A crucial step to enhance the integrity of the Saudi financial market
In a decisive regulatory move aimed at enhancing the integrity of the economic environment and protecting the accounting and auditing profession in Saudi Arabia, the Saudi Organization for Certified Public Accountants (SOCPA) announced that it has referred two entities to the Public Prosecution. This firm action comes after they were caught practicing accounting and auditing activities without obtaining the necessary regulatory licenses, a clear violation and a crime punishable by law, and a threat to the reliability of financial reports in the market.
Regulatory context and efforts to protect the profession
This step comes as part of the ongoing efforts of the Saudi Organization for Certified Public Accountants (SOCPA), the regulatory and supervisory body for the accounting profession in the Kingdom. SOCPA bases its procedures on the “Accounting and Auditing Profession Law,” which aims to regulate the practice of the profession, raise its quality standards, and ensure practitioners adhere to the highest professional and ethical standards. Regulating this vital profession is a cornerstone for achieving the goals of Saudi Vision 2030, which focuses on enhancing transparency, combating financial and administrative corruption, and creating an attractive and reliable investment environment based on accurate financial data.
Details of observed violations
The Authority clarified, after coordinating with security agencies and conducting initial investigations, that one of the violating establishments is a licensed office authorized to provide "financial advice for non-securities matters." However, it exceeded the scope of its license by publishing advertisements on its website and the social media platform "X" offering "financial statement approval" services. This advertisement misleads the public and suggests the office's ability to provide auditing and review services, which are exclusively reserved for licensed certified public accountants.
The second establishment, a commercial enterprise, promoted its “review” service on its website and displayed a sign outside its premises suggesting it offered professional services. Both cases constitute a clear violation of the law, as they provided specialized professional services without possessing the necessary qualifications, competence, and licenses to guarantee the quality and reliability of these sensitive services.
Importance and expected impact of the procedure
This referral is of paramount importance on several levels. Locally, it sends a strong deterrent message to anyone tempted to practice the profession without proper qualifications, thus protecting businesses, especially small and medium-sized enterprises (SMEs), from falling victim to unqualified services that could lead to inaccurate financial statements and legal and tax problems. This measure also strengthens the business community's confidence in licensed accountants and auditors who adhere to regulations.
At both the regional and international levels, these stringent measures demonstrate the Kingdom's commitment to implementing global governance and transparency standards. Foreign investors consider the strength of the regulatory and supervisory framework a key factor when making their investment decisions. Therefore, ensuring the reliability of financial reporting enhances the attractiveness of the Saudi market for foreign direct investment and reinforces the Kingdom's position as a leading financial and economic hub.
Legal penalties and the role of the Public Prosecution
The Authority confirmed that these practices fall under Article 10 of the Accounting and Auditing Profession Law, which criminalizes “misleading the public by any means to create the false impression of one’s right to practice the profession.” Following the referral, the Public Prosecution will investigate the two cases and complete the necessary legal procedures to prosecute those involved and apply the penalties stipulated in the law, which may include imprisonment and fines. The Authority stressed that it will not tolerate any violations that compromise the integrity of the profession and the reliability of the national economy, urging everyone to adhere to the regulations and deal only with licensed firms and individuals.
