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HISTORICAL INTRODUCTION

ON ACCOUNTING AND AUDITING

PROFESSION IN SAUDI ARABIA

 

 

 

By the mid of the 14^th Hijri century (1930) the accounting and auditing profession acquired the attention of the authorities in Saudi Arabia. The Commercial Business Regulation issued by Royal Decree No. 32, dated 15.01.1350H, stated that accounting records should be maintained. Company Regulations issued by Royal Decree No. M/6, dated 22.03.1385H, required companies to prepare financial statements to be audited by a licensed CPA. It also included provisions that govern the assignment of a CPA and a definition of the scope of his responsibilities. The resolution of H.E Minister of Commerce No. 422, issued in 1388H (1968), specified certain requirements that should be complied with in order to practice auditing in the Kingdom. This resolution was in force until issuing CPA Regulations in 1395H (1974), which was the first foundation stone laid to organize the profession in the Kingdom. A higher committee for certified public accounting was established, in accordance with the Regulation, to supervise and monitor the profession. By the early of this century, many parties started to develop the profession in order to keep it in pace with the peculiar jump witnessed by the Kingdom in many fields. In 1401H (1981), King Saud University commenced to hold a series of symposiums about accounting development methods in Saudi Arabia, in order to reach suitable recommendations for resolving out any obstacles that may hinder the development of the profession. In 1401H, the Academic Board allowed King Saud University to establish Saudi Accounting Association. The purpose of the Association is to promote accountancy thoughts, exchange of ideas and academic productions, consultation and conducting studies.

In mid 1399H (1979) a discussion was held between HE Mr. Yousef Al-Hamdan, the Deputy Minister of Commerce and Mr. Abdulaziz Al-Rashed the head of Al-Rashed firm, with regard to the auditing profession environment in Saudi Arabia and aspects of its development. At that time the situation seemed critical and disclosed certain deficiencies which would impact the economic and financial activities in the country. The discussion concluded with an agreement on the necessity of taking practical measures to remedy such deficiencies and to develop the auditing profession in a manner that would enable auditors cope with the radical changes that took place in this field. Three months later the ideas referred to in this discussion were further elaborated with HE the Minister of Commerce Dr. Sulaiman Al Saleem whereby it was determined that the Public accounting profession in Saudi Arabia in not keeping abreast with the changes that the country is undergoing. However, deficiencies were not determined for areas concerned to be able to handle them in a proper manner.

To determine such deficiencies and in order for the Ministry to take appropriate measures to seek the means of developing the profession of public accounting, Al-Rashed firm (CPA) formed a team of researches, with the participation of Dr. Abduyllah Al-Faisal from King Saud University, to conduct a preliminary survey in order to determine the status of the Public Accounting Profession. The results of this study were summed up in a memorandum which specified the major deficiencies in the conduct of this profession.

This memo was used as a basis for discussions with the areas concerned at the Ministry who confirmed that this preliminary study reflects in a general manner all the deficiencies in the public accounting profession and is deemed to be a suitable starting point for a project that would handle the issue of developing this profession. Al-Rashed firm was requested to prepare a proposal for this project which would take into consideration the plausibility of making use of the experience of other countries and the specific environment of the Kingdom.

Al-Rashed firm prepared a comprehensive proposal for a project that would cover the standards relevant to public accounting, auditing and a comprehensive internal organisation and development of the accounting profession in general.

This propoasl was further discussed with the authorities concerned at the Ministry and it was deemed suitable to handle the issue of development of the accounting profession in three phases as follows :

PHASE 1 : Comparison Study of Profession in a Number of Countries

(1400H/1980 – 1401H/1981) :

The Objective of this study was to determine the experience of those countries in the profession development in order to benefit from that in the development of the profession in the Kingdom.

Following a detailed study by the Ministry of Commerce of the proposal Submitted by Al-Rashed, the Ministry commissioned the firm to conduct the comparative study, that is, phase one of the project. Three foreign countries had to be selected for this comparative study. To make the selection, nine countries were identified and classified into three groups based on the state of development of their accounting profession; similarities of their economic environment to that of the Kingdom and possibility of Saudi Arabia’s benefit from their established organizations. The three groups were as follows :

The First Group : U.S.A, England and Canada.

The Second Group : France, West Germany and Sweden.

The Third Group : Tunisia, Venezuela and Brazil.

The U.S.A, West Germany and Tunisia were selected for the comparative study.

The comparative study consisted of :

A.Review of authoritative pronouncements, laws and regulations of the three countries which relate to :

1. Accounting standards and financial reporting requirements;

2. Auditing standards and auditing requirements;

3.Professional ethics; and

4.The internal organization of the accounting profession.

B.Interviews with officials of the institutes representing the accounting profession in the three countries.

C.Analysis of data gathered as a result of the previous two steps.

D.The preparation of a comprehensive report (in Arabic) setting forth :

1. A comparison of the internal organization of the accounting profession; standards of accounting and auditing; and the code of professional ethics in the three countries.

2. Tentative conclusions as to the implications of the study to the development of the accounting profession in Saudi Arabia.

The comparative study report was submitted to the Ministry of Commerce. After review of the report, the Ministry of Commerce held discussions with the firm to determine the most approriate approach for the execution of phases two and three of the project. Two approaches were considered as follows :

Approach one :

Combine phases two and three in one comprehensive study to develop recommendations for a highly regarded accounting profession that would cope with the development in other areas in the Kingdom and accommodate the best available in other developed countries. However it was contemplated that combining the two phases required substantial effort and field survey in order to specify the beneficiaries from the finanical statements in the Kingdom, the information required by them to make their decisions and the extent of the accounting profession’s capability to provide such information.

Approach two :

Limit phase two to the development of recommendations that would address the most immediate requirements. Specifically, limit this phase to developing recommendations with respect to auditing standards, the organization of the accounting profession, the code of professional ethics, objectives of financial statements of business enterprises, the basic concepts of financial accounting for business enterprises and the general presentation and disclosure standard, because the accounting profession in Saudi Arabia required immediate organisation.

Phase 11 : Preparation of Conceptual framework and some selected subjects

(1402H / 1982 – 1406H / 1986)

After careful consideration of the two approaches, a contract was signed between the Ministry of Commerce and the firm on 11.10.1402H to proceed with phase two of the project in accordance with the second approach described above. The contract requires the firm to carry out the following :

1.Selected subjects from finanical accounting which cover the following :

§Objectives of finanical accounting,

§Concepts of financial accounting, and

§Standards of presentation and general disclosure.

2.Auditng standards.

3.Internal organisation of the accounting profession.

1.2Method of Implementation :

Extensive research was made and a variety of methods were explored to determine the best approach for the implementation of this phase in order to arrive at recommendations suitable to the environment in the Kingdom within a reasonable time frame and to establish a basis for continuous development with the assistance of national calibre who are capable of updating such recommendations. Due care and attention was taken to involve technical experts from the selected countries who master the Arabic language, shall be referred to here as (experts). Saudi professors and advisors were also invited to review the recommendations of the experts, shall be referred to here as (advisors). Al-Rashed firm’s top management, particularly Messrs Al-Rashed and Yousef Al-Mobarak have extended all possible efforts to organize the work of both the experts and the advisors, shall be referred to here as (persons concerned). Experts from other Arab countries were also called to assist with respect to other aspects of the project, shall be referred to here as (Arab experts).

The proper organisation and coordination of work among the participants (experts, advisors, management personnel and Arab experts) has contributed to the achievement of the stated objectives of the project.

The project has been divided into three major parts, each of which was assigned to a team of experts who worked under the supervision of an advisor. Following is an overview of the method of implementation of this project and its effect on the final recommendations.

1.A number of meetings were held among team members and advisors to prepare a background paper setting forth the status of the accounting profession and laws and regulations which cover this profession and the audit of financial statements in the Kingdom. Various meetings were held inside and outside the Kingdom. These meetings ended into the formation of one volume that included the most significant rules and background informations effecting the profession in the Kingdom and the bases to be considered in the preparation of the project segments. This volume was prepared in both Arabic and English and referred to the team members who were instructed to take the information stated therein into consideration in preparing the initial drafts for each part of the project.

2.Visits to the Kingdom were arranged for team members on as many occasions as practically possible to get acquainted with the accounting profession and its environment and to conduct actual case studies which relate to their respective areas of responsibilities.

3.Upon deliberate and in-depth study of all aspects of the project and visits to a number of specialized institutes in this field and deliberations with reference to their experience and work environment, it was decided that the suitable approach to implement this project is to divide it into the following segments :

A.The study of selected subjects in finanical accounting, including :

§Objectives of financial accounting.

§Basic concepts in financial accounting.

§General presentation and disclosure.

B.Auditing standards, which cover : general standards including professional qualification, independence, due care; standards of field work including planning, Control, Recording, Evidence, Reporting and relevant procedures.

C.Internal organisation of the accounting profession.

4.Each team had to prepare and submit to the firm a preliminary draft of recommendations. The preliminary draft of each team was reviewed by Mr. Al-Rashed and his advisory group and returned to each team with suggested additions, changes and deletions in order to prepare their study and recommendations which will be distributed among members of other teams for study and comments.

5.The drafts of each section were distributed among teams of other section who were requested to prepare their comments in writing and sent to persons concerned for study and sending to other teams.

6.Comments received from teams’ members and notes made by advisors thereon were sent to each team to look into and consider its effect on its work. Many communications between teams’ members, advisors, and persons concerned were made during preparation of final draft which was distributed among teams’ members, advisors and persons concerned as a step towards discussing it in a meeting attended by all teams’ members, advisors and persons concerned.

7.A meeting was held in Riyadh Palace Hotel from 06.01.1403H to 12.01.1403H attended by all six experts, three advisors and the two persons concerned from Al-Rashed firm. A separate hall was specified for those meetings which continued day and night. Shorthand and recording services were provided. During these meetings, which continued for many days, proposals submitted by each team were discussed and specific recommedations were achieved. The discussion pointed out significent matters that require obtaining opinions in regard from the Ministry of Commerce and other related parties. It is clear that this meeting will have significant effect in manifesting the appropriateness of research trends and the relevence of recommendations.

8.An overview presentation of draft recommendations was made to HE the Minister of Commerce, HE the Deputy Minister of Commerce and other officials concerned from the Ministry. The Meeting, held at the Institute of Public Management, was also attended by their excellencies the Minister and Deputy Ministers of Finance, as well as the Governor and Deputy Governor of SAMA. The significance of this meeting was manifested in clarifying the appropriate trends and giving the firm an impetus through asserting that authorities concerned are giving due care and attention to the accounting and auditing profession.

9.Team members and the advisory group held further meetings at Riyadh Palace Hotel, to discuss the results of their presentation and team members were instructed to adjust their draft recommendations as necessary in accordance with the results of the meeting and send to the persons concerned in Riyadh. One of the experts was commissioned to read the adjusted draft recommendations in their final form.

10.The final draft recommendations were handed to areas concerned and reviewed by the advisors in Al-Rashed firm. A meeting was held by the areas concerned and advisors in Al-Rashed office to discuss the final copy of the draft recommendations.

11.Another general meeting was held at the Riyadh Hyatt Regency for a few days to finalize the revised copy of the draft recommendations. This meeting was attended by the persons concerned and the advisors in order to discuss the results of the three teams’ revisions of the said draft recommendations.

12.Team members were then called in for further discussion with the advisors and Al-Rashed personnel concerned. This discussion resulted in further ramifications of the final product.

13.On 09.06.1403H a meeting was held in Riyadh attended by the advisors, and persons concerned. In this meeting, all aspects of the project were discussed and issues left from the previous meeting were tackled. Each advisor was assigned a certain segment of the project in order to ensure its adaptability to the environment of the Kingdom in general and the present condition of the accounting profession in particular, and to verify its accuracy from the technical point of view, clarity of style, general consistency and feasibility of application in Saudi Arabia.

14.During this period, the various stages of the project were translated into Arabic, reviewed by the Arab experts and handed over to the advisors and other experts for final review.

15.The Ministry of Commerce forwarded this study to the government areas concerned and to a selected group of certified public accounting to seek their advice and opinion accordingly.

16.The notes were received and summarised and the study was adjusted in accordance with the suggestions that the Ministry deemed to be acceptable.

17.Ministerial Resolution No. 692, dated 28.02.1406H was finally issued to approve this study which is concerned with the objectives and concepts of financial accounting, and the standards of presentation and disclosure, and to consider them as an official reference and guidelines to all certified public accountants who are licensed to practise this profession in Saudi Arabia.

Based on Ministry follow-up during the application period of those standard and concepts, Ministerial Resolution No. 852 dated 07.10.1410 was issued to impose compliance by the objectives and concepts of accounting and audit on preparing enterprices financial statements. The Ministry entrusted the directorate general of Interior Commerce to follow-up CPA’s compliance with those rules and to receive their suggestions and comments regarding results of the mandatory implementation of these standards.

18.The Royal Decree No. M/12 dated 13.05.1412H was issued invalidating CPA’s Regulations issued under the Royal Decree No. M/43 dated 13.07.1394, and authorizing the passage of New CPA Regulation. This new regulation entrusted SOCPA the reponsibility of developing accounting and auditing profession.

Phase 3 : Establishment of SOCPA (1412/1992 – Up to date )

As indicated in phase the efforts made by the Saudi Ministry of Commerce culminated in the issue of Royal Decree No. M/12 dated 13.05.1412H (1992 G) authorizing the passage of the new CPA Regulations. Article (19) of these Regulations stated that an Organization shall be established under the name of (Saudi Organization for Certified Public Accountants “SOCPA”). It shall operate under the supervision of the Ministry of Commerce in order to promote the accounting and auditing profession and all matters that might lead to the development of the profession and improve its status. The following presents an executive summary of the SOCPA objectives, responsibilities and current activities :

First : Objectives :

· Review, develop and approve accounting standards.

· Review, develop and approve auditing standards.

· Establish the necessary rules for fellowship certificate examination (CPA exam.) including professional, practical an scientific aspects of audit profession and applicable regulations.

· Organize continuous education programs.

· Establish an appropriate quality review program in order to ensure that Certified Public Accountants implement professional standards and comply with the provisions of Certified Public Accountants Regulations and relevant by-laws.

· Conduct special research work and studies covering accounting, auditing and other related subjects.

· Publish periodicals, books and bulletins covering accountancy and audit related subjects.

· Participate in local and international committees and symposiums relating to the profession of accounting and auditing.

Second : Management :

The Board of Directors practices the powers required for realizing its objectives. The Secretary General of SOCPA executes and follows up Board decisions and practices authorities of executive management. Technical committees prepare general rules organizing the profession, including establishing and developing accounting and auditing standards, professional ethics, organizing SOCPA fellowship exam, practice monitoring programs. These committees are formed from experts and members of high specialization; University staff, practitioners from companies and government departments. The following table shows the names of committees concerned and their constitution:

 

Third : SOCPA Resources:

These resources consist of :

1. Subscriptions as determined by the Board of Directors.

2. Government subsidies.

3. Gifts, donations and legacies that the Board decides to accept.

4. Return on the investment of the SOCPA 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.

Fourth : Works Achieved by SOCPA :

Represented in its board of directors, technical committees and secretariat general of the SOCPA continuously work to achieve its objectives. The organization structure has been established and a number of professional projects were commenced. Some of which has been completed and remaining others are expected to complete within the near time.

1.Development and approval of professional standards and rules :

The main function of accounting and auditing is the provision of relevant information that satisfies the need of beneficiaries to reliable information provided in financial statements. This information assists decision makers in assessing the principles in the light of which financial reports; the projected returns, costs and risks are prepared and clarified. It provides reliable information and, therefore, increasing the efficiency of individuals, projects and markets. Therefore, CPAs should comply with a group of accounting, auditing and other professional standards, including codes of professional conduct, in addition to regulatory requirements imposed by rules and regulations. The compliance of CPAs with these standards and rules is considered as recognition from the accounting profession in regard of its responsibility towards the public, clients and professional fellows. The CPAs’ acceptance and adoption of these standards and rules while performing their professional responsibilities will result in improving the profession practice and consequently public confidence.

Due to the importance of this matter, the Certified Public Accountants Regulation, in Article (19), entrusted the SOCPA to review, develop and approve accounting and auditing standards and empowered, in Article (25), the Board to : approve accounting, auditing and other professional standards; form technical committees and lay down the rules and procedures for the performance of their functions. In Article (10), the Regulations state that CPAs shall comply with standards and rules issued by the SOCPA. The following are the works carried out in this regard and activities proposed for the future :

1.1 Review and Develop Accounting Standards :

The Accounting Standards Committee conducted a comprehensive study on previously issued standards, which included the objectives and concepts of financial accounting and presentation and general disclosure standard. It also determined the topics that are considered as significant to be covered by accounting standards, and consequently commenced preparing twenty standards. The committee studied enquiries received and issued relevant interpretations and opinions. The following list includes issued standards :

The committee issued also professionals opinions and interpretations as follows :

SOCPA is working on the preparation of some other standards, such as :

§Fixed assets.

§Intangible assets.

§Accounting of operation and maintenance contracts.

§Accounting of supply and construction contracts.

§Segment reporting.

§Other than temporary impairment.

§Equity method.

§Real estate.

§Lease contracts.

§Government grants and subsidies.

§Employee wages.

§Share dividend.

§Liabilities and contingencies.

§Financial bonds.

1.2 Review and develop Auditing Standards :

The Auditing Standards Committee conducted a comprehensive study covering previously issued auditing standards, which included: professional qualification; integrity, objectivity and independence; due professional care; planning; control and documentation, evidences of auditing and reporting. The committee determined the topics for which auditing standards are to be issued. The following list includes issued standards :

· Auditing in computer environment.

· Study and assessment of internal control for the purpose of auditing financial statements.

·Special reporting.

·Interim reporting.

·Audit risk and materiality.

·Attestation standards.

The committee decided also to start issuing the following standards :

§Audit sampling.

§Related parties transactions.

§Auditor’s responsibility to detect and report errors or irregularities.

§Internal auditing for the purpose of auditing financial statements.

§Prospective financial reporting.

§Reports on processing information by service organizations.

§Analytical procedures.

§Clients representations.

The committee issued also a number of professional opinions as follows :

1.3 Codes of Professional Conduct :

The Committee of Professional Ethics studied the rules of professional conduct enforced in a number of countries, and then the proposed rules were raised to the Board of Directors. The Board issued its approval under decision No. 5/3 dated 27.04.1415H corresponding to 02.10.1994. SOCPA members shall comply with those codes in practice and in dealing with professional fellows, clients and others. The committee studied inquiries received and issued a number of opinions and interpretations such as :

2. Monitoring CPAs performance :

To achieve the effectiveness of issued professional standards, a suitable means to verify compliance with these standards should be established. Therefore the Certified Public Accountants’ Regulation entrusted, in Article (19), SOCPA to establish an appropriate quality review program. The following explain the actions that were taken to achieve this objective :

2.1 Quality Control Standards For CPA Firms :

The Quality Review Committee conducted a comprehensive study for preparing quality control standards for CPA firms. The Board issued resolution No. 3/3 dated 26.01.1415H corresponding to 05.07.1994, approving the quality control standards for CPA firms as a guidelines for two years.

To implement the above requirement the Committee request concerned parties, including CPA firms, university staff members, Chambers of commerce and independent governmental organizations, to provide SOCPA with their comments on the quality control standards. Received comments were studied and presented to the quality review committee. The committee, upon adequate study, approved the proposed quality control standards and submitted it to the Board for final approval. The Board issued its resolution No. 8/2 dated 08.09.1418 corresponding to 06.01.1998 approving the quality control standards.

These standards consist of two sections, the first one includes, definition, aim, and scope of quality control. Section two includes, objectives of quality control standards, responsibility for compliance with quality control standards, and the elements of quality control which are :

1. Independence.

2. Assigining personnel to engagements.

3. Consultation.

4. Supervision.

5. Hiring.

6. Professional development.

7. Advancement.

8. Acceptance and continuance of clients.

9. Compliance with CPAs Regulations and Rules.

10. Periodic internal review (Inspection).

This section includes also the key factors that should be taken in consideration on the design or assessment of quality control standards and when the CPA firm documents for quality control.

These standards are considered as the principal base of the quality review program which will be adminstrated in order to obtain reasonable assurance that CPAs comply with the provisions of the Certified Public Accountants Regulations, audit and accounting standards, SOCPA professional rules and standards, and other professional instructions issued by competent authorities.

2.2Practice- monitoring program :

The quality review committee made best efforts to set a quality review program, taking in consideration that such program is to be consistent with professional environment in the Kingdom, the gradual progress, and improvement of professional performance. The proposed program was presented, through memorandum No. 48/1 dated 18.08.1415H corresponding to 19.01.1995, to SOCPA Board which in turn, issued its resolution No. 2/2 approving the practice-monitoring program to be implemented immediately upon issuance.

The aim of this program is to ensure that CPAs comply with the provisions of Certified Public Accountants Regulations, accounting and auditing standards, professional rules issued by SOCPA, and other professional instructions issued by competent authorities for the purpose of improving professional practices of CPA firms, maintain continuous quality professional practice and maximize, efficiency and reliability of professional services. The practice- monitoring program consists of three sections as follow :

Section (1) :

Includes definitions, an introduction providing historical description to the stages and procedures followed in preparing the program. It also includes a description of program objectives and performance requirements.

Section (2) :

Includes an explanation of the objectives, types and guidelines for CPA firm quality control review, which consists of annual review and periodic review. The program details annual review guidelines. Periodic review guidelines were issued during 1999.

Section (3) :

Indicates CPA Firm obligations, including provision of periodic informations and data to SOCPA so as to have an initial understanding of the extent to which CPA Firms comply with the adequate quality control, accounting and auditing standards, and SOCPA rules and standards.

The review program requires CPA Firms to comply with the following :

1. Provide SOCPA with periodic data on CPA Firms :

CPA Firm shall provide SOCPA, within a period not exceeding 90 days from the end of firm fiscal year, with the informations that may enable program administraters to implement the practice- monitoring program, monitor practitioners performance, initially acquainted of the extent of practitioners compliance with the regulations, accounting and auditing standards and SOCPA professional rules and standards. Section (3) of the practice- monitoring program includes detailed explanation of those requirements.

2.Apply adequate quality control :

A practitioner, regardless of its size or regulatory form, shall apply adequate quality control in compliance with quality control standards issued by SOCPA.

3.Acceptance review implementation by CPA firms :

Practioners shall accept that review team appointed by SOCPA is to perform the review as follows :

3.1Review annual periodic information provided by the firm (annual review). Section (3) of the program includes an illustration of the data the firm is required to submit periodically to SOCPA.

3.2.2Once every five years for firms auditing other companies and establishments.

 

3.3 Violations Review :

The object of this review is to examine the request referred to the Committee from the CPA Violations Investigation Committee and to submit a report summarizing violations imputed to CPAs. The report submitted to the investigation committee shall include, in addition to imputed violations, an explanation of related regulatory and professional requirements, and to state the violations, if any.

2.3Quality Control Review Guidelines :

This guideline review procedures to which the review team, practitioner, and other parties responsible of the implementation of the review program are required to comply when organizing or performing a periodic review. The guidlines include also review scope, study and assessment of quality control, selection of engagements to be reviewed, practitioners multi- offices to be visited, form and content of review report.

Review guidline does not require new professional requirements. However, it includes the same requirements stated in the Certified Public Accountants Regulations, accounting and auditing standards, professional ethics rules, quality control standards and other professional and regulatory requirements. Therefore the review manual contains such procedures needed only to provide reasonable assurance that practitioners comply with those requirements.

2.4 Quality control manual :

To facilitate application of quality control standards to practitioners, SOCPA prepared a quality control manual that includes a description of the professional and regulatory requirements for each of the elements of quality control for practitioner, policies and procedures guidlines and illustrative forms proposed for documentation of policies and procedures adopted by firm to verify compliance with quality control standards. The quality review committee, through its resolution No. 5/2 dated 28.02.1419H, approved the manual as guidance reference to be followed by practitioners on implementation of quality control standards.

Quality Control Manual does not require new professional requirements as these requirement are stated in the CPA’s Regulations and professional standards. Although the policies and forms included in the manual are not mandatory, yet applying them will assist CPA firms to apply quality control standards comptently and effectively.

3. Educational and professional qualification :

In view of the significance of financial statements and auditor’s report, the CPA preparing such statements should be assured of his capabilities to verify the information included therein. The external auditor should also be assured of the fairness of his opinion on financial statements. This can not be achieved unless accountants and auditors have sufficient educational and professional qualifications that enable them to understand entity activity, denotation of information present in financial statements and proper application of accounting and auditing standards. Therefore, developing suitable educational and professional programs is considered necessary. Educational and professional programs are not only limited to the areas of accounting and auditing, it includes also other areas.

In consideration of the above, CPA’s Regulation, in Article (19) entrusted SOCPA to organize courses of continuous education and specific ones for the preparation of fellowship examination, provided such courses cover the professional, practical, and theoretical aspects of accounting and auditing profession. The following are works achieved :

3.1 SOCPA Fellowship Exam. :

Immediately upon approval of the General Rules for the fellowship exam, the SOCPA started building an information base containing a number of standard CPA questions and answers. Thirteen exams were held. Hundreds of candidates sat for the exam and one hundred and thirty of them obtained the SOCPA fellowship.

3.2 Courses Covering SOCPA Fellowship Examination:

The aim of these courses is to enable the trainee to be acquainted with the theoretical and practical aspects of accounting and auditing and to apply it skillfully. Each course consists of a number of training materials and each training material covers one or more topics of SOCPA fellowship exam subjects, which include accounting, auditing, zakat and tax, jurisprudence and business law. Each training material includes a discussion of the objectives and elements of the topic, a sufficient explanation of each element, and the same is connected to the relevant professional standards. It also includes problems and application cases. SOCPA started conduction of the course since 1995. By the end of 1998, eight courses were conducted in each of Riyadh and Jeddah and one course in Dhahran. The following table shows the number of training material units, number pages, number of implemented training courses and number of participants :

The SOCPA conducts periodically a survey among trainees and instructors to evaluate courses materials and instructors’ performances.

3.3 Special courses for practitioners licensed at issue time of the regulation :

Paragraph (1/A) of Article (20) of the Certified Public Accountant’s Regulations stipulates that all Certified Accountants licensed to practice the profession in the Kingdom at the time these Regulation came into force, should attend courses held by the SOCPA and pass the examination within a period not exceeding three years from the date of implementing the program prepared for that purpose, unless they obtain the fellowship certificate stipulated in Para. (2), Article (19) of the Regulation. Therefore Education and Training Committee has prepared the general rules organizing these courses, which the Board approved later on. Training materials were prepared and courses were implemented effective from 1996 in Riyadh, Jeddah and Dhahran. SOCPA, periodically conducts a questionaire to participants to evaluate these courses.

3.4 Special Training Courses :

The aim of these courses is to enable the trainee to be acquainted with the theoretical, practical and professional aspects of a specific topic. These courses address all those who are concerned with accounting and auditing in both the private and the public sectors, particularly those who work in areas related to the topic of the courses. Training materials units for these courses are designed to suit the special requirements of each course. SOCPA commenced these courses effective from 1998.

3.5 Continuous Professional Education :

Article (2/1) of Education and training committee work procedures states that the committee shall prepare, develop and conduct CPE courses, therefore, SOCPA secretariat general prepared a proposal for the rules that organize the CPE program. This proposal was achieved upon comprehensive study to the rules followed in U.S.A, U.K and IFAC. The committee discussed the proposal in many meetings and redrafted with respect the comments pointed. After being approved by the committee the proposal was sent to SOCPA members and to members of universities staff to obtain their comments. Then final draft was prepared and submitted to SOCPA Board. The Board issued its decision No. 3/2 dated 11.09.1419H corresponding to 29.12.1997 approving the rules as effective from 01.01.1999.

These rules aims to update technical and professional informations and skills in subjects applicable to accounting and auditing profession in order to maintain or enhance CPA’s technical and professional competence. According to these rules :

1.Any full member, licenced to practice the profession, should complete 300 CPE points every three years, provided that training points for any one year not be less than 65.

2.Any full member, not licenced to practice the profession, should complete 180 CPE points every three years, provided that training points for any one year not be less than 50.

3.Any one who passed SOCPA fellowship examination and who is not a member of SOCPA, should complete 180 CPE points every three years, provided that training points for any one year not be less than 50.

4.Any category, other than that mentioned in (1,2,3) above, if required to satisfy the CPE requirements should complete 180 CPE points every three years, provided that training points for any one year not be less than 50.

4. Serving members and public interests :

One of the most significant methods that may assist SOCPA to achieve its objectives is to be acquainted with and follow- up the new trends of accounting and auditing, including the application of new technology. The Certified Public Accountants’ Regulations state in Article (19) that SOCPA shall be entrusted to conduct researches and studies issue periodicals, books and publications, and participate in local and international committees and symposiums related to the profession of accounting and auditing. In consideration to the above, SOCPA founded and/ or carried out the following:

· Specialized information center to serve its members and other accounting and auditing researchers. The center includes a specialized library containing books, research papers, specialized bulletins in the field of accounting and auditing standards and professional rules issued by professional bodies in different countries. It also includes specialized theoretical books in accounting, auditing and other related subjects such as jurisprudence, business law, zakat and taxes.

· A comparative study of accounting policies adopted by public companies. This analysis was classified by sector, and within each sector, the policies applied to items disclosed in financial statements of each company were defined, such as, inventory, investments, depreciation, … etc. This study is updated yearly and distributed to parties related to accounting and auditing profession.

· Each year, a number of seminars are conducted by a number of experts of highly specialized in the fields of accounting and auditing, are held SOCPA, as well, participates in local and international conferences and symposiums.

· A quarterly professional bulletin is issued to set forth the SOCPA news, issued standards and rules, and any subject or article that may contribute in raising the standard of the profession.

5. Researches, Studies and Informations :

This aims to activate the relation between SOCPA and its members, so that the former can respond to their needs, promote their capabilities and assist them to overcome any difficulty that they may face. It aims also to activate SOCPA and its members to serve public interest through the enhancement of professional services provided by CPAs.

 

The works carried by SOCPA in this area include, preparation of professional standards and rules, holding a number of conferences and symposiums, training courses, study of inquiries and providing relevant solutions, issue professional studies, researches and publications, establishing information center containing books, research papers, specialized bulletins in the field of accounting and auditing and related subjects such as Jurisprudence, Business law and Zakat and Income. This area also includes SOCPA participation in local, regional and international conferences and symposiums and cooperation with local, regional and international organizations in developing the profession.

6. Human and Financial Resources and Organizational Structure :

The most significant activity that enables SOCPA to achieve its purposes is the development of its organizational structure, financial, human and technical resources. The understanding and effective dealing with emerging professional issues and members’ requirements will assist in the development of the profession to keep in pace with surrounding changes and expanding scope of service. Considering the importance of this aspect, the Certified Public Accountants’ Regulations in Article (25) stated that financial and administrative rules and internal regulations for SOCPA should be issued.

In consideration of the above, SOCPA built its organizational structure, including human and financial resources and issued rules organizing its work, such as:

·Financial and Administrative Rules.

·Executive Rules for the Preparation of Accounting Standards.

·Executive Rules for the Preparation of Auditing Standards.

·Procedures of Performance for the Accounting Standards Committee.

·Procedures of Performance for the Auditing Standards Committee.

·Procedures of Performance for the Professional Ethics Committee.

·Procedures of Performance for the Quality Review Committee.

·Procedures of Performance for the Education and Training Committee.

· Procedures of Performance for the Examination Committee.

· General rules for the SOCPA fellowship exam.

·General framework for the training material of the SOCPA fellowship exam.

· General framework for the training material of CPAs.

·SOCPA internal structure regulations.

·SOCPA strategic plan (1998 – 2002).

SOCPA staff is about 25 personnels. In addition to its Board of Directors and Technical Committees, SOCPA employs in performance of its activities, many persons of high qualifications and experience in accounting and audit profession including highly specialized, University staff, practitioners and companies and government departments staff and officers in various economic bodies in both the public and private sectors.

7. SOCPA Strategic Plan :

Within the effort made to develop accounting and auditing profession and to achieve the interests of CPA firm and community in general, SOCPA prepare its strategic plan (1998-2002). The plan included a concept to SOCPA future vision and selection of activities that assist in the realization of that vision. The basis used in selection was the highest priority for the area of activity and its adaptability to the professional environment in the Kingdom.

The plan was sent to concerned and interested parties to obtain their opinion, comments or suggestions. The committee studied comments received and make necessary changes before submitting to the Board. SOCPA Board issued his decision No. 4/2/1 dated 17.01.1419 corresponding to 13.05.1998 approving SOCPA strategic plan for the period (1998 – 2002).