Nepal is on the era of new transitional phrase to economic prosperity within the framework of new federal setup. The simple changes in political regime, ideology, and government structure do not assure the national development. The nation cannot prosper without the change in the attitudes with a progressive mindset of the political leaders, bureaucrats, and technocrats. This change has to be reflected in every sector and aspect of the society and institution in a balanced and integrated approach. Among many, the development of Finance and Accountancy profession in Nepal at this critical period of time is utmost and urgent importance.
Since 1990 after the adaptation of Multiparty democracy and neoliberalism with the free market economy, there were some significant policies changes in the development in the Accountancy field in both the public and the private sector. The enactment of ‘The Nepal Chartered Accountants Act, 1997, to enhance and development of Professional Accountants, as well as towards economic and social responsibility of the accountants, and to contribute towards economic development of the country, was one of the major steps. The Institute is an autonomous body and is fully authorized by the Act to regulate accountancy profession in Nepal’. However, the Institute could not deliver as expected rather it dwindled in the regressive approach to monopolize its market.
It is urgent and a desperate need of qualified accountants and finance professions in Nepal. Both the quality and quantity of Chartered Accountants have been very low. The Institute of Chartered Accountant which is a self-regulated and autonomous body and only Institute in Nepal has not been in a level playing field to promote the accountancy profession. Instead, it has been discouraging other qualified Nepalese Chartered Accountants from foreign countries and has been enforcing than to migrate to other developed countries by regressive and prejudicial by-laws and regulations.
Office of Auditor General — the external auditor of the Government, states that the cumulative arrears had gone up to Rs 500.08 Billion till fiscal 2016-17. The report says that local level administration could not justify the expenses worth of Rs 14.25 billion and district development committee arrears mounted to Rs 12 billion. The Auditor General reports concluding that because of the misappropriation of public money and corruption which has increased the debt burden on each Nepali reached to Rs 24,276.75 by the fiscal year 2016.17. These increasing financial irregularities clearly demonstrate a dire need of many qualified and regulated accountants in the nation. Accountants are the gateway to corruption. Unless the Government takes a serious and proactive approach to regulate and develop the accounting profession, the control mechanism to reduce the corruption and financial irregularities will be in dismay.
The Government has given very little attention to the aspect of regulating and developing the accounting profession to check the financial health of the Nation. The monopoly of the Institute of Chartered Accountant which has not been regulated by the governing body has made the financial market more chaotic and evading the public and investors confidence resulting in capital flight. It is apparent that the Chartered Accountants are involved in tax evasion in collaboration with tax officers through the abuse of Tax settlement Act 2033. The Auditor General report has also noted the irregularities through the tax settlement commission. The ethics and the quality of chartered accountants have to be seriously looked into by the Government Authority. Unfortunately, the members of the Institute of chartered accountants are not regulated by any independent regulatory bodies in Nepal. It is not too late to form an independent regulatory body to regulate, develop and promote the accountancy profession.
Almost most of the major economic country in the world has moved from the self-regulation to independent regulation after 2002. The Sarbanes Oxley act 2002, which is also known as “Corporate and Auditing Accountability, Responsibility, and Transparency Act” which was enacted in the US after the major corporate and accounting scandal, including Enron and World.com. As a result of this Act and independent regularities body know as The Public Company Accounting Oversight Board (PCAOB) was created. It created a new, quasi-public agency, the Public Company Accounting Oversight Board, or PCAOB, charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. The act also covers issues such as auditor independence, corporate governance, internal control assessment, and enhanced financial disclosure. To enhance the global cooperation in regulating the Audit and Accountancy the International Forum of Independent Audit Regulators (IFIAR) was set up in 2006. Today, IFIAR has 52 independent audit regulators worldwide. Following the international practices, Bangladesh has enacted a similar regulation known as financial reporting ACT in 2015 with a requirement to form an independent regulator know as financial reporting council. Similarly, after Satyam scam in 2009, India too started to debate on the establishment of Independent regulatory body. Further, the need was stronger after surfacing the fraud case of Punjab national bank of Rs 13,000 Crore, Rotomac Global of Rs 3,695 Crore and Jatin Mehta Rs 6,200. Similar case but to that not that scale was obvious in the merger of Apex and NCC Bank in Nepal. The important questions arise here, “What were the auditors doing here? There is a huge risk in investing in Nepal and may result in financial crises foreseeable future by a large scale scam if the Government does not become serious in adopting the international practices to form an independent regulatory body.
Nepal has a stable government with its ambition to develop the nation with a slogan of SAMBRIDDHA NEPAL, thus the nation needs a sufficient number of qualified accountants to be able to cater to the needs of the transition economy. In this critical juncture, the accountancy profession needs to present itself as an attractive career for the brightest young minds of the country, and the regulators need to provide an environment that will enable them to do so. It is, therefore, utmost important to form independent regulatory body known as Financial Reporting Council is allowed to play its part in the development of the overall financial system of the country. Thus by retaining and attracting the bright Nepalese Chartered and Certified Accountants through the establishment of Independent regularity bodies will be a milestone to the prosperity of the Nation.
Bigyan Prasai, Chartered Certified Accountant, Masters in Public Policy, University of London, SOAS)
