Discuss in brief about the disclosures required for financial statement under Nepal Financial Reporting…

Disclosure means the additional information accompanying the financial statements — an explanation of the activities that significantly influenced the financial results — which accountants attach as notes or footnotes to communicate relevant information about assets, liabilities and equity that cannot be fitted into the statements themselves; and NFRS, issued by the Accounting Standards Board of Nepal under the framework of IFRS and made effective from 15 July 2014, lays down both the statements to be presented and the matters to be disclosed with them, so that company accounts in Nepal are consistent, transparent and internationally comparable.

1. The five statements to be presented: an entity must present a complete set of five statements — the statement of profit or loss, the statement of other comprehensive income, the statement of changes in equity, the statement of financial position, and the statement of cash flows — along with the accounting policies and notes, which are an integral part of them.
2. Accounting policies and measurement basis: the measurement basis adopted — historical cost, current cost, realizable value, fair value or present value — must be disclosed, since it is the foundation on which the entire statements rest, together with any other accounting policies relevant to understanding them; such disclosure is compulsory by law and by the regulators.
3. Key assumptions and estimation uncertainty: the key assumptions about the future and the other sources of estimation uncertainty at the balance sheet date that carry a significant risk of causing a material adjustment to carrying amounts within the next year must be disclosed in the notes, along with their nature and carrying amount.
4. Changes in accounting policy and prior period errors: any change in accounting policy or system, the correction of prior year errors and the cumulative effect of such change must be disclosed, and it appears as the restated opening balance in the statement of changes in equity.
5. Basis of presenting profit or loss: the profit or loss statement must be prepared either by the function of expense method (cost of sales, distribution expenses, administrative expenses — showing gross profit) or by the nature of expense method (raw materials used, staff costs, depreciation and amortization), and the basis used must be made clear; both proceed through finance costs, profit before tax, income tax expense, profit from continuing operations and profit or loss on discontinued operations.
6. Earnings per share and attribution of profit: basic and diluted EPS must be shown, the shares used for basic EPS being the weighted average number of ordinary shares outstanding during the period, and net income must be attributed separately to the owners of the company and to the non-controlling interests.
7. Other comprehensive income: the OCI statement starts with net income and adds items such as loss on revaluation, available-for-sale investments, cash flow hedges, exchange gain or loss on translation of foreign operations, actuarial gain or loss on defined benefit pension schemes, the share of associates' OCI and the related tax — with the items that will later be reclassified to profit or loss identified.
8. Capital management and dividends: information enabling users to evaluate the entity's objectives, policies and processes for managing capital must be disclosed, as must the dividend proposed or declared before the statements were authorized for issue but not recognized as a distribution, the amount per share, and any cumulative preference dividend not recognized.
9. Movements in equity: the statement of changes in equity must disclose, across share capital, share premium, capital redemption reserve, treasury share reserve, foreign exchange reserve, revaluation reserve, other reserves, retained earnings and non-controlling interest, every movement from the opening balance at 1 Shrawan to the closing balance at 31 Ashadh — issue of share capital, profit for the year, revaluation surpluses and deficits, dividends, shares issued in a business combination, ESOP shares, share-based payments and shares purchased for cancellation.
10. Classified statement of financial position: the balance sheet must be presented vertically, with assets split into non-current (PPE, intangibles, biological assets, investment property, investments in associates, other investments, deferred tax assets, other non-current receivables) and current (inventories, short-term investments, biological assets, income tax receivable, trade and other receivables, cash and cash equivalents, assets held for sale), and the other side into equity, non-current liabilities and current liabilities — total equity and liabilities always equalling total assets.
11. Post-balance-sheet events and other notes: where information is received after the balance sheet date about conditions existing at that date, the related disclosures must be updated; further notes cover inventory changes, investments, asset retirement, insurance contract modifications and infrequent events of significant impact, some being mandatory under the standard and others voluntary on management's decision.