Regulating the Accounting Profession in the Kingdom of Saudi Arabia
The legal accounting profession is of great significance mainly because of its role in ensuring compliance with different laws and regulations.
Mainly, a chartered accountant is responsible for suggesting remedies for addressing any gap that may adversely impact a business establishment.
The role of a chartered accountant in an organization is very important especially in the context of providing external and internal reports containing information that is used for making important decisions by the users of those reports as well as ensuring compliance with all the applicable rules and regulations. Therefore, it is highly important to ensure that chartered accountants do their jobs independently but the issue is that most chartered accountants work in the internal finance and accounting departments of commercial business establishments. The Kingdom recently announced some changes to the regulation governing the auditing and accounting professions. The name of the Saudi Organization for Certified Public Accountants (SOCPA) was changed to the Saudi Organization for Auditors and Accountants (SOAA).
Today, we will be briefly reviewing the key tasks and responsibilities of a chartered accountant in light of the changes made to the aforementioned regulation.
Chartered accountants must ratify and sign all the reports they issue. They are required to mention their full names as well as license numbers in all official reports when sharing any information/ data both internally and externally, and during any correspondence both within the organization and with external parties. They are also required to keep their licenses in a place in their office from where it can be seen properly.
A chartered accountant must comply with all the applicable rules and principles of the profession, the code of ethics it is obligated to follow, and the technical accounting and auditing standards approved by the SOAA.
After completing their tasks and duties, accountants should make sure that all the supporting documents, copies of financial statements, and other reports are preserved for a minimum of 10 years, and that too from the issuance date of the reports for each financial period they review. They should be able to provide the organization they work for with the reviewed financials and final reports whenever required or requested.
Due to the sensitive nature of the profession, the Kingdom has increased its efforts with regard to localizing all the jobs in this field. For this purpose, a chartered accountant firm is required to employ a certain number of Saudi nationals.
Concerning restrictions and prohibitions, a chartered accountant is not allowed to audit the financial statements of institutions or companies in which he/ she has an interest either direct or indirect. A chartered accountant should also be aware and careful regarding not exceeding the maximum limit of the number of listed and unlisted joint-stock companies, which he/ she can review annually.
A chartered accountant is also not allowed to disclose any information about any of his/her clients that were obtained during the course of the execution of his/ her professional work, or using such information for his/ her benefit, except for the situations in which he/ she either has the consent of the customer or at the request of government authorities.
All the tasks related to auditing financials of banks, joint-stock companies, institutions, and public authorities can only be carried out after a period of 5 years after the date of obtaining the license.
Concerning fines and penalties, and without prejudice to any other penalty mentioned in any other rule or regulation, a chartered accountant should be imprisoned for a period of not more than 5 years and be handed a fine of not more than SR2 million or should be handed one of the aforementioned mentioned two penalties if he/she forges certificates, submit incorrect data/ information, misleads others in believing that he/she has the right to practice the profession while he/she doesn’t have any license, or his/ her license has been canceled, or he/ she has been suspended by the authorities from practicing the profession.
The abovementioned penalty will also be applicable if a chartered accountant submits reports that contain incorrect information or conceals any data that should have been included and presented in any report, document, or account during his days of practicing the profession, or if he/ she certifies any report that is opposite to the ground reality and facts.
The Public Prosecution should investigate the above-mentioned crimes and should also consider filing a case against the professional that failed in complying with all the applicable laws and regulations.