Ten years ago, a bank branch in Nepal ran on ledgers, a strongroom, and a handful of desktop computers. Today, the same branch is connected to core banking systems, mobile banking apps, payment gateways, and cloud infrastructure that never sleeps. As Nepal's financial sector has gone digital, the risks have moved with it — and so have the audit requirements. A traditional financial audit, however thorough, was never designed to test whether your systems can withstand a cyberattack or whether an ex-employee still has access to customer data. That is exactly the gap an IT audit in Nepal is built to close, and it is why banks are now required to have one, and why fast-growing digital businesses are choosing to get one too.
What an Information System (IT) Audit Examines
An IT audit, also called an information system (IS) audit, is a systematic review of an organisation's technology environment rather than its financial statements. It examines data security — how sensitive information is encrypted, stored, and transmitted; system controls — whether changes to software and infrastructure go through proper approval and logging; and access management — who can log into which systems, view which data, and make which changes, and whether that access is reviewed and revoked when someone changes roles or leaves the organisation. Beyond these core areas, the audit typically also covers backup and disaster recovery readiness, business continuity planning, and how well the organisation's technology practices align with its written IT policies.
Legal Requirement for BAFIA-Regulated Banks and Financial Institutions
For commercial banks and other financial institutions regulated under the Bank and Financial Institution Act (BAFIA), 2073, IT audits are not optional. Nepal Rastra Bank's IT Policy and IT Guidelines require licensed banks and financial institutions to implement regular IT system audits as part of their overall risk management framework, alongside data backup and recovery policies and formal disaster recovery and business continuity planning. Where a bank does not have sufficient in-house expertise to conduct the audit itself, the guidelines explicitly allow it to be outsourced to an external IS audit professional, though responsibility for audit planning and follow-up remains with the bank's own audit committee. Compliance is examined during NRB's periodic onsite and offsite supervision, which means a weak or missing IT audit trail is something examiners will notice.
Why Fintechs and Digital-Payment Companies Should Consider One Voluntarily
If your business is not a licensed bank, an IT audit is not currently a legal obligation in the same way — but that does not mean it is any less important. Digital wallets, payment gateways, lending apps, and other fintech platforms handle exactly the kind of sensitive financial and personal data that makes them attractive targets for fraud and cyberattack. A voluntary IT audit gives founders and boards independent assurance that customer data is genuinely protected, not just assumed to be, and it signals credibility to banks, investors, and payment partners who increasingly expect to see evidence of sound technology governance before they will integrate with or invest in a digital platform.
Typical IT Audit Process and Deliverables
A typical IT audit begins with scoping and planning, where the auditor identifies which systems, applications, and data flows fall within the review. This is followed by a detailed risk assessment and testing phase, which may include reviewing user access logs, testing backup restoration, evaluating firewall and network configurations, and in some cases running penetration tests to probe for exploitable vulnerabilities. The auditor also reviews policy documentation against actual practice, since many organisations have a well-written IT policy that simply is not being followed day to day. The engagement concludes with a formal report setting out findings, risk ratings, and specific recommendations, along with a follow-up mechanism to confirm that identified gaps are actually remediated rather than left open indefinitely.
Common Findings
Across Nepali organisations, a handful of issues surface repeatedly. Weak access controls are the most common — shared login credentials, former employees whose accounts were never deactivated, or excessive administrative privileges granted "just in case." Data backup gaps are another frequent finding, where backups exist on paper but have never actually been tested for successful restoration, meaning a real failure could reveal the backup does not work at all. And cybersecurity exposure — outdated software, missing security patches, absent multi-factor authentication, or firewalls that were configured years ago and never revisited — rounds out the most commonly reported risks. None of these are exotic problems; they are ordinary lapses that accumulate quietly until an audit, or an actual incident, brings them to light.
How IT Audits Complement Statutory Financial Audits
A statutory financial audit and an IT audit are not competing exercises; they cover different territory and reinforce each other. Your financial audit gives assurance that the numbers in your financial statements are accurate and complete, but it generally treats the underlying IT systems as a black box, trusting that the data extracted from them is reliable. An IT audit tests that assumption directly, verifying that the systems generating your financial data are secure, properly controlled, and resistant to unauthorised manipulation. Together, the two give a far more complete picture: one confirms the numbers are right, and the other confirms the systems producing those numbers can be trusted in the first place.
Conclusion
As Nepal's financial sector continues its shift toward digital banking, mobile payments, and fintech innovation, an IT audit is quickly becoming as fundamental to good governance as the annual statutory audit. For BAFIA-regulated banks, it is already a compliance requirement. For growing digital businesses, it is fast becoming the difference between a platform that partners and investors trust, and one they quietly avoid.
If you would like to understand where your organisation stands, our team at Bandhu Fintech can help you scope and plan an IT audit suited to your size and risk profile.
Disclaimer: This article is for general information only and does not constitute legal or tax advice. Please consult an ICAN-registered Chartered Accountant for guidance specific to your company's circumstances.
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