The objective of this assessment is toupdate the public expenditure and financial accountability(PEFA) assessment published in early 2008. The assessment isexpected to assist the Government of Nepal to: (a) establishindicator led assessment of the country’s public financialmanagement (PFM) system, (b) update the fiduciaryenvironment of the PFM systems and processes of the country,and (c) assist in identifying those parts of the PFM systemthat may need further reform and development. Theinstitutional and organizational approach taken by theGovernment of Nepal ensured coordination among variousgovernment institutions. The assessment included collectionof additional documentation, including meeting minutes, andinterviews with government counterpart teams and mainstakeholders. The report was updated and refined followingadvice from a World Bank team. A specialist in the use ofPEFA methodology assisted in the later drafts and visitedNepal in August 17-20, 2014. Meetings were held with thePEFA Secretariat at the Financial Comptroller General Office(FCGO) and with the Ministry of Finance (MoF) BudgetDivision. This final draft of the report addresses all thecomments received up to November 31, 2014. The findings ofthe assessment were shared with the donors in September 2014and their comments assisted the finalization of the draftreport. The World Bank also provided continuous qualitycontrol support.