Compliance Responses and Action Plans

  • Compliance Responses and Action Plans

    IFAC members and associates have provided self-assessment information about the regulatory and standard-setting framework in their countries (Part 1) and their organizations' activities in addressing IFAC's membership requirements (Part 2) as described in the Statements of Membership Obligations. Based on an analysis of this information, they are developing SMO Action Plans for continuous development and improvement.

    Some organizations have qualified to submit SMO Action Plans on a biennial basis by meeting eligibility criteria. These organizations are indicated with an asterisk (*).

    In the interest of transparency and providing information to the profession, regulators, and other stakeholders, all responses and SMO Action Plans are accessible below.

    Saudi Organization for Certified Public Accountants

     

    Introduction

    The information below has been submitted as part of the IFAC Member Body Compliance program. The Program has two components:

    Part 1: Assessment of the Regulatory and Standard-Setting Framework (provides information about regulatory requirements and standard-setting processes in member body countries); and
    Part 2: Assessment of Compliance (provides information on compliance by member bodies with the Statements of Membership Obligations). Part 2 of the Compliance Program will begin later this year, and the results will also be posted to the website.

    The responses to Part 1 are provided below. IFAC staff has reviewed the responses and, where necessary, validated them with external knowledgeable parties. A list of key terms is available to assist readers in understanding the responses.

    The purpose of this Part 1 Assessment is to collect information on the roles of IFAC member bodies and other organizations (including government, regulatory or other appointed authorities) with respect to:

    1. Setting auditing, accounting, ethics, public sector and education standards; and
    2. Regulating the accountancy profession.

    Sections 1 and 2 of Part 1 contain an introduction and instructions for member body respondents. For this reason, they are not included here, and the responses begin with Section 3.

    Questions or comments may be sent to complianceassessment@ifac.org.


    Section 3 -- Member Body General Information

    1. Country:

      Kingdom of Saudi Arabia


    2. Name of member body:
      Saudi Organization for Certified Public Accountants

      Or please specify name:



    3. Individual responsible for preparation:
      Dr. Ahmad A. Almeghames


    4. Date member body became a member of IFAC:
      Note: Please enter a numeric date (e.g., 12/2001, Month/Year)

      05 / 1993



    Questions 5 - 22 are for internal use only


    Section 3G -- Affiliations


    23. Please list those regional organizations to which your organization belongs (e.g., FEE, CAPA, ECSAFA, IAA, etc.):
      N.A.



    Section 4 -- Statutory Framework


    Responses to this section will provide a description of the legal framework governing the commercial aspects of auditing and financial reporting in your country.

    Section 4A -- The Companies Act or Commercial Code


    The following questions concern the Companies Act (the Act) or Commercial Code (the Code) or similar Legal authority in your country. If no Legal authority exists, or the Legal authority does not address particular questions, please indicate "N/A" for Not Applicable.

    24. What is the full name of:
      a). the Act or the Code: Companies Act
      b). the Enacting body: Ministry of Commerce and Industry
      c). date the Act or Code came into force: 07 / 1965


    25. How can IFAC obtain a copy of the Act or Code?
      Requesting from Ministry of Commerce and Industry, Saudi Arabia


    26. Is the Act or Code available in English?
      Yes   No


    27. What are the types of entities covered by the Act or the Code?
      Please check all that apply.
      Listed entities   Other (please specify): Corporations
      Private companies   Other (please specify): Limited Partnership
      Governmental   Other (please specify): General Partnership
      Not-for-profit   Other (please specify): Cooperative Companies


    28. Is there a requirement for the following entities to prepare annual statutory financial statements? If YES, please describe the financial reporting requirements including the accounting standards to be followed.
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities At the end of every financial year the board of directors make an inventory of the value of the company assets and liabilities as of that date and shall prepare a balance sheet of the company, a profit and loss statement, and a report on its operations and financial position for the expired financial year, setting out the proposed method for the allocation of net profits. Accounting standards generally accepted in Saudi Arabia are followed.
      Private companies As above.
      Governmental --
      Not-for-profit --
      Other (please describe) --
      Other (please describe) --


    29. Is there a statutory requirement for the following entities to be audited? If YES, describe the requirement including the auditing standards to be followed:
      Please check all that apply.
        No Yes (If YES, please describe)
      Listed entities Article 123 of Companies Act requires the board to put the documents mentioned above at the disposal of the auditor fifty-five days prior to the date set for the general meeting. Auditing standards generally accepted in Saudi Arabia are followed.
      Private companies As above.
      Governmental -
      Not-for-profit -
      Other (please describe) -
      Other (please describe) -


    30. Are the auditors ("statutory auditors") that are appointed for audits required by the Act or Code ("statutory audits") appointed for a specific period?
      Yes   No
      If YES, please indicate the term of appointment: 3 Year(s)


    31. Who appoints the statutory auditors?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify): Article 130 of Companies Act states that, the regular general meeting shall appoint one or more auditors from among those licensed to operate in Saudi Arabia and specify their remuneration and term of office.
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    32. Does the Act or Code require joint auditors for the statutory audit?
      Yes   No
      If yes, please describe the requirement:
      Article 130 of Companies Act states that, the regular general meeting shall appoint one or more auditors from among those licensed to operate in Saudi Arabia and specify their remuneration and term of office.


    33. Does the Act or Code require the rotation of the auditors or audit firms performing statutory audits?
      Yes   No
      If yes, please describe the requirement:
      Audit period shall not exceed three continuous years for companies audited by one auditor and not more than five continuous years for companies audited by more than one auditor.



    Section 4B -- Securities Market Regulations


    Responses to this section will provide a description of the financial reporting and auditing requirements for listed entities in your country.

    34. What are (a) the major items of Legal authority for such requirements, (b) the Enacting body(ies) and (c) the latest amendment date? Please identify the specific articles or sections that pertain to auditing and financial reporting:
    1. the major items of Legal authority for such requirements

    2. the Enacting body(ies)

      1. Ministry of Commerce and Industry.
      2 & 3 Saudi Monetary Agency and capital Market Authority.

    3. the latest amendment date?

      14.01.1997


    35. How can IFAC obtain a copy of the Legal authority?
      From Ministry of Commerce and Industry, and Saudi Monetary Agency and capital Market Authority.


    36. Is the Legal authority available in English?
      Yes   No


    37. Are there any additional or alternative financial statement reporting requirements for listed entities that are not described in your answer to Question 28?
      Yes   No
      If YES, please describe the requirement:


    38. Are there any additional auditing requirements that apply to listed entities other than those described in your answer to Question 29 (e.g., additional GAAS requirements, additional independence requirements, requirements to report to those charged with governance, etc.)?
      Yes   No
      If YES, please describe the requirement:
      As provided in 33 above.


    39. Who appoints the statutory auditors of listed entities?
      Please check all that apply.
      Shareholders   Management
      Board of directors   Other (please specify):
      Audit committee   Other (please specify):
      Government agency   Other (please specify):


    40. Are auditors who perform audits of listed entities appointed for a specified period?
      Yes   No
      If YES, please indicate the term of appointment: 3 Year(s)


    41. Are joint auditors required for audits of listed entities?
      Yes   No
      If YES, please describe the requirement:
      As stated in 33 above.


    42. Is rotation of the auditor or audit firm for audits of listed entities required?
      Yes   No
      If YES, please describe the requirement:
      As stated in 33 above.



    Section 5 -- Auditing Standards


    Responses to this section will provide a description of the legal and professional framework governing audit and other assurance standards in your country. The section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 5A -- Statutory Framework


    43. Please provide the name of the Legal authority and/or self-regulatory rules that establish audit and other assurance standards in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting audit and other assurance standards. If the standards are different for different entities (e.g., listed entities, private companies, governmental bodies, not-for-profit organizations, etc.), please specify the details that apply to each:
      Type of entity Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting audit and
      other assurance standards
      Listed entity CPAs Regulations N.A SOCPA Auditing Standards Committee
      Other (please describe) - -
      Other (please describe) - -
      Other (please describe) - -

      a. How can IFAC obtain copies of these documents?

      From SOCPA

      b. Are the documents available in English?
      Yes   No


    Section 5B -- Standard-Setting (SOCPA Auditing Standards Committee)


    44. For SOCPA Auditing Standards Committee, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      A private organization established by the profession.

      b. Name of standards

      SOCPA Auditing Standards.
      Plase note that SOCPA Auditing Standards Committee compares its standards to International Standards on Auditing.


    45. How many voting members does the standard-setting body have?
      11 voting members.


    46. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    47. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Best person for the job, including practioners, private and public members and academics.


    48. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Member body.


    49. What is the term of appointment for members?
      4 Year(s)


    50. For how many years has the standard-setting body been in existence?
      12 Year(s)


    51. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      $ 46,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      3.75



    52. To what entity is the standard-setting body accountable?
      SOCPA Board.


    53. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Exposure drafts are publicly published for comments.

    2. accessibility of meetings (i.e., public or private)

      The committee holds meetings including members only, then a public hearing will be held.

    3. approval process for final standards (i.e., majority required to approve final standards)

      Exposure drafts will be approved by the Committee and then presented to the board for final approval.

    4. other relevant due process activities

      --


    54. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      6 Day(s)



    Section 6 -- Ethics


    Responses to questions in this section will provide a description of the legal and professional framework governing ethics standards for accountants in your country. This section focuses on the establishment of such standards. Please indicate the role your organization plays within this framework.

    Section 6A -- Statutory Framework


    55. For each of the following types of professionals, please indicate the name of the Legal authority and/or self-regulatory rules establishing ethics standards for accountants and auditors in your country, the date of the last amendment of such authority or rules and the name of body responsible for setting the ethics standards.
      Type of professional covered Name of
      applicable
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting ethics standards
      Professional Accountants in Public Practice CPAs Regulations - SOCPA Ethics Committee
      Professional Accountants in Business CPAs Regulations - SOCPA Ethics Committee
      Professional Accountants in the Public Sector N.A -
      Other (please describe) - -

      a. How can IFAC obtain copies of these documents?

      From SOCPA

      b. Are the documents available in English?
      Yes   No


    Section 6B -- Standard-Setting (SOCPA Ethics Committee)


    56. For SOCPA Ethics Committee, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Private organization established by the profession.

      b. Name of standards

      SOCPA Codes of Ethics and Professional Conduct.

      Please note that SOCPA Ethics Committee compares its code with IFAC Code of Ethics as a part of its due process.


    57. How many voting members does the standard-setting body have?
      9


    58. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    59. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Best person for the job including practioners, private and public members and academics.


    60. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Member body.


    61. What is the term of appointment for members?
      4 Year(s)


    62. For how many years has the standard-setting body been in existence?
      12 Year(s)


    63. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      $ 16,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      3.75



    64. To what entity is the standard-setting body accountable?
      SOCPA board.


    65. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Exposure draft is publicly published for comments.

    2. accessibility of meetings (i.e., public or private)

      Meetings of the committee are private however a public hearing is to be held for receiving comments.

    3. approval process for final standards (i.e., majority required to approve final standards)

      Majority required to approve final standards.

    4. other relevant due process activities

      --


    66. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      6 Day(s)



    Section 7 -- Education


    Responses to questions in this section will provide a description of how education requirements for the profession are established. Please indicate the role your organization plays within this process.

    Section 7A -- Education Requirements


    67. Please describe in general terms the education system in your country including the different stages of education from early childhood education through to tertiary level study. Please indicate which aspects / levels are compulsory as part of the national education system:
      Pre-university educatiion in Saudi Arabia consists of elementary stage (6 years), intermediate stage (3 years)and secondary stage (3 years), in addition to vocational training institutes. No aspects l levels are compulsory as part of the national education system.


    68. Is there a legal authority or regulation that specifies the requirements for an individual to operate as an accountant or auditor in your country?
      Yes   No

      If YES, please provide the name and describe the requirements, including any relating to education, experience or qualifications.



    69. Please select from below all the relevant key levels of requirements to obtain certification from your member body (i.e. to qualify as a certified or chartered accountant) and provide a general description of the requirement.
      Academic requirements
      Holder of Bachelor's degree in Accountancy or any other equivalent certificate as may be deemed acceptable by the competent authorities in charge of equivalency of degrees.
      Professional examinations
      SOCPA fellowship certificate.
      Practical experience
      Three years experience, reducible to two years if the applicant is a holder of a Master's degree in accountancy or an equivalent degree, and to one year if the applicant is a holder of a PhD in accountancy or an equivalent degree.
      Final qualifying examination
      -
      Other (please describe) -
      -


    70. Which of the following arrangements best describes who establishes the education requirements for the accounting profession in your country? Please select one option.
      A government ministry, department or agency establishes education requirements for the accounting profession with no additional requirements set by the member body(ies).
      A government ministry, department or agency establishes minimum education requirements for the accounting profession, and member body(ies) supplement these requirements.
      Member body(ies) establishes the education requirements for the accounting profession.
      Other (please describe)


    71. Please provide the name(s) of the relevant body in the government ministry, department, agency and / or member body who establishes the education requirements.
      SOCPA education and training committee:
      Objectives: Develop the level of professional education in order to promote the status of the accounting and auditing profession. Therefore the role of the committees among other things, is to prepare, implement and develop education and training programs that enhance the level of professional education and training, particularly the following programs :
      - SOCPA fellowship certificate courses for CPAs licensed before issuance of CPAs Regulations.
      - CPE courses.
      - Special courses for specific topics or parties.
      The secretary general prepares and the committee selects topics for which training material are to be prepared. A list of specialized consultants shall be submitted by the secretary general and the committee selects to prepare the material of the topic. The consultants prepares the material based on professional standards accepted by SOCPA. The training material includes the instructor guidance, trainee guidance and training material presented to trainees the committee prepares a time schedule for conducting the training courses.

    1. A general description of the role of the relevant body(ies) including how it operates and its due process in establishing the education requirements.

      See Article (68).

    2. How many voting members does the relevant body(ies) have

      8 voting members.

    3. Are the members of the relevant body(ies) involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:

    4. For how many years has the body been in existence?

      12 Year(s)


    72. How would you describe the authority that the education requirements have?
      Requirements are legally-based
      Requirements are set in the constitution, by-laws or other rules of the relevant body(ies).
      Requirements are set in member body(ies) policy document(s).
      Other (please describe)

    72 a. How can IFAC obtain copies of these documents?
      From SOCPA

    72 b. Are these documents available in English?
      Yes   No


    73. Are the education requirements for accountants and auditors the same throughout your country, or do they differ among regions, provinces or states?
      Same   Different
      If different, please briefly describe the main differences:


    74. Please indicate the scenario that best describes who delivers the education and examination process for members of the profession. Please only select one option.
      The education program and final examination are delivered by the member body.
      The education program and final examination are delivered by the member body and other education institutions (e.g., universities, colleges, and others).
      The education program and final examination are delivered by education institutions (e.g., universities, colleges, and others).
      Other (please explain)


    75. Once qualified as a member of your professional body, can members offer their services directly to the public?
      Yes   No



    Section 7B -- Licensing


    76. Are there licensing requirements for auditors in your country?
      Yes (continue with Question 77)   No (proceed to Section 8)


    77. Who sets the requirements to obtain a license?
      Stated in CPAs Regulations which is issued by Royal Decree.


    78. What are the requirements to obtain a license (please select all relevant requirements.)?
      Academic study specific for obtaining a license
      Practical experience
      Licensing examination
      Final qualifying examination
      Other (please describe)


    79. Are there ongoing requirements to retain a license?
      Yes   No

      If YES, please select all relevant requirements.
      Continuing professional development
      Re-examination
      Other (please specify):


    80. What entity grants the license?
      Ministry of Commerce and Industry.


    81. Describe any additional licensing requirements for auditors of listed entities (e.g., additional education requirements, registration, etc.).
      To be enrolled in the Register of CPAs with the Ministry of Commerce and Industry.



    Section 8 -- Public Sector Accounting Standards


    Responses to this section will provide a description of the legal and professional framework governing public sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate, where appropriate, the role of your organization within this framework.

    Section 8A -- Statutory Framework


    82. Please provide the name of the Legal authority and/or self-regulatory rules establishing public sector accounting standards in your country, the date of last amendment and the name of the body responsible for setting public sector accounting standards. If the standards are different for different entities (e.g., whole of government, ministry/department, statutory authority/agency, profit entity owned by government, state governments, local governments, other [please specify]), please specify the details that apply to each.
      Type of entity Name of
      legal
      authority
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting public sector
      accounting standards
      Whole of government N. A. N. A.
      Ministry/department N. A. N. A.
      Statutory authority/agency N. A. N. A.
      Profit entity owned by government N. A. N. A.
      State governments N. A. N. A.
      Local governments N. A. N. A.
      Other (please describe) N. A. N. A.
      Other (please describe) N. A. N. A.

      a. How can IFAC obtain copies of these documents?

      N. A.

      b. Are the documents available in English?
      Yes   No



    Section 9 -- Private Sector Accounting Standards


    Responses to the questions in this section will provide a description of the legal, statutory and professional framework governing private-sector accounting standards in your country. The section focuses on the establishment of such standards. Please indicate what role your organization plays within this framework.

    Section 9A -- Statutory Framework


    94. Please provide the name of the Legal authority and/or self-regulatory rules that establish private-sector accounting standards in your country, the date of last amendment, and the name of the body responsible for setting private sector accounting standards. If the standards are different for different entities (for example, listed entities, private companies, governmental organization, not for profit organizations, etc.), please specify the requirements that apply to each.
      Type of entity Name of legal
      authority or
      applicable
      rules
      Date of last
      amendment
      (e.g. MM/YYYY 06/2001)
      Name of body responsible
      for setting private sector
      accounting standards
      Listed entity CPAs Regulations - SOCPA Accounting Standards Committee
      Other (please describe) Private companies See above -
      Other (please describe) - -
      Other (please describe) - -
      Other (please describe) - -

      a. How can IFAC obtain copies of these documents?

      From SOCPA

      b. Are the documents available in English?
      Yes   No


    Section 9B -- Standard-Setting (SOCPA Accounting Standards Committee)


    95. For SOCPA Accounting Standards Committee, please indicate the nature of the body (i.e., whether it is part of a government ministry or department, an agency appointed by government, a private organization established by the profession, or other [please describe]) and the name of the standards.
      a. Nature of body

      Private organization established by the profession.

      b. Name of standards

      SOCPA Accounting Standards.

      Please note that SOCPA Accounting Committee compares its standards with International Financial Reporting Standards as a part of its due process.


    96. How many voting members does the standard-setting body have?
      13


    97. Are the members of the standard-setting body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe:


    98. What are the criteria considered in selecting members of the standard-setting body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Best person for the job, including practioners private and public members and academics.


    99. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Member body.


    100. What is the term of appointment for members?
      4 Year(s)


    101. For how many years has the standard-setting body been in existence?
      12 Year(s)


    102. Please indicate the budget in US$ of the standard-setting body for the last fiscal year:
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      $ 83,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      03.75



    103. To what entity is the standard-setting body accountable?
      SOCPA Board.


    104. Describe the due process followed by the standard-setting body. Please include explanations of the following:
    1. public exposure of standards

      Exposure draft is publicly published for obtaining comments.

    2. accessibility of meetings (i.e., public or private)

      Meetings of the committee are private, however a public hearing is to be held for receiving comments.

    3. approval process for final standards (i.e., majority required to approve final standards)

      Majority required to approve final standards.

    4. other relevant due process activities

      --


    105. Approximately how many days per year does the standard-setting body meet in full session (including teleconferences)?
      15 Day(s)



    Section 10 -- Monitoring (Quality Assurance) and Enforcement


    Responses to the questions in this section will provide a description of the legal and professional framework governing regulation of the profession in your country. Please indicate what role your organization plays within this framework.

    Section 10A -- Securities Market Regulatory Authority


    106. Name the authority that regulates the securities market:
      Saudi Capital Market Authority.


    107. What responsibilities does this organization have for monitoring and enforcing compliance with accounting, reporting or auditing requirements? Please identify the Legal authority that establishes that responsibility:


    108. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      Capital Market Law:
      Article Six
      a. The Authority shall have the power to carry out its functions under this Law as well as the regulations, rules and instructions issued pursuant thereto including, but not limited the power to:
      9. In addition to other provisions of relevant regulations, the Authority shall have the right to establish
      standards and conditions required for the auditors who audit the books and records of the Exchange,
      the Depositary Center, brokerage companies, investment funds and joint stock companies listed on the Exchange. The Authority, subject to its supervisory responsibilities, shall have the right to delegate this responsibility to the Saudi Organization for Certified Public Accountants.
      10. Determine the contents of annual and periodical financial statements, reports and documents that
      should be submitted by issuers offering Securities for public subscription or the issuers whose
      Securities are listed on the Exchange.


    2. accounting and auditing standard-setting

      See (a) above.

    3. review of financial statements prepared by listed entities, and monitoring of their compliance with the accounting and disclosure requirements

      See (a) above.



    Section 10B -- Stock Exchange


    109. Name the four largest stock exchangers (by market capitalization) and whether it is organized as a profit or not-for-profit organization:
      Profit Not
      for
      profit
      Stock Exchange
      Saudi Capital Market Authority.
      -
      -
      -



    Section 10B -- Stock Exchange
    Saudi Capital Market Authority. Details


    110. For Saudi Capital Market Authority., is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      Through SOCPA.

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.

      See answer of question (124) of the Questionnaire.

    3. How enforcement actions are administered.

      Through the investigation committee.


    Section 10B -- Stock Exchange
    - Details


    110. For -, is there a mechanism at the stock exchange(s) for monitoring and enforcing financial reporting, accounting and auditing of listed entities?
      Yes   No

      If YES, please describe the following:

    1. How the monitoring and enforcement of financial reporting, accounting and auditing is conducted.

      Through SOCPA

    2. The consequences of non-compliance with the financial reporting, accounting or auditing requirements.

      See answer of question (124) of the Questionnaire.

    3. How enforcement actions are administered.

      Through the investigation committee.



    Section 10C -- Regulatory Oversight of the Accounting Profession


    111. Has an audit profession oversight body been established (e.g., to oversee the external quality assurance review process, etc.)?
      Yes   No

      If NO, proceed to the next section.

      If YES, please describe :

    1. What are the name and duties of the oversight body?

      Note:
      There is SOCPA Quality Review Committee that is supervised by SOCPA board of directors. This is not, however, intependent oversight body (For details see question 124).


    2. The number of members on the oversight body



    3. Its powers



    4. How the oversight body conducts or oversees a program of inspections to assess the degree of compliance of each audit firm/auditor with applicable auditing standards and regulations



    5. The sanctions the oversight body may impose in the event of non-compliance



    6. How the oversight body is accountable to any public institution or body



    Section 10D -- Banks Regulatory Authority


    112. Name the authority that regulates the banks and similar financial institutions. Discuss how this authority differentiates between accounting requirements for regulatory reporting and general purpose external financial reporting:
      Regulatory authority: Saudi Arabia Monetary Agency. The legal authority is the following banking control law: Article 1 In this Law the following expressions shall have the definitions specified in this Article: a."Bank" means any natural or juristic person practicing basically any of the banking business in the Kingdom. b."Banking Business" means the business of receiving money on current or fixed deposit account, opening of current accounts, opening of letters of credit, issuance of letters of guarantee, payment and collection of cheques, payment orders, promissory notes and similar other papers of value, discounting of bills, bills of exchange and other commercial papers, foreign exchange transactions and other banking business. c."National bank" means a bank the head office and branches of which are situated in the Kingdom. "Foreign Bank" means a bank with branches in the Kingdom and its head office outside it. "Agency" means the Saudi Arabian Monetary Agency. "Invested Capital, means the capital assigned by a foreign bank for the capital use of its branches in the Kingdom. Article 2 No person, natural or juristic, unlicensed in accordance with the provisions of this Law, shall carry on basically any of the banking business. However, a. Juristic persons licensed in accordance with another law or special decree to carry on banking business may practice such business within the limits of their intended purposes. b. Licensed moneychangers may practice basically exchange of currency in the form of notes and coins, but no other banking business. Article 3 All applications, for the grant of licenses to carry on banking business in the Kingdom, shall be addressed to the Agency which will study the applications after obtaining all the necessary information and submit its recommendations to the Minister of Finance and National Economy. The license for a National Bank shall stipulate the following: 1. It shall be a Saudi Joint Stock Company. 2. The paid-up capital shall not be less than Rls. 2.5 million and all subscriptions towards share capital shall be payable in cash. 3. The founders and members of the board of directors shall be persons of good reputation. 4. The memorandum and articles of association shall be acceptable to the Minister of Finance and National Economy. In the case of a Foreign Bank wishing to set up a branch or branches in the Kingdom, the grant of a license shall be subject to such conditions as the Council of Ministers may stipulate upon the recommendation of the Minister of Finance and National Economy. The license shall in all cases be issued by the Minister of Finance and National Economy after the approval of the Council of Ministers. Article 4 As an exception to the provisions of the previous Article, the licenses or authorizations previously issued to the persons carrying on banking business in the Kingdom and effective at the time of promulgation of this Law shall continue to be recognized. The Agency may, however, call such documents and information from these persons, as it may deem necessary. The Agency with the approval of the Council of Ministers may call upon them to comply with all or any of the provisions of Article 3 of this Law within such period as it may fix. Article 5 Any person not authorized basically to carry on banking business in the Kingdom is not allowed to use the word "Bank", or its synonyms, or any similar expression in any language on his papers or printed matter, or in his commercial address, or his name or in his advertisements. Article 6 The deposit liabilities of a bank shall not exceed fifteen times its reserves and paid-up or invested capital. If the deposit liabilities exceed this limit, the bank must within one month of the date of submission of the statement referred to in paragraph 1 of Article 15, either increase its capital and reserves to the prescribed limit or deposit fifty percent of the excess with the Agency. Article 7 Every bank shall maintain with the Agency at all times a statutory deposit of a sum not less than fifteen percent of its deposit liabilities. The Agency may, if it deems it to be in the public interest, vary the aforesaid percentage provided that it shall not be reduced below 10 percent nor increased to more than 17.5 percent. The Agency may, however, vary these two limits with the approval of the Minister of Finance and National Economy. In addition to the statutory deposit provided for in the previous paragraph, every bank shall maintain a liquid reserve of not less than 15 percent of its deposit liabilities. Such reserve shall be in cash, gold or assets, which can be converted into cash within a period not exceeding 30 days. The Agency may, if deemed necessary, increase the aforesaid percentage up to twenty percent. Article 8 No bank shall grant a loan or extend a credit facility, or give a guarantee or incur any other financial liability with respect to any natural or juristic person for amounts aggregating more than 25 percent of the Bank's reserves and paid-up or invested capital. The Agency may, in the public interest, and subject to such conditions as it may impose, increase this percentage up to 50 percent. The provisions of the above paragraph do not apply to transactions between banks or between head offices and their branches or between these branches. Article 9 No bank shall undertake the following transactions: 1. Granting a loan or extending credit facilities, or issuing a guarantee or incurring any other financial liability on the security of its own shares. 2. Granting, without security, a loan or credit facilities, or issuing a guarantee or incurring any other financial liability in respect of: a. Member of its Board of Directors or its Auditors. b. Establishments not taking the form of joint-stock companies in which any of its Directors or Auditors is a partner or is a manager or has a direct financial interest. c. Persons or establishments not taking the form of joint stock companies in cases where any of the Bank's directors or Auditors is a Guarantor. 3. Granting, without security, a loan or a credit facility or giving a guarantee or incurring any other financial liability in favor of any of its officials or employees for amounts exceeding four months salary of any such concerned person. Any bank director or auditor or manager who contravenes paras 2 and 3 of this Article, shall be considered as having resigned his position. Article 10 No bank shall undertake any of the following activities: 1. To engage, whether for its own account or on a commission basis, in the wholesale or retail trade including the import or export trade. 2. To have any direct interest, whether as a stock-holder, partner, owner, or otherwise, in any commercial, industrial, agricultural or other undertaking exceeding the limits referred to in para 4 of this Article, except when such interest results from the satisfaction of debts due to the bank, provided that all such interests shall be disposed of within a period of two years or within any such longer period as may be determined in consultation with the Agency. 3. To purchase, without the approval of the Agency, stocks and shares of any bank conducting its business in the Kingdom. 4. To own stocks of any other joint-stock company incorporated in the Kingdom, in excess of ten percent of the paid up capital of such a company provided that the nominal value of these shares shall not exceed twenty percent of the bank's paid-up capital and reserves; the above limits may, when necessary, be increased by the Agency. 5. To acquire or lease real estate except in so far as may be necessary for the purpose of conducting its banking business, housing of its employees or for their recreation or in satisfaction of debts due to the Bank. In cases where a bank acquires real estate in satisfaction of debts due to it and such real estate is not necessary for the Bank's own banking business or housing of its employees or for their recreation, it shall dispose of it within three years of its acquisition or, in exceptional and justifiable circumstances, within such period or periods as may be approved by the Agency and subject to such conditions as it may deem fit to prescribe. As an exception to the provisions of para 5 of this Article, the bank may, in special and justifiable circumstances and with the approval of the agency, acquire real estate, the value of which shall not exceed 20 percent of its paid-up capital and reserves. Article 11 Banks are precluded from undertaking any of the following operations except after the written approval of the Agency and according to the conditions it prescribes: a. Altering the composition of their paid-up or invested capital. b. Entering into any scheme of amalgamation or participation in the business of another bank or another establishment carrying on banking business. c. Acquiring shares in a company established outside the Kingdom. d. Ceasing to carry on banking business. In such a case, the Agency must, before agreeing to this cessation, ascertain that the Bank has made necessary arrangements to safeguard the rights of the depositors. e. Opening branches or other offices in the Kingdom and also opening of branches or other offices by national banks outside the Kingdom. Before granting the written license provided for under this paragraph, the Agency should get the approval of the Minister of Finance and National Economy. Article 12 No person shall be a director of more than one bank. No person in the following cases shall be elected as a director or shall become a manager of any bank without prior written approval of the Agency: If he occupied a similar position in a banking concern that was wound up, even if the liquidation had been made before the promulgation of this Law. Such approval shall not be given by the Agency until it becomes clear that the person concerned was not responsible for that liquidation. b. If he was removed from a similar post in any banking establishment, even if such removal was before the promulgation of this Law. The approval of the Agency shall in this case be based on acceptable reasons. Any director or manager of a bank, who is adjudicated bankrupt or convicted of a moral offense, shall be considered as having resigned his post. Article 13 Every bank shall, before declaring distribution of any profits, transfer a sum equal to not less than 25 percent of its net profits, to the statutory reserve, until the amount of that reserve equals as a minimum of the paid-up capital. Amended Clause*) No bank shall pay dividends or remit any part of its profits abroad, until its aggregate foundation expenditures and losses incurred have completely been written off, and after deducting not less than 10% of the value of capitalized expenditures until all these expenditures have been completely written off. (Amended in accordance with Royal Decree No. M/2 dated 6.1.1391 AH.) Any action taken to declare or pay dividends in contranvention to the provisions of this Article shall be considered null and void. Article 14 Every bank shall appoint annually two auditors from amongst the approved list of auditors registered with the Ministry of Commerce and Industry. The Auditors shall submit a report on the Balance sheet and profit and loss account. This report shall include whether in the auditor's opinion the Bank's balance sheet duly and correctly represents its financial position and the extent of their satisfaction with any explanations or information they may have requested from the bank's manager or other staff. With regards to banks taking the form of a company, the report referred to in the above paragraph shall be read together with the annual report of the Bank management in the General Meeting, which must be held within the six months following the end of the bank's financial year. The bank management should send copies of these two reports to the Agency. The provisions of the first para of this Article shall apply to foreign banks in respect of their branches operating in the Kingdom. They should send a copy of the Auditor's report to the Agency. Article 15 Every bank shall furnish the Agency by the end of the following month with a consolidated monthly statement of its financial position relating to the previous month, which shall be true and correct, and be in the form prescribed by the Agency. Every bank shall also furnish the Monetary Agency within six months of the close of its financial year with a copy of its annual balance sheet and profit and loss accounts certified by its auditors in the form prescribed by the Agency. Article 16 The Monetary Agency may, with the approval of the Minister of Finance and National economy, issue general rules regarding the following matters: 1.The maximum limits of total loans that can be extended by a bank or banks. 2.The prohibition or limitation of specified categories of loans or other transactions. 3.Fixing the terms and conditions, which banks, should take into consideration when carrying out certain types of transactions for their customers. 4.The cash margins to be obtained by banks against specified categories of credits or guarantees. 5.The minimum ratio to be observed between the limits for loans and the collateral for such loans. 6.Fixing the assets to be maintained by each bank within the Kingdom. Such assets should not fall below a certain percentage of the Bank's deposit liabilities, which shall be fixed by the Agency from time to time. The Agency may, from time to time, issue decisions concerning the following: 1. Definition of the expression "deposit liabilities" referred to in this Law. 2. Determination of bank holidays and bank business hours. Article 17 The Agency may, at any time, request any bank to supply it, within a time limit it will specify and in the manner it will prescribe, with any information that it deems necessary for ensuring the realization of the purposes of this Law. Article 18 The Agency may, with the approval of the "Minister of Finance and National Economy, conduct an inspection of the books and accounts of any bank, either by the Agency's own staff or by outside auditors assigned by it. The examination of the bank's books and accounts should take place in the bank's premises. In such a case the bank staff must produce all the required books and records of accounts and other documents in their custody or within their authority and must furnish any information they have relating to the bank. Article 19 Any person who comes into possession of information during the performance of his duties in the implementation of this Law, is not allowed to disclose such information or to make use of it in any manner. Article 20 The Agency shall periodically publish combined statements of the principal data contained in the returns mentioned in Article 15. Article 21 The Minister of Finance and National Economy, in exceptional circumstances, and with the prior approval of the Council of Ministers, may exempt any bank from any provision of this Law or from the regulations issued in execution thereof for a limited period and subject to such other conditions as may be laid down in each case. Article 22 If the Agency finds that a bank has failed to comply with the provisions of this Law, or with the provisions of any regulations issued under this Law, or if a Bank adopts a policy that might seriously affect its solvency or liquidity, it may, with the approval of the Minister of Finance and National Economy, take one or more of the following measures: a. Appoint one or more advisers to advise the bank in the conduct of its business. b. Order the suspension or removal of any director or officer of the bank. c. Limit or suspend the granting of credits or the acceptance of deposits. d. Require the bank to take such other steps, as it may consider necessary. If the Agency finds that a bank persistently contravenes the provisions of this Law or the decisions or regulations made thereunder, it may call upon such a bank to submit its reasons for the contravention, accompanied by its proposals to rectify the position within a stated period. If the Agency is of the opinion that such proposals are not sufficient for their purpose or if the bank fails to implement an agreed or prescribed course of action within the stated period, the Minister of Finance and National Economy may, subject to the approval of the Council of Ministers, revoke the license of the said bank. Article 23 1. Any person who contravenes the provisions of para 1 of Article 2, Article 5 and items a, b and c of para 1 of Article 11, Article 12 and Article 18, shall be liable to imprisonment for a term not exceeding two years and to a fine not exceeding Rls 5,000 for every day the offense continues or to either of these penalties. 2.Any person who contravenes the provisions of Article 19 shall be liable to imprisonment for a term not exceeding two years and to a fine not exceeding Rls 20,000 or to either of these penalties. 3.Any person who contravenes the provisions of Articles 8, 9 and 10 shall be liable to imprisonment for a term not exceeding six months and to a fine not exceeding Rls 10,000 or to either of these penalties. 4.Any person who contravenes the provisions of articles 7, 14 and 15 shall be liable to a fine not exceeding Rls 500 for every day the contravention continues. 5.Any person who contravenes any other provision of this Law or the regulations and decisions issued in execution thereof shall be liable to a fine not exceeding Rls 5,000. 6.In the event that offenses punishable according to paras 2,3 and 5 of this Article are committed by the same person for one purpose and provided that such offenses are inter-related as to object and timing, they are to be considered as one offense punishable by one penalty. In imposing the penalties contained in this Article it is to be observed that should an offense be punishable by more than one penalty, the offender shall be subjected to the severest. Article 24 The Chairman, the Managing Director, the Directors, head office Manager and Branch manager shall be responsible, each within his own jurisdiction, for any contravention of this Law or the decisions and rules issued for its execution. Article 25 The Minister of Finance and National Economy shall appoint a committee of three persons from outside the Agency and specify the conditions and measures to be observed in adjudging contraventions punishable under this Law at the request of the Agency. Article 26 The Deputy Premier and the Minister of Finance shall put this Law into effect and it shall come into force from the date of its publication.


    113. Discuss briefly the legal requirements with respect to monitoring and enforcement by the regulatory authority of accounting and auditing standards that apply to the banks and similar financial institutions:
      See answer of question (112) above.


    114. Briefly describe the role of the regulatory authority as it relates to the following:
    1. regulation of the audit profession

      See answer of question (112) above.

    2. accounting and auditing standard-setting

      See answer of question (112) above.

    3. review of financial statements prepared by listed entities

      See answer of question (112) above.

    4. enforcement of accounting, reporting and auditing requirements

      See answer of question (112) above.



    Section 10E -- Non-Banking Financial Institutions Regulatory Authority


    115. Name the regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on non-banking institutions.
      Saudi Organization for Certified Public Accountants (SOCPA).


    116. What is the source of Legal authority of the regulatory authority(ies)?
      Royal Decree.


    117. Briefly describe the role of the regulatory authority(ies) as it relates to the following:
    1. regulation of the audit profession

      Article (19): An organization shall be established under the name of (Saudi Organization for Certified public Accountants). It shall operate under the supervision of the Ministry of Commerce in order to promote the accountancy and auditing profession and all other related matters that might lead to the development of this profession and raising its status. This Organization shall be specifically entrusted with the following : 1. Review, develop and approve accounting and auditing standards. 2. Establish the necessary rules for fellowship certificate examination provided that such rules cover the professional, practical, theoretical aspects of the audit profession including all Regulations pertaining to the profession. 3. Organize courses of continuous education. 4. Conduct special research work and studies covering accounting, auditing and other allied subjects. 5. Publish periodicals, books and bulletins covering accounting and auditing subjects. 6. Establish an appropriate quality review program in order to ensure that Certified Public Accountants comply with accounting and auditing standards and the provisions of these Regulations and its by - laws. 7. Participate in local and international committees and symposiums relating to the profession of accounting and auditing.

    2. accounting and auditing standard-setting

      See (a) above.

    3. review of financial statements prepared by listed entities

      See (a) above.

    4. enforcement of accounting, reporting and auditing requirements

      See (a) above.



    Section 10F -- Insurance Companies Regulatory Authority


    118. Name the regulatory authority responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements imposed on insurance companies.
      Saudi Arabian Monetary Agency.


    119. What is the source of Legal authority of the regulatory authority(ies)?
      Royal Decree.


    120. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession

      Law On Supervision of Cooperative Insurance Companies : Article10: 1. The general assembly of the insurance or re-insurance company shall, each year, appoint two auditing firms licensed to operate in the Kingdom and fix their remuneration. 2. The annual report submitted by the auditors to the general assembly must include, in addition to the particulars provided for in the Companies Law, the auditors opinion as to whether companys financial statements fairly reflect its financial position as of the date of the balance sheet and the result of its operations in the financial year then ending, as well as whether the preparation, presentation and auditing of these statements have been done in accordance with the accounting principles applicable in the Kingdom. 3. The financial statements and the auditors report must be published within three months from the expiry of the companys financial year. Article 11: The Agency shall have the right to require the insurance and re-insurance companies to provide it, in the form and at the dates it deems appropriate, with any information it sees necessary to realize the objectives of this Law. Such companies must forward to the Agency, upon its request, the following documents: 1. A statement of the revenues and expenses for each insurance class. 2. A detailed statement on its insurance operations during the period. 3. Statistics and general information on their activities. 4. A statement of their investments. 5. Any other statements required by the Agency. Article 17: All insurance and re-insurance companies subject to the provisions hereof must maintain a separate account for each insurance class in accordance with the requirements of the Implementing Regulations of this Law. They must also maintain records and books in which shall be entered the insurance policies issued by the company, the names and addresses of the policy holders, the date of executing each policy, its validity, the rates and conditions stated therein and any amendment or alterations effected thereon. The Agency may, at its own direction, issue resolutions requiring insurance companies to enter in such records and books any information needed for exercising the Agency's supervisory powers. Such recorded data and information may be stored on the computer under the rules and procedure set force in the Implementing Regulations of the Commercial Books Law.

    2. accounting and auditing standard-setting

      See (a) above.

    3. review of financial statements prepared by listed listed entities

      See (a) above.

    4. enforcement of accounting, reporting and auditing requirements

      See (a) above.



    Section 10G -- Other Regulatory Authority


    121. Name any other regulatory authority(ies) responsible for monitoring compliance with and enforcing accounting, reporting and auditing requirements.
      -


    122. What is the source of Legal authority of each regulatory authority?
      -


    123. Briefly describe the role of the regulatory authority(ies) as it relates to the following
    1. regulation of the audit profession

      -

    2. accounting and auditing standard-setting

      -

    3. review of financial statements prepared by listed listed entities

      -

    4. enforcement of accounting, reporting and auditing requirements

      -



    Section 10H -- Quality Assurance


    124. Does any organization of professional accountants/auditors organize a program of quality assurance review to monitor compliance with accounting, reporting and auditing requirements?
      Yes   No

      If NO, proceed to next Section.

      If YES, briefly describe the monitoring and enforcement mechanism.



    125. Under what authority does the organization conduct the program of quality assurance review?
      Under the CPAs Regulations issued by Royal Decree.


    126. Who performs the review (e.g., one firm reviewing another firm, staff from the national professional organization, contractors, or a combination of these)?
      Review team assigned by SOCPA.



    Section 10 I -- Investigation and Discipline


    127. Is there a process for investigating and disciplining the accounting profession in your country?

    128. Which of the following best describes the responsibility for the investigatory and disciplinary function in your country?
      Government or other agencies are solely responsible for this function.
      Government or other agencies have this responsibility, but the member body or bodies participate in the process.
      Government formally delegates this function to the member body or bodies, to exercise on its behalf.
      Member body or bodies have separate and independent processes that operate alongside processes of legal authorities.
      Other (please explain)


    129. Please indicate the name of the body or bodies responsible for investigation and discipline.
      The investigation committee, Ministry of Commerce and Industry.


    Responses to the remaining questions in this Section are required if your organization has responsibility for investigation and disciplinary actions.

    130. How many voting members does the body have?
      3


    131. Are the members of the body involved on a voluntary basis or employed by the standard-setting body?
      Voluntary  
      Employed  
      Both - Please describe: Two employed and one volentary.


    132. What are the criteria considered in selecting members of the body (e.g., best person for the job, sector of the profession, private and public members, academic, geographical representation, etc.)?
      Decided by CPAs Regulations.


    133. Who appoints these members (e.g., member body, government, user, regulator, etc.)?
      Minister of Commerce and Industry.


    134. What is the term of appointment for members?
      3 Year(s)


    135. For how many years has the body been in existence?
      11 Year(s)


    136. Please indicate the budget in US$ of the body for the last fiscal year.
      Note: Please enter a whole number using commas (e.g., 4,000,000)

      $ 10,000

      Please enter the exchange rate used to calculate this number.

      Note: Please enter a decimal amount (e.g., 4.0027)

      03.75 (specify currency)



    137. To what entity is the body accountable?
      1. Ministry of Commerce and Industry
      2. SOCPA.



    138. Approximately how many days per year does the body meet in full session (including teleconferences)?
      7 Day(s)



     

     

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