Business Enthusiast

 An audit is carried out to comply with Income Tax. This is the common understanding we find among the Nepalese business community. It is true but not 100%. The audit does help in getting the tax returns and their supporting schedules error-free & accurate but the main purpose of the audit is to: 1) Ensure Statutory compliance. 2) Identify Internal Control Weaknesses & get recommendations from experts to improve on it. 3) Improve processes to ensure efficiency and effectiveness. 4) Build capacity of the staff & those involved in the process as they get the chance to interact & learn from them the best in the field. Well, but how to ensure all the purposes are met & ensure that audits are being done for the sake of audit. How to turn it into an opportunity to learn more and use it a driver for constantly evolving change? In other words, how to get more out of the Audit Process? Here's what you can do to get better out of the process: Photo credit: @creativevision

Circulation has been issued by The Institute of Chartered Accountants of Nepal clarifying the provision made in the FY 2075/76 fiscal policy with regards to certification by the auditor in current assets and current liabilities schedules. According to the circulation, following auditors are not eligible for the certification work: 1) Current External Auditor, Internal Auditor or Financial Advisor of the loanee (borrower). 2) Current External Auditor and Internal Auditor of the loaner banks and financial institution. Who was required to have the certification? Any loanee intending to borrow or renewing their existing loan of more than NPR 25 crore provided such loans are proposed to be used as working capital. What is the need of the circular? To bring independence and objectivity in the certification work and expand the current market of certification. What does it mean for the loanee? Loanee before applying for the loan has to have their financial statements finalized, re

The Institute of Chartered Accountants of Nepal has published a press release directing its members not to be registered separately as an Auditor in the Municipality, Rural Municipality or any other government agencies. ICAN has emphasized that it is a sole authority of the institute to grant a certificate of practice to its members and one should be able to use the audit license per limit set by the institute. ICAN has also highlighted that it had similar issues in the past with Nepal Rastra Bank, Nepal Insurance Board, Ministry of Education and Department of Co-operatives where it was mutually agreed that not further enlistment is necessary once a person become member of the ICAN and it will be ICAN's responsibility to share to most up to date list with government agencies and regulatory authority to avoid any confusion. Source of Image: Kantipur News Recent press release from ICAN has been issued after two consecutive enlistment notices were issued by Gokarnesh

Ministry of Agriculture, Land Management and Cooperatives issued a directive to better manage and bring quality and consistency in Audit of Cooperatives in Nepal. The government of Nepal approved the directive effective 2075/05/07 i.e. August 23, 2018. This is pretty important given the fact that Nepal Government has recognized co-operatives one of the pillars for country's development. Not only that, per data published by the Department of Co-operatives, almost 6 million Nepalese people are beneficiary of the co-operative with 34,512 registered and employing more than 60,517 people which is pretty significant. We have tried to present few key takeaways/ highlights of the directive for Nepalese, foreigners and those who are engaged with Cooperatives in one form or another. Hope this article will assist you in compliance and better manage the audit. 1) Furnishing information on Auditor's appointment must be done within 3 days and the following documents must be attache

As a layman what are the things that we need to consider while reading the financial statements of an entity. Well there are numerous important schedules, account balances and disclosures which we shouldn't miss out but in this particular blog, we are trying to draw your attention to one of important element of the audit financial statement called " Audit Opinion ". Audit Opinion is the certification by the auditors (members of the Institute of Chartered Accountants of Nepal) that the financial statements prepared by the management is true and fair in accordance with the corroborative evidence reviewed and sampling test of transaction. It is independent and unbiased opinion usually on the letter head of the auditor, signed by the partner, and forms first page of the audit report. There are, generally two types of Audit Opinion  1) Unqualified and 2) Modified . And, Among Modified there are three additional sub categories 1) Qualified Opinion, 2) Adverse Opinion

How many of us know the Audit Act, 2048 will soon be repealed and hopefully, we will have a new Audit Act, 2075 soon. Honorable Finance Minister Yubaraj Khaitwada has filed the ordinance in House of Representative on 2075/03/14. It has already been tabled and gone through two rounds of discussion, the last one being 2075/04/21. New Act addresses the change in the structure of the Office of Auditor's General given the fact that Nepal is now a Federal state. It has clearly determined the scope of work for the Office of Auditor's General (OAG). All the offices of Government of Nepal including Central Government, Provincial Government, Metropolitan City, Municipality, and Rural Municipality, Nepal Army, Nepal Police, Nepal Armed Force. Act also makes OAG responsible for the audit of the government-controlled entity, where Government of Nepal has more than 50% ownership. It also provides authority for the audit of donor-funded projects within Government of Nepal and entities

Audit Committee is a very important function in any entity, especially from the governance perspective. It is proven that audit committee lead to strengthened financial discipline in an entity improving accountability, systematic efficiency, and transparency. Nepalese Company Act has made it mandatory for following companies to have an audit committee companies with authorized capital above NPR 30 million, or companies wholly or partially owned by Government of Nepal Following is the extract of the provision from Nepalese Company Act, 2063 (First Amendment, 2074): Must consist of at least three-member under the chairpersonship of the director not involved in the day to day management. At least one member shall be an expert having a professional certificate on accounting or seasoned person with at least a bachelor's degree in accounts, commerce, management, finance or economics. Member shall not be a close relative of the Chief Executive Officer. Roles and Respo