IFRS Standards will be the financial reporting framework for all listed companies in Saudi Arabia starting in 2017, and the IFRS for SMEs will be the reporting framework for unlisted companies starting in 2018. Adoption of IFRS Standards is part of a ‘Project for Transition to International Accounting and Auditing Standards’ undertaken by the Saudi Organization for Certified Public Accountants (SOCPA), which is the Saudi Arabian national standard-setter. Currently, the Saudi Arabian Monetary Authority (which is the Saudi Arabian central bank) requires banks and insurance companies in Saudi Arabia (both listed and unlisted) to report using IFRS Standards.
SOCPA standards currently apply to all other companies, listed and unlisted.
The Project involves SOCPA reviewing each individual IFRS Standard (including Interpretations). To date, that review has been completed for some IFRS Standards and is ongoing for the remaining ones. As a result of the review to date, SOCPA has decided the following:
- Additional disclosure requirements will be added to some standards, mainly to reflect Shariah or local law.
- Where IFRS permits optional treatments for a type of event or transaction, SOCPA may remove one of the options. However, for the IFRS Standards for which the review has been completed, SOCPA has decided not to remove any options.
- SOCPA may decide to amend any IFRS requirement that contradicts Shariah or local law, taking in consideration the level of technical and professional preparedness in the Kingdom. However, for the IFRS Standards for which the review has been completed, SOCPA has decided not to make any amendments.