CERTIFIED PUBLIC ACCOUNTANTS' REGULATIONS
Ref : M/12
Date : 13.5.1412H
Through the help of Almighty God, We Fahad Bin Abdul Aziz Al Saudi King of Saudi Arabia After reviewing the provisions of Articles 19 and 20 of the Council of Ministers Regulations promulgated by Royal Decree # M/38 dated 22.10.1377H ; and After reviewing the Certified Public Accountants' Regulations promulgated by Royal Decree # M/43 dated 13.07.1394H. and subsequent amendments ; and After reviewing the Council of Ministers Resolution # 40 dated 12.05.1412H. have decreed as follows : First : Approval of the Certified Public Accountants' Regulations in the form hereto attached. Second : His Royal Highness the Deputy Premier and their excellencies the Ministers shall implement this Decree each within his jurisdiction.
Article (1) :
No person , natural or legal , shall be entitled to practice the audit profession unless his name is listed in the Register of Certified Public Accountants with the Ministry of Commerce.
Article (2) :
To be registered as a certified Public Accountant , an applicant shall be :
- A Saudi national ;
- Of full legal capacity ;
- Of good conduct ; not convicted of doctrinal punishment or of an offense involving moral turpitude or breach of trust , unless rehabilitated ; not subjected to a disciplinary decision discharging him from governmental service , unless three years have lapsed since the taking of such disciplinary decision ;
- Holder of a Bachelor's degree in Accountancy or any other equivalent Certificate as may be deemed acceptable by the competent authorities in charge of equivalency of degrees.
- Having practical experience in the field of accounting after graduation , as referred to in clause (4) above , with any of the following bodies :
- A. Certified Public Accountants' offices duly approved by the Saudi Organization for Certified Public Accountants (SOCPA) herein provided for in the present Regulations and according to the conditions specified in the executive by - laws. This period of service shall be for a minimum of three years , reducible to two years if the applicant is a holder of a Master's degree in accountancy or an equivalent degree , and to one year if the applicant is a holder of a Ph.D. in accountancy or an equivalent degree.
B. Government bodies , companies or sole proprietorships according to the conditions and terms stipulated in the Executive By - laws , provided that such terms are no less than those stated in paragraph (A) above.
- Full member of the Saudi Organization for Certified Public Accountants.
- Fully dedicated to practice the profession.
However ,a Certified Public Accountant may practice other types of activities provided that such activites are not incompatible with the code of ethics of this profession according to the conditions laid down by the executive by - laws.
Article (3) :
On the basis of a resolution of the Minister of Commerce , a committee shall be formed to consider the applications for enrollment in the certified Public Accountants Register. This committee shall be chaired by a high ranking official from the Ministry of Commerce (grade 14 and above) , with membership as follows : 1. A Saudi Legal Advisor to be appointed by the Minister of Commerce. 2. A Saudi Certified Public Accountant with a minimum of five years of professional practice to be nominated by SOCPA board of directors. The enrollment committee shall decide on the application within the period specified in the executive by - laws. This decision shall be properly justified. However , appeal against this decision shall be lodged with the Grievance Board.
Article (4) :
When applying for enrollment in the Certified Public Accountants register , and for each such renewal , natural persons shall pay a fee of S.R 1000.
Article (5) :
Upon enrollment , a Certified Public Accountant , whether individual or firm , shall be granted a license to practice the profession . The license shall be duly signed by the head of the enrollment committee and shall indicate enrollment number and date. The license shall be valid for a period of five years renewable for equal terms on the basis of an application to be submitted within a minimum of ninety days prior to the expiry of the license.
Article (6) :
A Certified Public Accountant shall in fact practice the profession and notify the competent authority at the Ministry of Commerce of the address of his office and any change of such address within the deadlines stipulated in the executive by - laws or , otherwise , any such notification served upon him at his address as kept with the Ministry shall be deemed valid. A Certified Public Accountant shall also notify the competent authority at the Ministry of Commerce when opening any other branch.
Article (7) :
Audit reports issued by the Certified Public Accountant shall be signed by the Certified Public Accountant himself , in case of individuals , or by the partner who actually participated in or supervised the audit in the case of accounting firms. No other person may be delegated this power of signature.
Article (8) :
A Certified Public Accountant's office shall carry the personal name of the Certified Public Accountant himself. The license granted to him has to be placed in a prominent place in his office.
Article (9) :
All letterheads , correspondence , reports and other data issued by a Certified Public Accountant , whether individual or firm , shall carry the name , number and date of issue of his license . Additionally , a Certified Public Accountant shall furnish SOCPA with the required information on his activity as specified in the executive by - laws.
Article (10) :
A Certified Public Accountant shall comply with the professional code of ethics as well as with accountancy , audit and other technical standards issued by SOCPA. A Certified Public Accountant shall also comply with applicable regulations and by - laws.
Article (11) :
A Certified Public Accountnat shall undertake to attend a given number of seminanrs as may be specified and held by SOCPA .
Article (12) :
A Certified Public Accountant , under all circumstances , shall maintain documents received from clients , audit working papers and copies of financial statements pertaining to his clients for a minimum period of ten years from the date of issue of the audit report covering each financial year that is duly audited.
Article (13) :
A Certified Public Accountant shall not be entitled to audit the accounts of enterprises or companies in which he has a direct or indirect interest , as specified in the executive by - laws.
Article (14) :
A Certified Public Accountant shall not be entitled to audit the accounts of joint stock companies , banks and public corporations unless he has a minimum of five years of professional practice from the date of obtaining the license.
Article (15) :
A Certified Public Accountant shall be liable for damages sustained by clients or other parties as a result of professional errors in the performance of his work . Such liability shall be borne jointly by partners of the accounting firm concerned.
Article (16) :
A Certified Public Accountant (individual or firm) shall employ a given percentage of Saudi nationals among his staff. The executive by - laws shall specify this percentage without prejudice to the provisions of the Labour and workmen Regulations.
Article (17) :
In the event that a Certified Public Accountant ceases to practice the profession for any reason whatsover whether on a temporary or on permanent basis , he shall notify the competent authority at the Ministry of Commerce accordingly within thirty days from the date of such cessation . However , the validity of the license shall expire if such cessation is of a permanent nature , and without prejudice to the penalties stated in these Regulations , the competent authority at the Ministry of Commerce shall be entitled to issue a resolution cancelling the license of any Certified Public Accountant who ceased to practice the profession without giving the notice specified in this article in the time stipulated , after establishing the validity of the cause of such cancellation and hearing the testominy of the accountant concerned. However , in the event that such an accountant has been notified but did not show up within the following thirty days of the date of his notification his license shall be cancelled without hearing his testimony . A complaint against the decision to cancel a given license may be lodged with the Grievance Board. However , cancellation of a given license does not lead to the cancellation of the accountant's membership in SOCPA.
Article (18) :
In the event that a Certified Public Accountant ceases to practice his profession permenantly or for a period which would cause harm to clients or third parties , all outstanding work with him and the rights and obligations resulting thereof shall be liquidated according to the rules and procedures specified in the executive by - laws.
Article (19) :
An organization shall be established under the name of (Saudi Organization for Certified public Accountants). It shall operate under the supervision of the Ministry of Commerce in order to promote the accountancy and auditing profession and all other related matters that might lead to the development of this profession and raising its status.
This Organization shall be specifically entrusted with the following :
- Review , develop and approve accounting and auditing standards.
- Establish the necessary rules for fellowship certificate examination provided that such rules cover the professional , practical , theoretical aspects of the audit profession including all Regulations pertaining to the profession.
- Organize courses of continuous education.
- Conduct special research work and studies covering accounting , auditing and other allied subjects.
- Publish periodicals, books and bulletins covering accounting and auditing subjects.
- Establish an appropriate quality review program in order to ensure that Certified Public Accountants comply with accounting and auditing standards and the provisions of these Regulations and its by - laws.
- Participate in local and international committees and symposiums relating to the profession of accounting and auditing.
Article (20) :
The Organization shall consist of :
- 1. Full members , namely :
- A. All Certified Public Accountants licensed to practice the profession in the Kingdom at the time these Regulations come into force , provided that they attend the courses held by the Organization and pass the examinations within a period not exceeding three years from the date implemting the program prepared for that purpose , unless they obtain the fellowship certificate stipulated in para. (2) , Article (19) of these Regulations.
- B. Those who hold the qualifications provided for in para. (4) Article (2) of these Regulations , provided that they obtain the fellowship certificate stipulated in para. (2) , Article (19) of these Regulations.
- 2. Associate members and they are those who apply for membership from among those who hold the Qualifications referred to in para. (4) , Article (2) of these Regulations.
Article (21) :
The Organization's headquarters shall be located in Riyadh , and other branch offices may be established elsewhere in the Kingdom.
Article (22) :
The Organization shall have a General Meeting consisting of all full members who already paid their annual subscriptions. The General Meeting shall only hold its regular or extraordinary meetings if attended by the majority of its members. However , if the quorum required for holding such a meeting is not present an invitation shall be addressed for holding a subsequent meeting within thirty days of the previous meeting . In the latter case , the meeting shall be valid regardless of the number of attending members. General Meeting resolutions of the Organization are adopted by the majority voting of the attending members . However , in case of equal votes , the chairman shall have the casting vote. Ordinary General Meetings of the Organization shall be held at dates to be fixed at the beginning of each fiscal year of the Organization. An extraordinary general meeting may be held upon a request of one fifth of its members or its Board of Directors . The Organization's Board of Directors shall be in charge of preparing the agenda for the General Meeting .
Article (23) :
The General Meeting of the Organization shall have the following powers :
- Approve the Organizations internal structure .
- Approve the Organizations annual budget and its final accounts for each year ; appoint an auditor for its accounts and determine his fees .
- Approve both the annual working plan submitted by the Board and the annual report of the Board on the Organization's activity .
- Elect the members representing Certified Public Accountants on the Organization's Board of Directors.
- Discuss all items on the General Meetings agenda covering matters that fall within the scope of the affairs or interests of the Organization.
Article (24) :
The Organization's affairs shall be managed by a Board of Directors consisting of Fifteen members , as follows :
- The Minister of Commerce or his delegate - Chairman
- The Deputy Minister of Commerce - Member
- The Deputy Minister of Finance and National Economy for Financial Affairs and Accounts or any official of grade 14 and above appointed by the Minister of Finance and National Economy. - Member
- The Vice President of the General Controller's Bureau or any official of grade 14 and above appointed by the President of the General Controller's Bureau. - Member
- Two Saudi members of the teaching staff of the accounting department of one or more of the universities of the Kingdom , to be appointed by the Minister of Commerce upon the nomination of the Minister of Higher Education.
- A representative for the Council of Chambers of Commerce and Industry , to be appointed by the Minister of Commerce upon nomination by the said Council. - Member
- Six members from among Saudi practitioner Certified Public Accountants to be elected by the Organization's general meeting for a term of three years , renewable for one more term. By way of exception , these members shall be appointed in the first Board of Directors for five years by a resoultion to this effect from the Minister of Commerce
The Secretary General of the Organization shall attend the meetings of the Board of Directors without having the right to vote on decisions taken .
The Board of Directors meets once at least every ninety days at the invitation of its Chairman or his designated representative . The chairman shall invite the Board for a meeting if requested to do so in writing by at least four members.
Meetings of The Board of Directors shall be valid only if attended by the majority of members including the chairman or his designated representative. Decisions of the Board shall be adopted by the majority vote of members present , and in case of equal votes , the chairman shall have the casting vote.
Article (25) :
The Board of Directors shall manage the affairs of the Organization and practice the powers needed for realizing its objectives . Specifically , the Board shall be empowered to :
- Propose amendements it sees fit to the Certified Public Accountants Regulations ; and the rules and decisions necessary for its implementation and any other regulations and rules relating to the accounting and auditing profession .
- Review , develop and approve accounting and auditing standards.
- Establish the financial and adminstrative rules for the Organization and determine its fiscal year.
- Develop the internal structure of the Organization .
- Determine membership subscription fees and the method of their collection .
- Organize the fellowship certificate examinations to cover the professional , practical and theoretical aspects for the practice of auditing and other related subjects .
- Organize programs and courses of continuous education .
- Form technical committees such as Accounting and Auditing Standards , Quality Review , Examinations , Nomination , Continuous Education , Professional Ethics Committees etc. , and lay down the rules and procedures for the performance of their functions .
- Appoint the Secretary General of the Organization and his deputy provided they are Saudi Nationals who satisfy the conditions prescribed for granting the license to practice but are not in practice . The Board of Directors shall determine their duties , responsibilities , rights and the method of their financial remuneration.
Article (26) :
The Organization's resources shall consist of :
- Subscriptions as determind by the Board of Directors.
- Government subsides.
- Gifts , donations and legacies which the Board decides to accept .
- Return on the investment of the Organizations funds and proceeds from the publication and sale of research work , studies and other publications as well as income from services rendered by the Organization .
Article (27) :
The General Meeting of the Organization shall appoint annually a licensed Certified Public Accountant to be the auditor of the Organization. The auditor shall have access to the books and documents and to express any reservations he may have . He shall audit the organization's accounts and submit a report thereon to the General Meeting . However , the auditor or any of his partners shall not be a member of the Organization's Board of Directors. The General Meeting shall determine the auditor's fees , reappoint him or select another auditor. By way of exception , the Board of Directors shall appoint the auditor and determine his fees for the first fiscal year of the organization .
Article (28) :
Persons who do not comply with the provisions of these regulations shall be subject to one of the following penalties : - Reprimand , Warning , or suspension from practicing the profession for a period not to exceed six months. - Removal of the name of the non - compliant from the Certified Public Accountant's Register and publishing the resolution providing for the penalty of suspension or the removal of the name of the non - compliant member at his expense in one or more of the local newpapers.
Article (29) :
Subject to the provisions of other Regulations , investigations for non - compliance with the provisions of these regulations shall be carried out by a committee to be formed by the Minister of Commerce. The Committee shall be chaired by the Deputy Minister of Commerce with membership consisting of a Saudi legal advisor and one member of the board of directors of SOCPA . Should the committee decide that the non - compliance act constitutes a crime it shall refer it to the competent authority . Following issue of a ruling , the forecited committee shall consider the non - compliance act in terms of professional ethics and may impose any of the following penalties : Reprimand , Warning , or suspension from practicing the profession for a period not to exceed six months . The non - compliant member have a right to appeal to the Grievance Board against the resolution issued imposing any of the foregoing penalties. However , should the investigation committee determine that the non - compliance act does not constitute a crime , it may impose one of the following penalties upon completion of investigation : Reprimand , Warning , or suspension from practicing the profession for a period not to exceed six months. In case the committee beleived that the non - compliance act does not deserve any of the specified penalties it shall dismiss the case . The committee's decision should be in all cases based on just causes , and the non - compliant member shall have the right to appeal to the Grievance Board against the penalty decision . In the event that the committee is of the opinion that the penalty of removal of the name of the non - compliant from the Register should be imposed , it shall refer the matter to the Grievance Board for taking the appropriate decision.
Article (30) :
A Certified Public Accountant whose registration has been cancelled subject to the provisions of these Regulations and by - laws may apply for re - registration once again after the lapse of five years from the date of the removal of the name from the Register decision . The application shall be considered by the Minister of Commerce and the conditions and procedures for (original) registration shall be followed on re - registration.
Article (31) :
The period of suspension or removal of the name from the Register stipulated in these Regulations shall not be counted in the computation of the period required for those who may audit the accounts of joint stock companies , banks and public corporations referred to under Article (14) hereof .
Article (32) :
The Grievance Board shall have the jurisdiction to impose the penalty of the removal of the name from the Register provided for in these Regulations . It shall also have the jurisdiction to consider all claims filed by or against the certified public accountant for any reason relating to the practice of the profession in conformity with the provisions of these Regulations .
Article (33) :
The competent authority at the Ministry of Commerce shall take the steps required to bring before the Grievance Board the action for non - compliance regarding which the committee referred to in Article twenty nine takes the view of imposing the penalty of removal of the name of the accountant concerned from the Register .
Article (34) :
The Minister of Commerce may bind the certified public accoutant to furnish the Ministry with any information as may be required to ascertain that the accountant is practicing his profession in compliance with the provisions of these Regulations.
Article (35) :
Cooperation among accountants licensed in accordance herewith and non - Saudi certified public accountants shall be organized in conformity with the executive by - laws.
Article (36) :
Licenses issued to certified public accountants prior to the enforcement of these regulations shall remain valid provided that the licencees are practicing the profession . Moreover , foreign accounting firms , whether individuals or companies , shall be bound to :
A. Have one or more Saudi certified public accountant partners licensed to practice the profession within two years of the enforcement of these regulations , otherwise the license previously issued shall be deemed to be terminated . The by - laws shall set out the rules and rate of Saudi participation in such firms and stipulate the procedures for verifying their proper application .
B. A foreign accountant or partner shall stay in the Kingdom for a minimum of nine months each year and actually practice the profession .
Article (37) :
These Regulations shall supersede the certified Public Accountants Regulations promulgated by Royal Decree # M/43 dated 13.07.1394H , and amendments thereto and all provisions in conflict therewith .
Article (38) :
These Regulations shall be published in the official Gazette and shall be enforced after ninety days from the date of their publication . The Minister of Commerce shall issue the By - laws and directives necessary for the application of these Regulations.