Saudi companies must prepare annual financial statements in accordance with the applicable SOCPA framework (full IFRS or SOCPA SME standard). This guide covers which framework applies, the main components of the statements, preparation steps, disclosure and notes, and filing with the Ministry of Commerce and CMA. See SOCPA standards, annual audit, and accounting software.
Overview
The Companies Law and SOCPA require companies to prepare financial statements that give a true and fair view of the entity's financial position, financial performance, and cash flows. The statements are prepared for the financial year and comprise the primary statements plus notes. They are approved by the board and, after audit where required, by the shareholders at the AGM, and filed with the Ministry of Commerce and (for listed companies) with the CMA.
Applicable Framework
Listed companies and many large entities apply IFRS as adopted by SOCPA. Eligible SMEs may apply the SOCPA SME standard. The framework determines recognition, measurement, and disclosure. Using the wrong framework (e.g. SME when full IFRS is required) can lead to restatement and regulatory issues. See SOCPA standards for criteria.
Components of Financial Statements
A complete set of financial statements typically includes: (1) Statement of financial position (balance sheet) at the end of the period; (2) Statement of profit or loss and other comprehensive income (or separate income statement and statement of comprehensive income); (3) Statement of changes in equity; (4) Statement of cash flows; (5) Notes comprising significant accounting policies and other disclosures. Comparative figures for the prior period are required. The SOCPA SME standard may permit simplified formats and fewer notes.
| Component | Purpose |
|---|---|
| Statement of financial position | Assets, liabilities, equity at period-end |
| Profit or loss / OCI | Revenue, expenses, other comprehensive income |
| Changes in equity | Movements in equity accounts |
| Cash flows | Operating, investing, financing cash flows |
| Notes | Policies and detailed disclosures |
Preparation Process
Close the books at the financial year-end; reconcile all accounts and ensure transactions are recorded in the correct period. Apply the applicable accounting policies consistently and prepare the primary statements and notes. Management is responsible for the statements; the auditor (where appointed) audits them. Use accounting software that supports the chosen framework and generates the required reports. Allow time for board review and audit before the AGM and filing deadlines.
Disclosure and Notes
Notes must disclose accounting policies and information necessary for a true and fair view. Typical areas: basis of preparation, significant policies (e.g. revenue, PPE, leases, financial instruments), segment information (if required), related parties, commitments, contingencies, and post-balance-sheet events. Full IFRS requires extensive disclosures; the SME standard reduces them. Ensure notes are consistent with the primary statements and that all material items are disclosed.
Filing with MC and CMA
Approved (and where required, audited) financial statements are filed with the Ministry of Commerce as part of annual compliance. Listed companies file with the CMA and must comply with continuous and periodic disclosure rules. Filing is via the relevant portals. Late or incomplete filing can result in penalties. See annual audit requirements and AGM requirements.
Preparation Checklist
- Confirm the applicable framework (full IFRS vs SOCPA SME) and accounting period.
- Close the ledger, reconcile balances, and record adjusting entries (accruals, depreciation, provisions).
- Prepare all primary statements and notes in accordance with the framework; ensure consistency and comparatives.
- Have the statements reviewed by management and, where required, audited by a SOCPA-licensed auditor.
- Obtain board approval and then shareholder approval at the AGM; file with MC and CMA by the deadlines.