Background

Saudi Organization for Chartered and Professional Accountants (SOCPA) was established in 1992 as a mandatory membership organization for Certified Public Accountants (CPAs) 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; and (iv) establishing and operating a quality assurance review system.

Accounting Standards

IFRS Accounting Standards are required for all publicly accountable entities in Saudi Arabia. SOCPA requires the application of ‘IFRS Accounting Standards that are endorsed in Saudi Arabia and other standards and pronouncements endorsed by SOCPA’. The ‘endorsed’ standards are all IFRS Accounting Standards as issued by the International Accounting Standards Board in addition to disclosure requirements 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 Accounting Standards such as the subject of Zakat, common control, and liquidation basis. All SMEs (as defined in the IFRS for SMEs Standard) are required to apply the IFRS for SMEs and are also permitted, in certain circumstances, to use full IFRS Accounting Standards.

Sustainability Disclosure Standards

On 5 November 2021, the Saudi Exchange launched ESG Disclosure Guidelines to aid issuing companies understand the context, characteristics and market best practices in ESG disclosures. Work on establishing a reporting framework for Sustainability disclosure is under consideration by the relevant authority.