Accounting regulation

ACCA - F1   ACCOUNTANT  IN  BUSINESS

World's dispersed resources which were once out of reach by many small and middle size enterprises are now easily accessible. One organization may acquire technical resource form country A, finance from country B, sale its product worldwide and operate from country C. Outsourcing is also common. Therefore, traditional accounting style guided fully by ethics, cultural standards and national Generally Accepted Accounting Practice (GAAP) faced number of challenges regarding comparability and  understandability within globalized business world. It increased risk, uncertainty, distress and outrage among users of financial information. So, to tackle fraud, conflicts and emerging issues, together accounting communities from around the world take initiation to harmonize and standardize accounting profession.

Despite there are still many regional/nationals standards, rules and regulations companies should comply to keep operating within one country. They should first be accountable to national/regional authorities, which impose national regulatory rules to bring uniformity in accounting policy and practice. E.g. In UK companies are regulated by Companies House and in Hong Kong by Companies Registry. Similarly, financial statements in UK are governed by 'Companies Act 2006' and in Hong Kong by 'Companies Ordinance.'

Page 4 Public Sector Accounting

In Nepal Laws governing state-owned enterprises have made provision for maintenance of accounts on the basis of a double-entry book-keeping system, following generally accepted accounting principles in case of stated-owned enterprises, expect companies and banks. The double-entry system does follow Nepal Accounting Standards in Case of companies, but there is no provision for mandatory compliance of International Standards (IAS/IFRS), except for banks.

A synopsis from an article 'Nepal on the Path of implementation of IFRS' published in ICAN Journal September 2013.

 "IFRS accepted as a global language for accounting and financial reporting, it is in the interest of country itself to adopt it and be understood by rest of the world instead of being isolated in financial reporting. At the reporting entity level, by adopting IFRS, a business entity can present its financial statements on the same basis as its foreign competitors, with enhanced Comparability. Entities may also need to convert to IFRSs if they are a subsidiary of a foreign entity that uses IFRSs."