January 2013 NPSAS unit, FCGO

Outline of Presentation  Nepal Public Sector Accounting Standard (NPSAS)  Introduction of Project  Component II  Component Financing  Programs and Status  Implementation Challenges  Way forward

NPSAS  The Accounting Standards Board of Nepal has developed Nepal Public Sector Accounting Standards (NPSAS) for public sector entities in Nepal  Government of Nepal (GoN) has approved NPSAS on September 15, 2009 (B.S )  This Standard comprises two parts  Part 1 is mandatory and  part 2 is not mandatory.  NPSAS are incompliance with the Cash Basis International Public Sector Accounting Standards (IPSAS), developed by IFAC (Internal Federation of Accounts).

Introduction of Project  GoN has received a grant of Nepal public Financial Management (PFM) Multi Donor Trust fund (MDTF).  Which is amounted to US$ 4.3 Million for Strengthening Public Financial Management System (Treasury System, Financial Reporting and PFM Capacity Building).  Contribution of GoN is amounted to US$ 1.4 Million

Component II  Component II (i.e. Strengthening accounting and reporting practices in public and private sector) includes, to strengthening financial accounting and reporting of budgetary entities and State Own Enterprises (SOEs). to convergence Nepal Accounting Standards (NASs with IFRS) introduce Commitment Accounting to capture and report the commitment information. pilot consolidated financial reporting in accordance with part 1 of cash basis IPSAS (NPSAS)

Financing for Component II Component and /or activity Project Cost (US $ in million) MDTFGoN Component 2. Strengthening accounting and reporting practices in public and private sector Activities 1. Support convergence to IFRS Introduce Commitment Accounting Pilot consolidated Financial reporting in accordance with cash basis IPSAS The detail financing plan for component II is as follows:

S.N.Component (2)Project CostExpenditureRemaining TotalMDTFGoNTotalMDTFGoNTotalMDTFGoN 1 Sub component 2.1 Support convergence to IFRS % % Sub component 2.2 Introduce Commitment Accounting % Sub component 2.3 Pilot consolidated Financial reporting in accordance with cash basis IPSAS % % Purchase of furniture Purchase of Machinery and Equipment Translation of NPSAS in Nepali Version Operating expenses Total % % Financing Status of Comp.2 Amt in USD Exchange Rate : 1 US $ = Rs 86

Program and Budged of Last FY 2011/12 S.N.Program Approve d budget NRs in '000' Expenditure % of Exp. Remar ks Capital Exp. 1Purchase of furniture Purchase of Machinery Recurrent Program Exp. 1 Translation of NPSAS in Nepali version Orientation of NPSAS at Piloting ministries Convergence to IFRS/IAS Operating Expenses Total

Progress of Last FY 2011/12 S.N.ProgramProgressRemarks Capital Exp. 1Purchase of furniture  Procurement of Furniture and other Completed 2Purchase of Machinery  Procurement of Digital Camera, Laptop and Multi Media Completed

Progress of Last FY 2011/12 S.N.ProgramActivities and Progress Remar ks Recurrent (Program) Exp. 1 Translation of NPSAS in Nepali version Approval of ToR and Cost for Translation on February 14, 2012 Agreement Signed with Consultant on May 23, 2012 Draft Translation Report Submission June 29, 2012 Seminar cum Training and Submission of Draft Final report on July 9, 2012

Progress of Last FY 2011/12 S.N.ProgramActivities and ProgressRemarks Recurrent (Program) Exp. 2 Orientation of NPSAS at Piloting ministries Two ministries have been selected for Piloting o Ministry of Physical Planning, Works and Transport Management (i.e. Large Ministry) o Ministry of Woman, Child and Social Welfare (i.e. Small Ministry)

Progress of Last FY 2011/12 S.N.ProgramActivities and ProgressRemarks Recurrent (Program) Exp. 3 Convergence to IFRS/IAS A MoU has been signed on March 19, 2012 between ASB and PEFA o Conduct capacity building activities o Awareness Program and Trainings o Seminars, workshops, study tours etc. o Draft NASs submission o Procurement of consulting services Total Amount (US$0.3 Million)

Program and Budged of Current FY 2012/13 S.N.Program Approve d budget Status Capital Exp. NRs in '000' 1Purchase of furniture 400 Procurement plan has been approved. 2Purchase of Machinery equipment 1000 Recurrent Program Exp. 1 Publication of NPSAS in Nepali version 300 A technical committee has been formed on July 29, 2012 for final editing and tuning. Part-1( i.e. mandatory) is completed and ready to publish. To be completed by March, Conduct NPSAS ToT 400 To be completed by June,20013 ToR is prepared for Hiring a consultant To be completed by May, Revision and redesign of accounting formats as per NPSAS Orientation of NPSAS at Piloting ministries 300 Proposed training plan is prepared. To be completed by April Convergence to IFRS/IAS 500 Activities are being monitored. 6 Operating Expenses 500 Total3900

Program and Budged of Current FY (Additional Proposed) S.N.Program Proposed Budget Remarks Recurrent Program Exp. NRs in '000' 1Conduct NPSAS ToT Revision and redesign of accounting formats as per NPSAS 500 3Orientation of NPSAS at Piloting ministries Baseline Survey of Commitment Accounting Introduce Computerized Government Accounting System (CGAS) Convergence to IFRS/IAS Preparation of Accounting Manual of GoN 2500 Total14800

Challenges Institutional Memory Technical capacity of personnel Coordination among stakeholders Change resist management To improve and enhance the overall PFM System

Way forward Piloting and Implementation of NPSAS Introduce Computerized Government Accounting (CGAS) To develop guidelines as per NPSAS with appropriate examples Introduce Commitment Accounting to capture and report the commitments information. Convergence of NAS to IFRS Development of Accounting Manual of GoN.