In its ongoing efforts to enhance transparency in the financial market and protect the assets of the national economy, the Saudi Organization for Auditors and Accountants announced that it has taken strict legal measures against violations that were recently detected, as two individuals were referred to the Public Prosecution for committing acts that constitute a clear violation of the Accounting and Auditing Profession Law and its implementing regulations.
Details of observed violations
The authority clarified that initial investigations revealed the involvement of two individuals in irregular practices. The first case involved a person whose license had previously been revoked practicing the profession and issuing an audit report on a company's financial statements, disregarding the license revocation decision. This constitutes circumvention of the regulations and practicing the profession without legal authorization.
The second case involved a licensed accountant who issued an audit report that omitted material information he was obligated to disclose. This constitutes a serious breach of professional ethics and impartiality, negatively impacting the credibility of financial reports relied upon by investors and stakeholders.
Legal framework and Article 10
This referral is based on Article (10) of the Accounting and Auditing Profession Law in the Kingdom of Saudi Arabia. This article explicitly criminalizes any attempt to mislead the public or suggest the right to practice the profession without a valid license, whether the license has been revoked or suspended. Penalties also include providing false information or concealing material facts in accounting reports or documents, which falls under the category of crimes subject to criminal prosecution.
The importance of oversight and its impact on the investment environment
These oversight measures are of paramount importance in the context of the economic transformations underway in the Kingdom. The accounting and auditing profession is the cornerstone of ensuring the accuracy of financial data in the business sector. Reliable and transparent financial reporting enhances the confidence of local and international investors, supports the stability of the financial market, and prevents practices that could mislead shareholders or conceal financial difficulties.
The Saudi Organization for Auditors and Accountants acts as the first line of defense to ensure the quality of professional practices, as its supervisory role contributes to raising the level of governance in companies, which is in line with the objectives of the Kingdom’s Vision 2030 in building a prosperous economy based on transparency and integrity.
Warning and call for compliance
The Authority concluded its statement by emphasizing that it will not tolerate any violations of regulations that could compromise professional integrity or mislead users of financial statements. It urged all licensed practitioners to fully adhere to professional and ethical standards, verify the validity of their licenses, and ensure the accuracy of their reports to avoid penalties that could include disbarment, imprisonment, and fines, and to uphold the honor and standing of the profession.
