Introduction

Nepal is currently witnessing a wave of civic awakening, especially among Generation Z, who are leading widespread protests against systemic corruption and political impunity. The public outrage, fuelled by revelations of high-level financial scandals and lack of transparency in governance, signals a turning point. Amid these protests, the focus has sharply turned toward institutional reform, accountability, and transparency in financial dealings. One of the most effective tools in this fight against corruption lies in the application of robust financial reporting, internal controls, and use of Professionals certified in Forensic Accounting and Fraud Detection (FAFD), along with Chartered Accountants (CAs), play a pivotal role in uncovering corruption, tracking illicit financial flows, and bringing economic criminals to justice. 

Applying Internal Controls: Building a Defense Mechanism Against Corruption

In any system vulnerable to misuse of authority or misappropriation of funds, internal controls serve as the first line of defense. They are not just administrative tools, but ethical guardrails that help prevent, detect, and correct errors and irregularities including fraud and corruption. 

In Nepal, where public distrust toward financial governance is rising and protests are calling for accountability, strong internal controls are more important than ever. Whether in government agencies, NGOs, or corporate entities, well-structured internal control systems can significantly reduce the risk of corruption. 

What Are Internal Controls?

Internal controls are processes, procedures, and policies designed to:

• Ensure accuracy and reliability in financial reporting,
• Detect and prevent fraud, including corruption.
• Safeguard assets from loss or theft,
• Promote operational efficiency,
• Ensure compliance with laws and regulations, 

They are categorized into:

• Preventive controls e.g., segregation of duties, approval hierarchies.
• Detective controls e.g., reconciliations, audits, variance analysis.
• Corrective controls e.g., disciplinary action, system redesign. 

How Internal Controls Prevent Corruption

Internal controls directly target the opportunity element in the fraud triangle (opportunity, pressure, rationalization). When controls are robust:

• It becomes harder for individuals to manipulate financial records without being detected.
• Collusion is more difficult, as duties are segregated among different people or departments.
• Approval processes ensure that no single person can authorize large or sensitive transactions unilaterally.
• Regular internal audits highlight red flags early and enforce accountability. 

For instance, a proper procurement control system with vendor verification, competitive bidding, and multi-level approval can prevent fake invoicing or inflated contracts; two common forms of corruption in Nepal’s public sector. 

The Role of Chartered Accountants (CAs) in Strengthening Internal Controls

Chartered Accountants (CAs) are uniquely positioned to play a critical role in designing, implementing, and evaluating internal control systems. Their training in financial systems, risk management, auditing, and ethics enables them to identify weaknesses that may not be obvious to management or regulators. 

Key Roles of CAs

1. Designing Controls:
   • CAs help organizations assess financial and operational risks and design control mechanisms accordingly.
   • For example, in a public sector project, a CA can develop budget controls to track expenditures in real time.
2. Internal Auditing:
   • Many CAs serve as internal auditors or design internal audit functions.
   • They review the adequacy and effectiveness of internal controls and report directly to concerned management or audit committees.
3. Training and Sensitization:
   • CAs can train employees on compliance protocols and ethical standards, helping create a culture of integrity.
4. Detection and Investigation:
   • When controls fail, CAs with forensic or FAFD expertise can trace anomalies, conduct investigations, and quantify losses /corruption.
5. Control Testing and Monitoring:
   • CAs perform regular testing of controls to ensure they are not just policies on paper, but are actively implemented and effective.
6. Advisory to Government and Boards:
   • CAs often advise government bodies, municipalities, and board members on internal control frameworks, compliance gaps, and governance best practices. 

Nepal’s Reality: Why Internal Controls Often Fail

In Nepal, internal control systems often fail due to:

• Lack of segregation of duties in government offices.
• Weak documentation and informal processes.
• Political interference in financial decisions.
• Absence of independent internal audit functions.
• Limited use of technology in public financial management.

This creates fertile ground for bribery, fund misappropriation, and manipulation of public procurement; the very issues that have triggered mass protests across the country. 

Moving Forward: Empowering CAs to Lead Reform

To fight corruption effectively, the government and private sector should:

• Mandate internal audits conducted or reviewed by qualified CAs.
• Strengthen the legal backing for internal control systems in public bodies.
• Include CAs and FAFD professionals in investigation and monitoring committees.
• Promote digital tools like ERP systems with built-in control features. 

Chartered Accountants can be more than just financial experts; they can be watchdogs of integrity, helping Nepal transition toward more transparent, efficient, and accountable governance. 

The Role of Financial Reporting in Fighting Corruption

Transparent financial reporting forms the backbone of accountability in both public and private institutions. When done correctly, financial statements reveal how funds are acquired, allocated, and utilized. In the context of Nepal, where misuse of public funds is a common concern, enforcing standardized reporting can:

• Deter misappropriation of funds by increasing visibility and traceability.
• Help investors, donors, and the general public assess the integrity of financial activities.
• Provide a reliable audit trail for investigations. 

For government bodies, public enterprises, and NGOs, applying financial reporting standards ensures that the use of public money is clearly documented, thus limiting avenues for corrupt practices. 

International Financial Reporting Standards (IFRS): Ensuring Global Accountability

Adopting IFRS in Nepal promotes transparency, comparability, and credibility in financial statements, especially for businesses with cross-border operations or international stakeholders. 

Benefits of IFRS in Anti-Corruption

• Enforces consistency in financial reporting.
• Makes manipulation harder due to strict disclosure norms.
• Facilitates international audits and forensic reviews. 

As Nepal integrates further into the global economy, adherence to IFRS will be crucial to aligning its financial ecosystem with international best practices, limiting loopholes often exploited by corrupt actors. 

FAFD Certified Professionals and Chartered Accountants: The Anti-Corruption Investigators

FAFD professionals and Chartered Accountants serve as frontline investigators in financial fraud and corruption cases. Their specialized training allows them to:

• Detect anomalies in financial records.
• Trace the flow of illicit funds through forensic analysis.
• Examine shell companies, fake invoices, and round-tripping schemes.
• Quantify losses and gather admissible evidence for prosecution. 

In corruption investigations, particularly high-profile ones involving public officials, these professionals work closely with law enforcement, anti-corruption bodies like the Commission for the Investigation of Abuse of Authority (CIAA), and international forensic experts. 

They help answer critical questions:

• Where did the money come from?
• Where did it go?
• Who authorized the transactions?
• Were internal controls bypassed? 

In Nepal, empowering FAFD and CA professionals through institutional support and independence is essential to neutralize political influence and protect whistleblowers. 

Gen Z Protests: A Catalyst for Institutional Reform

Nepal’s youth, especially Gen Z, have mobilized under the banner of justice, transparency, and anti-corruption. Their activism has brought issues like financial irregularities, opaque governance, and tax injustice to the forefront. 

How Their Movement Can Leverage Professional Expertise

• Demand forensic audits of controversial public projects.
• Push for mandatory compliance certification for public-interest entities.
• Advocate for greater involvement of CAs and FAFD professionals in public accountability roles.
• Crowdfund independent audits and investigations when government institutions fail. 

These protests signal that the new generation will no longer tolerate systemic corruption. But emotion must be met with expertise and that’s where financial professionals come in. 

Conclusion

Corruption is not just a moral failure; it is a systemic issue that thrives in environments lacking transparency and accountability. Through standardized financial reporting, rigorous internal controls, and international standards like IFRS, Nepal can build an ecosystem that inherently resists corruption.

Moreover, by empowering and involving FAFD-certified professionals and Chartered Accountants, the country can ensure that financial crimes are not only exposed but properly investigated and prosecuted. The Gen Z-led movement in Nepal is a powerful force for change. But to sustain this momentum, it must align with systemic reforms and expert intervention. Only then can Nepal pave the way for a transparent, accountable, and corruption-free future. 

Call to Action
Let the protests not just be a cry against corruption, but a rallying call for financial reform. Engage professionals. Demand audits. Support systemic change. The future of Nepal depends on it. 

About the Author and Non-Solicitation Statement

I, Bidur Luitel, a Chartered Accountant (CA) and a certified professional in Forensic Accounting and Fraud Detection (FAFD), affirm that this article is not written for commercial or solicitation purposes. However, in light of the growing demand for accountability and transparency in Nepal, I am willing to voluntarily contribute my professional expertise to any independent or government-formed anti-corruption investigation committee. I remain committed to upholding the principles of justice, transparency, and public service. 

I can be reached at luitel.bidur@gmail.com.