Internal Audit Services in Nepal

What internal audit actually does

Internal audit is an independent, objective examination of how your organisation manages risk, controls its processes, and governs itself. Unlike the statutory audit, it is not about forming an opinion on your financial statements for outsiders — it works for you, reporting to management and the board on what is and isn't working inside the business.

The modern approach is risk-based: rather than checking everything equally, we concentrate effort where the exposure is greatest — cash handling, procurement, inventory, revenue recognition, payroll, and the places where one person controls a process end to end. That is where losses and fraud actually happen.

Internal audit vs statutory audit

The two are complementary, not alternatives. Most organisations we work with need the statutory audit by law and adopt internal audit because the annual audit alone was finding problems far too late.

Who needs internal audit in Nepal

Internal audit is not compulsory for an ordinary private company the way the annual statutory audit is. But for a growing set of organisations it is either required in substance or simply overdue:

• Listed companies with paid-up capital of NPR 30 million or more, and companies wholly or partly owned by the Government of Nepal — Section 164 of the Companies Act 2063 requires an audit committee, and Section 165 makes that committee responsible for supervising and reviewing the internal audit function
• Banks, financial institutions and insurers, where Nepal Rastra Bank and sector regulators require audit committees, risk assessment and information-system audits
• Cooperatives, whose boards must maintain internal control policies and account to their members
• NGOs and INGOs, where donors increasingly require internal control assurance alongside the project audit
• Manufacturers, trading houses and hospitality groups where stock, cash and procurement pass through many hands
• Any business that has grown faster than its systems — multiple branches, a bigger team, and an owner who can no longer see every transaction

Our risk-based approach

1. 01Risk assessment — we map your processes with management, score each risk by likelihood and impact, and agree where the audit effort will go. No generic checklist.
2. 02Audit plan — scope, coverage and timing agreed in writing with management or the audit committee, usually as a rolling annual plan broken into quarterly cycles.
3. 03Fieldwork — we test what actually happens against what is supposed to happen: sampling transactions, verifying approvals, observing cash and stock, and tracing processes end to end.
4. 04Reporting — every finding states the issue, the risk it creates, the root cause and a practical recommendation, rated so you know what to fix first.
5. 05Follow-up — the next cycle begins by checking whether agreed actions were implemented. A recommendation nobody acts on is just paperwork.

Areas we commonly review

• Cash and bank — receipts, custody, reconciliations, and segregation of duties
• Procurement and payables — quotations, approval limits, vendor master data and related-party purchases
• Inventory — physical verification, valuation, movement controls, wastage and shrinkage
• Revenue and receivables — billing completeness, credit control, discounts and collections
• Payroll and HR — attendance, overtime, SSF contributions and ghost-employee testing
• Statutory compliance — VAT, TDS and regulatory filings tested for accuracy and timeliness
• Fraud risk — override of controls, unusual journal entries and conflict-of-interest exposure
• IT and access controls — who can approve, edit and delete in your accounting system

What you receive

• A risk register that ranks your exposures rather than listing them
• A written internal audit report with rated findings, root causes and recommendations
• An action tracker assigning each recommendation an owner and a deadline
• A management or board/audit-committee briefing, in plain language
• Follow-up verification in the next cycle confirming what was actually fixed

Internal audit from Butwal, across Nepal

Most firms offering internal audit in Nepal operate from Kathmandu, which makes genuine continuous auditing expensive — fieldwork becomes an occasional trip rather than a regular presence. Rolacon is based in Tilottama, Butwal, in the middle of the Lumbini industrial and trading corridor, so quarterly cycles, surprise cash counts and stock verifications are a drive, not a flight.

We work with manufacturers, trading houses, schools, cooperatives, hotels and NGOs across Rupandehi and the wider province, and remotely with clients elsewhere in Nepal.