The Saudi Organization for Chartered and Professional Accountants (SOCPA)

The Law of the Profession of Accounting and Auditing Royal Decree No. M/59 March 11, 2021 requires the establishment of a mandatory quality assurance (QA) review system for all audits in Saudi Arabia.

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 QA reviews take place every three years for public interest entities (PIEs), and every five years for non-PIEs. PIEs in Saudi Arabia are listed entities which comprise joint stock companies, limited liability companies, and brokerages (IESBA Public Interest Entity Database, April 2023). SOCPA has also adopted relevant standards—ISQM 1, 2, and ISA 220 (revised).

SOCPA first established its Quality Review Committee (QRC) in 1992 in line with the CPA Regulation, and initiated its first reviews with the assistance of the American Institute of Certified Public Accountants in 2001. SOCPA continues to review its QA review system on an ongoing basis to ensure alignment with SMO 1 requirements. For example, in February 2017, SOCPA’s QRC recruited an external consultant to review SOCPA’s QA review process and recommend improvements in a benchmarking study. It has since reported that the QA review system is in line with the requirements of SMO 1.

To support its members, SOCPA: (i) conducts workshops with the Institute of Chartered Accountants of England and Wales and the Institute of Chartered Accountants of Pakistan in order to disseminate information about the system nationwide and improve QA review processes and procedures; (ii) translates ICAP’s Audit Practices Manual into Arabic for use by SMPs in Saudi Arabia; (iii) issues guidelines such as quality control manual; and (iv) disseminates information on relevant standards to its members and stakeholders on an ongoing basis. Most recently, SOCPA has organized training, with support of a firm, for its QA reviewers on ISQM 1 and 2 and translated IAASB’s implementation guides to Arabic.

In Q4 of 2023, SOCPA introduced the peer review service which enables accounting firms to evaluate their quality management systems and the methodology / implementation of their professional services. The objective is to have an independent evaluation before the QA review and identify possible areas for improvement.

Current Status: Sustain

The Law of the Profession of Accounting and Auditing Royal Decree No. M/59 March 11, 2021 Regulation, along with SOCPA 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 Education. While the Ministry of Education sets the accountancy degree criteria, SOCPA establishes and provides professional examinations as well as the accountancy education program that is needed.

SOCPA’s Education Committee monitors new and revised standards and will notify the Ministry of Education of any changes. In 2022, with input from IFAC, SOCPA launched a model accountancy education curriculum for universities in Saudi Arabia in line with 2019 IES.

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 Education); fulfill practical experience requirements; and become members of SOCPA after passing the professional examinations and accountancy education program. Individuals with bachelor’s level degrees in accounting or equivalent (as determined by the Ministry of Education) may apply for membership as “Associate Members”. Holders of SOCPA fellowship Certificate may apply for full member non-practitioner and after completing further experience requirements can apply for full member practitioner.

CPAs are required to remain members of SOCPA in good standing as evidenced by being included in the SOCPA License List. They must complete their CPD requirement of 120 CPD hours every three years, minimum 20 CPD hours a year. SOCPA completed a comprehensive review of the existing educational requirements for professional accountants in the jurisdiction against those of the revised 2019 IES and confirms alignment.

Current Status: Sustain

The Saudi Organization for Chartered and Professional Accountants Ordinance No. 416 of 2021 designates 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 issued by IAASB 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 the date of this assessment, the 2022 Handbook is applied in the jurisdiction.

To support implementation, SOCPA translated ISQM 1 & 2, ISA 220, ISA 315, ISA 600, and ISRS 4400 into Arabic in line with the IFAC translation policy, available here.

SOCPA reports that it monitors new and revised standards promulgated by the IAASB with the intention of updating education and examination programming and translating the standards accordingly on an ongoing basis.

To further 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 which has been available since May 2017.

Current Status: Sustain

The Saudi Organization for Chartered and Professional Accountants Ordinance No. 416 of 2021 delegates authority to the Saudi Organization for Chartered and Professional Accountants (SOCPA) to set ethical requirements for professional accountants, under the supervision of the Ministry of Commerce. SOCPA reports that it requires the application of IESBA Code of Ethics as issued by IESBA with some minor modifications. SOCPA noted that some parts of the Code have been modified (e.g., Section 600 was modified to state that the only permissible non-assurance services are listed in a permissible services list). As of the date of this assessment, the 2023 Handbook is applied in the jurisdiction.

SOCPA reports that it monitors new and revised standards or pronouncements issued by IESBA. SOCPA assists members in complying with the prescribed ethical standards by ensuring that they have access to rules and regulations on the website, via its magazine, and published reports.

Lastly, SOCPA signed a contract with the Institute of Chartered Accountants of England and Wales (ICAEW) to provide free access to its small and medium practices for the ICAEW portal, which provides information on ethical standards.

Current Status: Sustain

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. SOCPA reports that accrual-basis IPSAS have been adopted without any amendments.

SOCPA participates in the government-led implementation committee with the Ministry of Finance and the General Auditing Bureau. SOCPA reports that the implementation committee maintains an ongoing process to review SMO 5 requirements to consider the adoption of new or revised standards.

SOCPA continues to raise awareness of the importance of IPSAS through its organization and delivery of workshops on IPSAS as well as translating IPSAS into Arabic.

Current Status: Sustain

In accordance with the Law of the Profession of Accounting and Auditing Royal Decree No. M/59 March 11, 2021, the Ministry of Commerce is responsible for establishing and operating an investigative and disciplinary (I&D) system for professional accountants

SOCPA completed an assessment and reported that the I&D system aligned with SMO 6 requirements. The revised regulation that was adopted in 2016 included the following changes which enabled the system to be in line with SMO 6 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.

SOCPA is encouraged to promote ongoing reviews of the I&D system against SMO 6 requirements by the Ministry of Commerce to ensure continued effectiveness and alignment.

Current Status: Sustain

The Saudi Organization for Chartered and Professional Accountants Ordinance No. 416 of 2021 stipulates that 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 listed entities which comprise joint stock companies, limited liability companies, and brokerages (IESBA Public Interest Entity Database, April 2023). PIEs are required to use SOCPA-endorsed IFRS, in line with the Companies Act No. M/6 of 1965 (as amended in 2015 and 2022), the SAMA Banking Control Law of 1966, 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.

To support implementation of the standards, SOCPA regularly provide IFRS training sessions in English and Arabic as well as Arabic translations of the IFRS Standards. SOCPA also publishes guidance specifically related to adoption challenges and participates in sessions carried out by firms and other organizations. SOCPA states that it notifies its members of all new and revised IFRS, and other pronouncements issued by the IASB via its website and magazine. Most recently, it has translated IFRS S1 and S2 issued by the ISSB under the IFRS Foundation.

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.

Current Status: Sustain