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Saudi companies need to reveal IFRS progress

  • Saudi Arabia Image

22 Aug 2016

Listed entities in Saudi Arabia will have to report under IFRSs as adopted by the Saudi Organization for Certified Public Accountants (SOCPA) as off 1 January 2017. The Saudi Capital Market Authority (CMA) now requires disclosures regarding the entities' progress on adoption. The resolution could be seen as the result of lessons learned from IFRS transition in other jurisdictions that did not have such an overview over public entities’ IFRS readiness (for example in the European Union or Korea).

The CMA has called on listed entities to disclose their IFRS transition progress in three phases.

By 1 September 2016, the companies need to disclose the following information on the Saudi Stock Exchange "Tadawul" website:

  • Whether an IFRS transition plan has been prepared;
  • If no transition plan has been prepared yet, the target date for preparing the plan;
  • Whether an IFRS experienced and specialised external consultant has been hired;
  • If no consultant has been hired, the point of time when this will be done or the reasons for deciding against hiring an external consultant;
  • Whether an entity's internal team responsible for the IFRS transition plan and its implementation has been formed;
  • If no team has been formed, the reasons for not doing so;
  • IFRS transition process difficulties the entity may be facing;
  • The target date for the preparation of the first set of IFRS financial statements and the periods covered by such financial statements.

By 30 October 2016, listed entities need to make the following disclosures:

  • Phase one disclosures updates;
  • Whether the accounting policies necessary for the preparation of IFRS financial statements have been approved;
  • If the accounting policies have not been approved yet, the target date for approving the accounting policies;
  • Where the entity is ready to implement IFRS, it would be exempted from these disclosures but would need to disclose that it has readily available IFRS financial statements and the significant effects of implementing IFRS.

By 31 January 2017, listed entities need to make the following disclosures:

  • Phase one and two disclosures updates;
  • Whether IFRS financial statements have been prepared and the periods covered by these financial statements;
  • If no IFRS financial statements have been prepared yet, the reasons for not doing so and the target date for preparing them;
  • The significant effects on the entity as a result of implementing IFRS (if the effects of implementing IFRS are immaterial this would also need to be disclosed);
  • Any hindrances that might affect the listed entity ability to prepare IFRS financial statements;
  • The extent of the listed entity's readiness to prepare IFRS financial statements for the first quarter of 2017 within the applicable regulatory period.

The CMA also notes that it might request additional disclosures it finds to be necessary in relation to the IFRS transition plan. Please click for access to the announcement on the CMA website.

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