Saudi Arabia

Member Organizations

Member Organization Associate

  Saudi Organization for Certified Public Accountants

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    The Companies Act No. M/6 of 1965 (as amended in 2016) defines the accounting, auditing, and financial reporting requirements in the Kingdom of Saudi Arabia. Certified Public Accountants (CPA) Regulation No. M12 of 1991 stipulates that the Saudi Organization for Certified Public Accountants (SOCPA) is the accounting and auditing standard-setter under the supervision of the Ministry of Commerce for all companies.

    Accounting Framework

    Public interest entities (PIEs) in Saudi Arabia are defined as banks and insurance companies, while all other entities are considered non-PIEs. PIEs are required to use SOCPA-endorsed IFRS, in line with the Companies Act No. M/6 of 1965 (as amended in 2016), the SAMA Banking Control Law of 2008, and SAMA’s By-Laws.

    The ‘endorsed’ standards are IFRS as issued by the IASB in addition to requirements and disclosures added to some standards by SOCPA. The ‘other standards and pronouncements’ are those standards and technical releases that are endorsed by SOCPA for matters not covered by IFRS such as the subject of Zakat (religious tax/obligation).

    SOCPA adopted IFRS for SMEs as of January 2018 for non-PIEs. The only modifications made by SOCPA were to add some disclosures, mainly to reflect Sharia or local law. SMEs are also permitted to use full IFRS as endorsed by SOCPA, with two conditions (i) SMEs must apply full IFRS in full, not selectively; and (ii) once an SME elects to use full IFRS, it must continue applying those standards.

    Auditing Framework

    In accordance with the Companies Act, all joint stock companies, limited liability companies, and brokerages are required to have mandatory annual audits of their financial statements.

    SOCPA reports that it requires the application of ISA in Saudi Arabia with the following additional requirements: (i) audit documentation (ISA 230) can be retained for at least 10 years; and (ii) footnotes are required in audit reports. As of 2019, the 2018 version of ISA has been endorsed for application in the jurisdiction. SOCPA translated the handbook in line with IFAC translation policy, available here.

  • Regulation of Accountancy Profession

    Professional accountants are subject to regulation by the Saudi Organization for Certified Public Accountants (SOCPA) in accordance with the Certified Public Accountants (CPA) Regulation No. M12 of 1991 under the supervision of the Ministry of Finance.

    Subject to oversight by the Ministry of Commerce, SOCPA is responsible for: (i) setting accounting and auditing standards; (ii) establishing ethical requirements; (iii) administering professional examinations and delivering continuing professional development programs; (iv) approving CPA offices that can offer training to candidates wishing to fulfill the requirements for certification; and (v) establishing and operating a quality assurance review system. Investigation and discipline of members of the profession is the responsibility of a committee that was established by the Ministry of Commerce and includes a SOCPA representative.

    The CPA Regulation, along with SOCPA’s internal regulations, specify initial and continuing professional development (IPD and CPD, respectively) requirements, and outline the areas of responsibility of other entities involved in regulation which includes the Ministry of Higher Education. While the Ministry of Higher Education sets the accountancy degree criteria, SOCPA establishes and provides professional examinations as well as the accountancy education program that is needed.

    In order to obtain the CPA designation, the law stipulates that individuals are required to be Saudi nationals; have at least a bachelor’s level degree in accounting or equivalent (as determined by the Ministry of Higher Education); fulfill practical experience requirements; and become members of SOCPA. CPAs are required to complete a CPD requirement of 20 CPD units (60 hours) every year. CPAs may obtain an audit license from the Ministry of Commerce, which is also the entity responsible for maintaining the audit registry.

    In line with Article 20 of the CPA Law, individuals with bachelor’s level degrees in accounting or equivalent (as determined by the Ministry of Higher Education) may apply for membership as CPA trainees, and are referred to as “Associate Members.” Associate Members can practice bookkeeping. Associate Members are subject to SOCPA’s rules and regulations, including CPD requirements.

  • Audit Oversight Arrangements

    There is no independent audit oversight arrangement in Saudi Arabia.

    In line with the Certified Public Accountants (CPA) Regulation No. M12 of 1991, auditors are regulated by the Saudi Organization for Certified Public Accountants (SOCPA) under the supervision of the Ministry of Commerce.

    CPAs may obtain an audit license from the Ministry of Commerce, which is also the entity responsible for maintaining the audit registry.

    Subject to oversight by the Ministry of Commerce, SOCPA is responsible for: (i) setting auditing standards; (ii) establishing ethical requirements; (iii) administering professional examinations and delivering continuing professional development programs; (iv) approving CPA offices that can offer training to candidates wishing to fulfill the requirements for certification; and (v) establishing and operating a quality assurance review system. Investigation and discipline of members of the profession is the responsibility of a committee that was established by the Ministry of Commerce and includes a SOCPA representative.

  • Professional Accountancy Organizations

    Saudi Organization for Certified Public Accountants (SOCPA)

    SOCPA was established in 1992 as a mandatory membership organization for Certified Public Accountants (CPAs) in accordance with the CPA Regulation No. M12 of 1991 to regulate professional accountants.

    Subject to oversight by the Ministry of Commerce, SOCPA is responsible for: (i) setting accounting and auditing standards; (ii) establishing ethical requirements; (iii) administering professional examinations and delivering continuing professional development programs; (iv) approving CPA offices that can offer training to candidates wishing to fulfill the requirements for certification; and (v) establishing and operating a quality assurance review system. Investigation and discipline of members of the profession is the responsibility of a committee that was established by the Ministry of Commerce and includes a SOCPA representative.

    In addition to being a Member of the International Federation of Accountants, SOCPA is a member of the Asian-Oceanian Standard-Setters Group and the Gulf Cooperation Council Accounting & Auditing Organization.

  • Projects or Other Information

Adoption of International Standards

  • Quality Assurance

    The Certified Public Accountants Regulation No. M12 of 1991 require the establishment of a mandatory quality assurance (QA) review system for all audits in Saudi Arabia.

    The Saudi Organization for Certified Public Accountants (SOCPA) is responsible for establishing and operating a QA review system, under the supervision of the Ministry of Commerce. SOCPA uses a cycle-based approach where quality control reviews take place every three years for public interest entities (PIEs), and every five years for non-PIEs. PIEs are defined as banks and insurance companies, and all other entities are considered non-PIEs.

    SOCPA adopted ISQC 1 without any modifications in March 2016, which came into effect in January 2017.

    SOCPA reports that the QA review system is in line with the requirements of SMO 1.

    Current Status: Adopted

  • International Education Standards

    The CPA Regulation, along with SOCPA’s internal regulations, specify initial and continuing professional development (IPD and CPD, respectively) requirements, and outline the areas of responsibility of other entities involved in regulation which includes the Ministry of Higher Education. While the Ministry of Higher Education sets the accountancy degree criteria, the Saudi Organization for Certified Public Accountants (SOCPA) establishes and provides professional examinations as well as the accountancy education program that is needed.

    In order to obtain the CPA designation, the law stipulates that individuals are required to be Saudi nationals; have at least a bachelor’s level degree in accounting or equivalent (as determined by the Ministry of Higher Education); fulfill practical experience requirements; and become members of SOCPA. CPAs are required to complete a CPD requirement of 20 CPD units (60 hours) every year. CPAs may obtain an audit license from the Ministry of Commerce, which is also the entity responsible for maintaining the audit registry.

    In line with Article 20 of the CPA Law, individuals with bachelor’s level degrees in accounting or equivalent (as determined by the Ministry of Higher Education) may apply for membership as CPA trainees, and are referred to as “Associate Members.” Associate Members can practice bookkeeping. Associate Members are subject to SOCPA’s rules and regulations, including CPD requirements.

    SOCPA reported that it was in the process of executing plans to be fully complaint with revised 2015 IES, which emphasize competency-based learning, by the end of 2017. As of the date of the assessment, further information is needed to confirm if the national accountancy education requirements have incorporated the revised IES.

    Current Status: Partially Adopted

  • International Standards on Auditing

    The Certified Public Accountants (CPA) Regulation No. M12 of 1991 designates the Saudi Organization for Certified Public Accountants (SOCPA) as the audit standard-setter in the jurisdiction, under the supervision of the Ministry of Commerce.

    SOCPA reports that it requires the application of ISA as endorsed with the following additional requirements: (i) audit documentation (ISA 230) can be retained for at least 10 years; and (ii) footnotes are required in audit reports.

    As of 2019, the 2018 version of ISA has been endorsed for application in the jurisdiction. SOCPA translated the handbook in line with IFAC translation policy, available here.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    The Certified Public Accountants (CPA) Regulation No. M12 of 1991 delegates authority to the Saudi Organization for Certified Public Accountants (SOCPA) to set ethical requirements for professional accountants, under the supervision of the Ministry of Commerce.

    As of the date of the assessment, SOCPA reports that its Code of Ethics and independence requirements are based on the 2016 IESBA Code of Ethics.

    It remains unclear if SOCPA is planning to converge with the 2018 International Code of Ethics for Professional Accountants (including International Independence Standards) which came into effect in June 2019.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    The Ministry of Finance and the General Auditing Bureau are responsible for defining public sector accounting standards subject to approval by the Council of Ministers.

    The Saudi Organization for Certified Public Accountants (SOCPA) reports that as of the date of the assessment, IPSAS have been adopted without any amendments. It also indicates that implementation of IPSAS is expected to be completed by 2021.

    The 2018 Arabic version of the IPSASB Handbook is available here.

    Current Status: Adopted

  • Investigation and Discipline

    In accordance with the Certified Public Accountants (CPA) Regulation No. M12 of 1991, the Ministry of Commerce is responsible for establishing and operating an investigative and disciplinary (I&D) system for professional accountants.

    It includes a representative from the Saudi Organization for Certified Public Accountants (SOCPA) Board, Deputy Minister of Commerce, and a legal advisor.

    SOCPA completed an assessment of the I&D system and reports that the I&D system is in line with the requirements of SMO 6.

    Current Status: Adopted

  • International Financial Reporting Standards

    Certified Public Accountants (CPA) Regulation No. M12 of 1991 stipulates that the Saudi Organization for Certified Public Accountants (SOCPA) is the accounting standard-setter under the supervision of the Ministry of Commerce for all companies.

    Public interest entities (PIEs) in Saudi Arabia are defined as banks and insurance companies, while all other entities are considered non-PIEs. PIEs are required to use SOCPA-endorsed IFRS, in line with the Companies Act No. M/6 of 1965 (as amended in 2016), the SAMA Banking Control Law of 2008, and SAMA’s By-Laws.

    The ‘endorsed’ standards are IFRS as issued by the IASB in addition to requirements and disclosures added to some standards by SOCPA. The ‘other standards and pronouncements’ are those standards and technical releases that are endorsed by SOCPA for matters not covered by IFRS such as the subject of Zakat (religious tax/obligation).

    SOCPA adopted IFRS for SMEs as of January 2018 for non-PIEs. The only modifications made by SOCPA were to add some disclosures, mainly to reflect Sharia or local law. SMEs are also permitted to use full IFRS as endorsed by SOCPA, with two conditions (i) SMEs must apply full IFRS in full, not selectively; and (ii) once an SME elects to use full IFRS, it must continue applying those standards.

    Current Status: Adopted

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

Methodology

Methodology
Last updated: 12/2019
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