Saudi regulator tightens audit rules, giving audit committees its findings

Saudi Arabia's Capital Market Authority has approved amendments requiring registered accounting firms to employ enough audit managers with the Saudi Organization for Chartered and Professional Accountants (SOCPA) fellowship and to give listed companies' audit committees its findings, it said on 29 September.

The amendments are to the authority's rules for auditors of the entities it supervises. The findings are its inspection results on each listed company's audit file, and the amendments take effect from the date of publication.

What the authority approved

The announcement said the amendments cover five areas:

• A sufficient number of audit managers holding the SOCPA fellowship, or equivalent fellowships the authority accepts, in proportion to the nature, scale and complexity of the firm's business.
• An appropriate quality management system for audit and review engagements, and compliance with professional standards when reviewing interim statements and auditing annual statements.
• Cooperation with the authority's inspections, including a corrective action plan, submitted for approval and then implemented, where the inspection outcome warrants one.
• Sharing the authority's final inspection results on a listed company's audit file with that company's audit committee.
• Wider transparency report disclosures on the firm's profile, governance and leadership, and on its quality management system, including who oversees it and the outcome of its annual evaluation.

The authority said the amendments are meant to align the framework with international best practice and to raise the quality of audits of supervised entities and of the information registered firms disclose. It said that passing inspection results to audit committees would enable them to monitor the work of the auditor.

Deadlines and disclosure in the rules

The authority's English translation of the rules records an amending board resolution, number 3-106-2026, dated 12 August 2026, and sets the timetable for some of these duties. A registered firm must give a listed company's audit committee the final inspection results on its audit file within 10 days of receiving them, under Article 10. Under Article 13, firms must publish an annual transparency report in Arabic and English within four months of the end of their financial year and keep it on their website for at least five years.

The rules apply the fellowship test twice, making it a condition of registration under Article 7 and a condition of keeping the registration under Article 10, the text shows. Article 10 also requires firms to keep a record of engagement team working hours for each audit of a supervised entity. For individual accountants it requires enough working hours on each engagement and, as a guiding paragraph, that the number of listed company audits at any time does not exceed an appropriate number.

The annex to the rules sets out what the report must contain. Beyond the governance and quality management items, it asks for the share of audit staff holding the SOCPA fellowship or an accepted equivalent, Saudisation rates, the results of the firm's latest internal inspection, any penalties or litigation affecting the firm, and a list of clients that are supervised entities with the working hours spent by the responsible accountant, the audit manager and the engagement quality reviewer.

From consultation to approval

The authority published the draft on 8 April for 30 calendar days of public consultation ending on 8 May, it said at the time. The draft's transparency report provisions referred to disclosures on the firm's legal form and its quality management system. The approved version, as described in the 29 September announcement, refers instead to the firm's profile, governance and leadership.

The authority has been adding to its register while tightening the rules. On 14 September it approved the registration of Kreston NBB for Professional Consulting, taking the number of registered accounting firms to 17 and registered certified public accountants to 58, it said. Kreston NBB may not begin audits of listed companies or real estate investment traded funds until it meets conditions set by the authority. The same announcement noted that the rules, first issued in 2018, were previously amended in 2022.