Key Highlights NAS for NPOs is a mandatory accounting standard developed by the Accounting Standards Board (ASB), Nepal, tailored for non-profit organizations.   Effective from 16 July 2023 for INGOs and from 16 July 2024 for NGOs, this standard mandates accrual-based accounting, standardized reporting formats, and clear fund classifications.   Designed to promote transparency, accountability, and trust, it replaces inconsistent practices previously followed by NPOs.   NGOs must update accounting policies before FY 2024/25 (Nepali FY 2081/82) to comply.   Adopting NAS boosts donor confidence, ensures regulatory compliance, and simplifies audits.     A New Era of Accountability for Nonprofits in Nepal Non-profit organizations (NPOs) in Nepal have long played a pivotal role in social development, disaster response, education, health, and poverty alleviation. Whether international NGOs (INGOs) or local grassroots NGOs, these organizations rely heavily on donor funding, grants, and government collaboration. But here’s the real deal: financial mismanagement, inconsistent reporting, and weak accountability have plagued the sector for years. That’s where Nepal Accounting Standard for Not-for-Profit Organizations (NAS for NPOs) steps in. In this blog, we’ll break down: What NAS for NPOs really is   Why it’s important (especially now!)   How it changes the game for NGOs and INGOs in Nepal   Actionable steps to stay compliant and future-ready   Let’s dive in.    What Is NAS for NPOs?   The Nepal Accounting Standard for Not-for-Profit Organizations (NAS for NPOs) is a nationally accepted accounting framework tailored specifically for nonprofits. It’s not just a tweaked version of commercial standards like IFRS or GAAP. It’s custom-built for the unique needs of organizations that serve communities rather than chase profits. Core Objectives of NAS for NPOs: Promote accurate and standardized financial reporting   Enable transparent fund management   Ensure donor and stakeholder confidence   Provide comparability across nonprofit entities   Replace cash-based systems with accrual-based accounting   This standard now applies to: NGOs and INGOs   Charitable trusts and foundations   Non-profit associations   Profit-not-distributing companies   Any entity set up with a social service motive instead of profit       Why Was NAS for NPOs Introduced? Before NAS came into the picture, Nepal’s nonprofit sector was a mixed bag. Some organizations used cash accounting, others relied on IFRS, and a few winged it with manual records. The lack of a unified system caused issues such as: Non-comparable financial statements   Inaccurate grant usage tracking   Audit difficulties and compliance risks   Erosion of donor trust   So, what changed? In 2018, the Accounting Standards Board (ASB) Nepal developed and released NAS for NPOs. But starting from 16 July 2023, implementation was made mandatory for INGOs, and will be mandatory for all NGOs from 16 July 2024.   NAS for NPOs: Compliance Timeline   Organization Type Mandatory Implementation Date Applicable For Fiscal Year INGOs 16 July 2023 FY 2023/24 (2080/81) NGOs & Others 16 July 2024 FY 2024/25 (2081/82)   Prepare now or risk non-compliance.   Key Features of NAS for NPOs Let’s decode what this new standard actually requires. 1️⃣ Accrual-Based Accounting Cash accounting is out. Under NAS: Transactions are recorded when they occur, not when cash changes hands.   Requires double-entry bookkeeping for every transaction.   More accurate reflection of financial health and obligations.   2️⃣ Standardized Financial Statements Organizations must prepare the following: Statement of Financial Position (Balance Sheet)   Statement of Income and Expenditure   Statement of Changes in Reserves   Statement of Cash Flows   Statement of Accounting Policies   Notes to Financial Statements    Additionally, for donor-funded projects, the following two reports are mandatory: Fund Accountability Statement   Statement of Budget vs Actual (Variance Report)   3️⃣ Fund Classification: Restricted vs Unrestricted Restricted Funds: Donations meant for specific projects (e.g., earthquake relief).   Unrestricted Funds: Can be used for general operating expenses.   Proper fund classification ensures clarity and avoids fund misuse. 4️⃣ Recognition of Grants and Donations Under NAS: Donations are recognized based on conditions, not just cash inflow.   If a grant is conditional, it’s recognized as income only once the condition is fulfilled.   This approach improves matching of income to activities. 5️⃣ Disclosure Requirements More transparency is expected: NGOs must disclose their accounting policies, grant utilization, fund restrictions, and project expenditures.   Enhances stakeholder confidence and audit readiness.   How NAS for NPOs Impacts NGOs in Nepal ✅ Boost in Donor Confidence With transparent reporting, donors can see where their money is going. This builds long-term relationships and opens doors for future funding. ✅ Enhanced Financial Management Standardized systems help NGOs: Track multiple projects and budgets accurately   Identify under/overspending   Make data-driven decisions   ✅ Simplified Audits Auditors can easily verify financials due to: Clear fund classifications   Consistent documentation   Predefined reporting templates   ✅ Regulatory Compliance Staying compliant ensures: Renewal of registration/licenses   Smooth interaction with Social Welfare Council and other regulators   Avoidance of penalties and blacklisting     Challenges to Expect (And How to Tackle Them)   Challenge Solution Lack of trained accountants Provide NAS-specific training to in-house finance teams Migration from cash-based to accrual Use ERP or accounting software designed for NPOs (e.g., SaralBooks) Understanding donor fund classification Consult with professionals for fund mapping and documentation Delays in policy update and audit prep Set internal compliance deadlines ahead of July 2024   Practical Steps for NGOs to Get NAS-Ready   Conduct a NAS Compliance Audit Identify current gaps in your reporting system.   Update Financial Policies Shift from cash-based to accrual-based frameworks.   Train Your Team Organize workshops or hire consultants to train your finance personnel.   Adopt NAS-Compliant Software Use cloud-based platforms like SaralBooks that support project-level reporting and fund tracking.   Engage Auditors Early Bring in your auditor to vet your accounting transition plan.     Why NAS for NPOs Is a Game-Changer for Nepal   “Transparency breeds trust, and trust attracts funding.” With over 50,000 NGOs registered in Nepal, and billions in aid flowing through INGOs annually, Nepal’s social sector needed an upgrade. NAS for NPOs is that upgrade. It aligns Nepal with international best practices, and: Reduces fraud risk   Creates a level playing field   Attracts foreign donors who require transparent documentation   Builds stronger governance for the entire nonprofit sector     Final Thoughts: Is Your NGO NAS-Ready?   July 2024 isn’t far away. If your organization hasn’t started the transition, now is the time. Whether you're a small local NGO or a major INGO, NAS compliance isn’t optional—it’s essential for survival and growth in Nepal's new nonprofit landscape.   Need Help Getting Compliant? At SaralBooks, we help nonprofits: Transition to NAS-compliant accounting   Set up project-level reporting   Automate fund classification   Get audit-ready with confidence   👉 Contact SaralBooks today for a free consultation and take the first step toward NAS compliance.