ICAN and Cooperative Regulatory Authority Join Hands to Strengthen Oversight in Nepal’s Cooperative Sector

3rd September 2025, Kathmandu

The Institute of Chartered Accountants of Nepal (ICAN) and the National Cooperative Regulatory Authority have agreed to collaborate, marking a significant step towards strengthening the regulation, supervision, and prudential audits within Nepal’s cooperative sector.

ICAN Cooperative Regulatory Authority

This partnership is a crucial move to enhance transparency, accountability, and financial discipline among the more than 20,000 savings and credit cooperatives that are a major pillar of Nepal’s grassroots financial inclusion.

Addressing Pervasive Challenges in the Cooperative Sector

Nepal’s cooperative sector, while vital for the local economy, has been facing widespread concerns due to issues such as weak supervision, governance lapses, and financial mismanagement. These problems have raised alarm bells about the security of members’ savings. The Cooperative Act 2074 was enacted to provide a legal framework and enforce regulatory audits for cooperatives, especially those heavily involved in savings and lending. However, the effective implementation of these provisions has been a persistent challenge, making a strong collaboration between professional and regulatory bodies an urgent necessity. This new partnership aims to bridge the gap between legal mandate and practical enforcement.

An interaction program in Kathmandu brought together key stakeholders from both organizations to discuss how to operationalize these regulatory audits. During the program, both sides agreed on the need to prepare a roster of auditors under ICAN’s coordination and to focus on enhancing monitoring, supervision, and technical support.

Leadership Voices and Collaborative Vision

The seriousness of the partnership was underscored by the presence of senior leadership from both sides. Dr. Khag Raj Sharma, Chairperson of the Cooperative Regulatory Authority, emphasized the critical need for effective oversight. He stated, “With over 20,000 savings and credit cooperatives under our jurisdiction, safeguarding members’ deposits and ensuring effective monitoring and supervision is unavoidable. The cooperation of ICAN is vital in this regard.” He further highlighted the importance of implementing Nepal Financial Reporting Standards (NFRS) within the cooperative sector to improve financial transparency.

In response, ICAN President CA Nil Bahadur Saru Magar expressed the Institute’s readiness to support regulatory strengthening. He noted that despite multiple bodies overseeing cooperatives, ineffective supervision remains a major challenge. He also pointed out the need for some revisions to the Cooperative Act 2074 to ensure stronger supervision, signaling a long-term commitment to reform. He stressed that mutual understanding and collaboration in areas like manpower development, knowledge exchange, and technical assistance are essential for success.

Key Outcomes of the Interaction

The program concluded with several key agreements that lay the foundation for future collaboration:

• Formal Partnership via MoU: Both institutions agreed to formalize their partnership by signing a Memorandum of Understanding (MoU) in the near future. This will provide a clear framework for their collaboration.
• Joint Auditor Roster: ICAN members, who are professionally qualified to conduct rigorous financial audits, will be included in a dedicated roster for carrying out regulatory audits of cooperatives. This will bring a higher level of professionalism and accountability to the audit process.
• Establishment of a Joint Mechanism: A special mechanism or steering committee will be established to ensure continuous coordination, resource sharing, and effective implementation of the agreed-upon initiatives.
• Capacity Development: A key focus will be on training and capacity-building for both auditors and cooperative personnel. This will ensure that all parties have the necessary skills and knowledge to uphold high standards of governance and transparency.

Why This Collaboration is a Game-Changer

This partnership is expected to bring about a transformative change in Nepal’s cooperative sector. By involving professional auditors from ICAN, the sector will be subject to more rigorous and transparent oversight. This enhanced supervision will not only help safeguard the savings of millions of members but also significantly reduce the risks of financial mismanagement and fraud that have plagued the sector in recent years. The adoption of NFRS will bring cooperative financial reporting in line with international standards, which will, in turn, build greater public confidence and trust.

The collaboration represents a concerted effort to move beyond mere legal provisions and create a practical, enforceable regulatory framework. It recognizes that strengthening institutional governance is the key to ensuring the sector’s long-term financial stability and sustainable growth. This initiative is a prime example of how professional bodies and government regulators can work together to address systemic issues and build a more resilient financial ecosystem.

Conclusion

The collaboration between ICAN and the National Cooperative Regulatory Authority is a landmark moment in addressing the long-standing challenges of Nepal’s cooperative sector. By laying the groundwork for a formal partnership, a joint auditor roster, and a focus on capacity-building, both institutions are paving the way for a more transparent, accountable, and resilient cooperative ecosystem. This alliance is crucial for protecting members’ savings, improving governance standards, and ensuring that the cooperative sector can continue to play its vital role in Nepal’s financial and economic development with greater public trust and confidence.

For More: ICAN Cooperative Regulatory Authority