Saudi Organization for Certified Public Accountants
Member | Established: 1992 | Member since 1993
SOCPA, which comprises accountants, auditors, and bookkeepers, was established in 1992 in accordance with the Certified Public Accountants (CPA) Regulation No. M12 of 1991. Only Certified Public Accountants are required to be members of SOCPA according to the Regulation. It also requires SOCPA to regulate the profession under the supervision of the Ministry of Commerce. Its key functions include (i) accounting and auditing standard setting; (ii) defining ethical standards; (iii) administering professional examinations and delivering continuous professional development programs; (iv) approving CPA offices that can offer training to candidates wishing to fulfill the requirements for certification; and (iv) designing and operating a quality assurance review system.
SOCPA is a member of the Asian-Oceanian Standard-Setters Group and the Gulf Cooperation Council Accounting & Auditing Organization. A SOCPA representative is also serving as a Trustee on the IFRS Foundation for a second three-year term.
Statements of Membership Obligation (SMO)
The Statements of Membership Obligations form the basis of the IFAC Member Compliance Program. They serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members.
- SMO 1: Quality Assurance
SOCPA has direct responsibility for establishing a mandatory quality assurance (QA) review system for all audits of financial statements, and since 2001, has operated a QA review system in line with the main SMO 1 requirements as indicated in the self-assessment.
In March 2016, the SOCPA Board adopted ISQC 1 without any modifications, to be applied for audits related to accounting periods beginning January 1, 2017. SOCPA is focused on assisting its members with the implementation of ISQC. For example, SOCPA issues guidelines and a quality control manual. SOCPA reports in its SMO Action Plan that in December 2016, it completed its translation of the Institute of Chartered Accountants of Pakistan’s Audit Practices Manual (2012) into Arabic for use by SMPs in the jurisdiction. It also works with other organizations, such as the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Pakistan, to improve its QA review process and procedures.
In February 2017, SOCPA’s Quality Review Committee recruited an external consultant to review SOCPA’s QA review process and recommend improvements.
SOCPA indicated in its 2017 SMO Action Plan that it plans to provide its members with the Arabic version of the IFAC SMP Quality Control Guide. As of the date of the assessment, IFAC has received a signed agreement from SOCPA in line with IFAC’s Translation Policy.
Based on the comments in the institute’s self-assessment of its existing QA review system and SMO 1 requirements, SOCPA is encouraged to provide specific examples in the SMO 1 Background Note on the training sessions provided to accounting firms. In its Action Plan, SOCPA is encouraged to describe specific ongoing and planned activities of how it is supporting its members with the implementation of QA reviews. Additionally, further information on the number of QA reviews conducted would be helpful.
- SMO 2: International Education Standards
SOCPA is in charge of professional examinations, continuing professional development, and approves CPA offices that can offer training to candidates wishing to fulfill the requirements for certification. SOCPA is in the process of bringing its education requirements in line with IES. It reports that as of May 2017, SOCPA’s examinations no longer refer to local standards, and are now based on international standards.
Since the Ministry of Higher Education determines requirements for obtaining an accounting degree, SOCPA engages with it to promote IES, as well as to identify any gaps with IES requirements. It notifies the Ministry of Higher Education of all new and revised IES and other pronouncements issued by the IAESB as its Education Committee monitors new and revised standards promulgated by the IAESB.
In December 2016, SOCPA reportedly completed its translations of various books on auditing and accounting for use in Saudi Universities. SOCPA also reports in its 2017 SMO Action Plan that it will translate the revised IES into Arabic by December 31, 2017. However, as of the date of the assessment, IFAC has not received a signed agreement from SOCPA in line with IFAC’s Translation Policy for IES.
SOCPA is encouraged to report on the extent to which the national system for accountancy education aligns with the revised IES requirements (effective as of July 2016) and consider developing a specific plan with a defined timeline to eliminate differences, if any. SOCPA should also consider participating in the international standard-setting process by providing comments on Exposure Drafts and other pronouncements issued by the IAESB.
- SMO 3: International Standards on Auditing
SOCPA has direct responsibility for adoption of auditing standards and formally announced its intention to adopt ISA by endorsement in 2012. SOCPA conducted a study to determine whether any changes were needed to be made to the applicable standards. As of January 2017, SOCPA reports that it requires the application of ISA (2016–2017 version) as endorsed for application in Saudi Arabia effective January 2017 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.
SOCPA reports that it monitors new and revised standards promulgated by the IAASB with the intention of updating education / examination requirements and translating the standards accordingly on an ongoing basis.
To support implementation, SOCPA notifies its members of all new and revised ISA and other pronouncements issued by the IAASB through its website and magazine, and provides training and implementation guidance to promote proper understanding and use of ISA. SOCPA also developed a certification examination on ISA for its members in May 2017. It is unclear if SOCPA monitors its members’ application of ISA through its QA review system.
In its SMO Action Plan, SOCPA is encouraged to provide recent and planned examples of trainings and learning activities it undertakes to support its members with the implementation of applicable auditing standards. It is also encouraged to clarify whether it has initiated the translation process for ISA, and if so, which version (year) of the Handbook it plans to translate. Lastly, the association is encouraged to provide information on how it monitors members’ application of ISA through its Quality Assurance review system.
- SMO 4: Code of Ethics for Professional Accountants
SOCPA has direct responsibility for developing ethical standards for its members and reports in its 2017 SMO Action Plan that its Code of Ethics are being converged with the 2010 IESBA Code of Ethics (Arabic). It is unclear, however, if the convergence process has been completed as of the date of the assessment.
SOCPA reports that it monitors new and revised standards or pronouncements issued by IESBA with the intention of updating its translation of the Code of Ethics. As of the date of the assessment, IFAC has not received a signed agreement from SOCPA in line with IFAC’s Translation Policy for the IESBA Code of Ethics.
SOCPA assists members in complying with the prescribed ethical standards by ensuring that they have access to rules and regulations on the website, via print media, and published reports on disciplinary hearings.
Lastly, SOCPA signed a contract with the Institute of Chartered Accountants of England and Whales (ICAEW) to provide free access to its small and medium practices for the ICAEW portal, which provides online information and knowledge on ethical standards.
SOCPA is encouraged to develop implementation guidance, if possible, to further support member compliance with applicable requirements and to develop mechanisms to monitor compliance with the requirements of the IESBA Code of Ethics. Lastly, SOCPA is encouraged to participate in the international standard-setting process by providing comments on Exposure Drafts and other IESBA pronouncements.
- SMO 5: International Public Sector Accounting Standards
Despite having no direct responsibility, SOCPA raises awareness of the importance of adopting IPSAS through its organization and delivery of workshops devoted to IPSAS. In order to raise awareness, SOCPA reports to be planning to provide training in Arabic on accrual basis IPSAS.
SOCPA reports that it participates in the government-led implementation committee with the Ministry of Finance and the General Auditing Bureau responsible for (i) enhancing public sector accounting; (ii) developing standards; and (iii) and overseeing implementation. The implementation committee is planning to select a number of government agencies eligible for the pilot program; assign a specialized consultancy firm to supervise the pilot program; and develop a strategy for continuous development of the government’s accounting system. As of the date of the assessment, 16 out of 24 IPSAS are reportedly applicable and a study is in place to review and adopt the remaining standards. SOCPA reports that the implementation committee maintains an ongoing process to review SMO 5 requirements to consider the adoption of new or revised standards.
The International Arab Society of Certified Accountants translated the 2015 Handbook of International Public Sector Accounting Pronouncements into Arabic, however it is unclear if this version is being used for the pilot program in Saudi Arabia.
In its SMO Action Plan, SOCPA is encouraged to provide recent and planned examples of workshops it undertakes to raise awareness of IPSAS. It is also encouraged to promote adoption of IPSAS by sharing the 2015 Handbook of International Public Sector Accounting Pronouncements to those responsible for the adoption of public sector accounting standards. Lastly, SOCPA should consider conducting continuing professional development courses on IPSAS if not already available.
- SMO 6: Investigation and Discipline
SOCPA shares responsibility with the Ministry of Commerce & Industry for monitoring and enforcing its members’ compliance with applicable standards and regulations.
As per the Certified Public Accountants (CPA) Regulation No. M12 of 1991, an Investigation and Disciplinary (I&D) Committee was established comprising the Deputy Minister of Commerce and Investment, a SOCPA Board member, and a legal advisor. The I&D system seemingly covers most of the SMO 6 requirements, however SOCPA proactively submitted revisions to CPA Regulation for full compliance with SMO 6 requirements, which will incorporate the following requirements: (i) establishing a separate disciplinary entity; (ii) establishing a process for the independent review of complaints on which there was no follow-up established; and (iii) publicizing the results of the investigative and disciplinary proceedings. In September 2017, SOCPA planned to initiate discussions with the Ministry of Commerce and Investment to obtain approval of the proposed changes to the regulation. Since then, SOCPA staff reports to have submitted its proposed revisions to the SOCPA Board of Directors for final approval (pending).
In the next SMO Action Plan Update, SOCPA is encouraged to report on the SOCPA Board of Directors’ decision and whether SOCPA initiated discussions with the Ministry of Commerce and Investment. SOCPA is also encouraged to showcase the activities that it conducts to raise members’ and the public’s awareness of the system’s requirements.
- SMO 7: International Financial Reporting Standards
SOCPA is responsible for setting accounting standards for all entities except for those regulated by the Saudi Arabia Monetary Agency. To this effect, SOCPA requires the application of IFRS as endorsed by SOCPA effective 2017 for all listed entities, and effective 2018 for all other non-publicly accountable entities. As of 2017, the 2017 version of IFRS has been endorsed for application in the preparation of financial statements of listed entities. Additionally, SOCPA has also encouraged early adoption of new standards such as IFRS 9, 15 and 16. For non-public interest entities, SOCPA has endorsed the IFRS for SMEs (2015 version) which will be effective on January 1, 2018 with a few extra disclosures.
To support implementation, SOCPA reports to regularly provide IFRS training sessions in English and Arabic. SOCPA also publishes guidance specifically related to adoption challenges, and participates in sessions to raise IFRS awareness carried out by firms and other organizations. SOCPA reports to notify its members of all new, and revised IFRS and other pronouncements issued by the IASB via its website and magazine.
Lastly, SOCPA actively participates in the standard-setting process as a nominee on the IFRS Foundation Board of Trustees (since 2013) and the IFRS SME Implementation Group. It also actively participates in the Asian-Oceanian Standard-Setters Group and the International Financial Reporting Interpretations Committee.
SOCPA is encouraged to indicate activities in its SMO Action Plan to collaborate with accountancy education providers to ensure that initial professional development and continuing professional development curricula, syllabi and programs incorporate standard-related topics.
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