Audited Financial Statements in Saudi Arabia: SOCPA, IFRS and the Filing Process

Which accounting framework a Saudi company follows, how the audit is organised, and how the statements reach the Ministry of Commerce and ZATCA each year.

Companies in Saudi Arabia prepare financial statements under International Financial Reporting Standards as endorsed in the Kingdom by SOCPA (the Saudi Organization for Chartered and Professional Accountants), with a separate endorsed standard for smaller entities. Most companies must have them audited by a licensed auditor and submit them through the Ministry of Commerce's Qawaem platform. The audited accounts then drive the Zakat or income tax return, so the audit timetable is also the tax timetable.

Before stage one

Before the first year closes, settle which framework applies, since endorsed IFRS and the endorsed standard for small and medium entities differ in disclosure and measurement. Foreign parents that report under full IFRS at group level usually prefer the Saudi subsidiary to use full IFRS as well, to avoid a second set of adjustments. Confirm with your auditor whether your company can or must use either framework.

• The financial year end in the articles of association and the first period length.
• The accounting framework the company will apply, agreed with the auditor.
• An auditor licensed by SOCPA, appointed by the partners or general assembly.
• A chart of accounts that maps to both local statements and group reporting.
• Access to Qawaem for the company, managed by someone who will still be there at year end.

Stage 1: Appoint the auditor

The partners or general assembly appoint an auditor licensed in the Kingdom and agree the fee and scope. Group auditors often use their Saudi member firm, which simplifies group reporting. Some very small companies may be exempt under the Companies Law rules; check before assuming an exemption.

• Deliverable: Signed engagement letter and the appointment resolution.
• Owner: Managers with the partners.
• Approval gate: Engagement signed well before year end so the auditor can plan interim work.

Stage 2: Close the books monthly

Close each month with bank reconciliations, accruals, intercompany confirmations and fixed asset updates. A company that only reconciles at year end hands its auditor a year of problems at once.

• Deliverable: Monthly closed ledgers and reconciliations.
• Owner: Finance manager.
• Approval gate: Intercompany balances agreed with the group every quarter.

Stage 3: Prepare year-end schedules

Prepare the supporting schedules the auditor will request: fixed assets, inventory counts, receivable ageing, provisions, end-of-service benefit calculations for employees, related-party transactions and Zakat or tax provisions.

• Deliverable: A complete audit file handed over on an agreed date.
• Owner: Finance manager.
• Approval gate: Schedules tie to the trial balance before handover.

Stage 4: Audit fieldwork

The auditor tests balances and transactions, confirms balances with banks and customers, reviews contracts and assesses estimates. Respond to queries quickly and log them, because unresolved points delay the opinion.

• Deliverable: Audit adjustments list and management letter points.
• Owner: Auditor with finance.
• Approval gate: All proposed adjustments either booked or explained.

Stage 5: Approve and sign the statements

Management approves the statements, the auditor issues the report and the partners or general assembly approve the accounts as the articles and the Companies Law require.

• Deliverable: Signed audited financial statements and the approval resolution.
• Owner: Managers and partners.
• Approval gate: Approval within the period the Companies Law and articles allow after year end.

Stage 6: File through Qawaem

Submit the audited statements through the Qawaem platform, which shares them with the relevant government bodies, including ZATCA. Filing late, or not at all, affects the company's standing with the Ministry of Commerce.

• Deliverable: Qawaem submission confirmation.
• Owner: Finance manager.
• Approval gate: The filed version matches the signed version exactly.

Stage 7: Feed the tax return

Use the audited figures as the base for the Zakat or income tax computation and the annual declaration. Differences between the filed statements and the return invite queries from ZATCA.

• Deliverable: Tax computation reconciled to the audited statements.
• Owner: Tax adviser.
• Approval gate: Reconciliation reviewed before the tax return is filed.

Handovers between stages

The fragile handover is between the group reporting pack and the local statutory accounts. Groups close their consolidation early and treat the Saudi statutory audit as an afterthought, then discover that local adjustments, such as end-of-service benefits or Zakat provisions, were never booked in the group numbers. Agree one set of figures and one timetable for both.

How you know it is finished

The cycle is complete when the audited statements are signed, approved by the partners, filed on Qawaem, reconciled to the tax return and reflected in the group consolidation, with management letter points assigned to owners for the coming year. Framework choices and exemptions should be confirmed with your auditor and a licensed adviser.

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