Chartered accountants, who get enrolled in the Indian chartered accountant institute after mid-July ’18 will not get a licence to practice chartered accountancy in Nepal.

The Institute of Chartered Accountants of Nepal (ICAN), the regulatory body for chartered accountants, has taken a decision in this regard in line with Indian practice that bars chartered accountants who have graduated from Nepal from practicing chartered accountancy in India.

This decision, however, will not come into effect if India agrees to sign mutual recognition agreement with Nepal, which will pave the way for those who have pursued chartered accountancy course in Nepal to practice chartered accountancy in India, according to ICAN President Mahesh Khanal.

Currently, Nepali graduates of the Institute of Chartered Accountants of India (ICAI) have to complete one-year internship and pass examinations on Nepali corporate and tax laws to be eligible to work as authorised chartered accountants in Nepal.

If the new provision comes into effect, ICAI graduates looking forward to practicing chartered accountancy in Nepal will have no option but to undergo the chartered accountancy course again in Nepal, which can take around five years.

“Since we are currently producing quite a good number of chartered accountants here in Nepal, the latest move will not create short supply of these professionals,” said Khanal.

Khanal had formally tabled the proposal to bar graduates of the Institute of Chartered Accountants of India from practicing chartered accountancy in Nepal based on “complaints filed by Nepali students”. His proposal was approved by a majority of board members of the ICAN.

The ICAN is a quasi-government regulatory body with a 17-member board. Of these members, 10 are certified chartered accountants, four are registered auditors and three are government officials.

Of these members, one was absent during the meeting that took the decision, while four-Bharat Rijal, Sunil Jakibanja, Jagannath Upadhyay (Niraula), Ram Prabodh Shah-did not support the move as it “smacked of ultra-nationalism” and have submitted notes of dissent.

Another three board members, who represent the Ministry of Finance, the Office of the Auditor General, and the Financial Comptroller General Office, are waiting

to hold consultation with the Finance Ministry before disclosing their position on the matter.

Since these three members are yet to divulge their stance, the minute of the meeting that took the decision has not been prepared yet.

The ICAN had initially floated a plan to immediately bar new ICAI graduates from practicing chartered accountancy in Nepal a month ago. But the plan drew widespread criticisms, especially from Nepali students pursuing chartered accountancy in India.

It is estimated around 10,000 Nepali students are currently enrolled in the Indian chartered accountant institute.

Following this pressure, the plan to immediately prevent new ICAI graduates from practicing chartered accountancy in Nepal was put on hold.

Then on June 12 a delegation led by ICAN President Khanal visited India to meet the president of the Indian chartered accountant institute.

During the meeting, Khanal proposed that India give recognition to Nepali chartered account graduates by signing the mutual recognition agreement.

So far, India has signed such agreements with very few countries, like Canada, Australia and Ireland. No country in South Asia has so far been able to sign that pact with India.

“Yet India has agreed to initiate the process of signing the agreement with Nepal,” said Khanal. “We hope it will be signed before mid-July 2018.”

Signing of such an agreement will exert pressure on Nepal to improve the quality of chartered accountancy course.

“Our course is still not up to mark considering the standard of international chartered accountancy courses,” ICAN Board Member Bharat Rijal said. Similar view was expressed by Anal Raj Bhattarai, a former banker and an ICAI graduate.

“Apart from improving standard of our courses, the ICAN should also take disciplinary action against registered chartered accountants engaged in malpractices to further enhance our image,” said Bhattarai.

Nepal currently has around 1,200 licensed chartered accountants. Around 5,000 are pursuing chartered accountancy course in Nepal.