Violators referred to the Public Prosecution for providing misleading accounting reports
In a decisive move reflecting the Kingdom's commitment to enhancing financial transparency and protecting the market from unprofessional practices, the Saudi Organization for Certified Public Accountants (SOCPA) announced the detection of regulatory violations that necessitated referring two individuals to the Public Prosecution. This action is part of SOCPA's intensive oversight efforts to ensure compliance with the Accounting and Auditing Profession Law and its implementing regulations, and to protect the national economy from the negative repercussions of misleading financial reports.
Details of observed violations
The Authority clarified that initial investigative procedures revealed the involvement of two individuals in acts classified as crimes under Article (10) of the Professional Regulations. The first violation involved an individual whose license had been previously revoked practicing the profession and issuing an audit report on the financial statements of a company. This action constitutes a blatant challenge to the regulations, as it involves practicing the profession without legal authorization, thus exposing those benefiting from these statements to high risks due to reliance on reports issued by an unauthorized entity.
The second violation involved a licensed accountant who issued an audit report that concealed material information he was obligated to disclose. This type of violation strikes at the heart of professional ethics, as withholding essential information misleads investors and stakeholders and undermines the principles of fairness and transparency upon which financial markets are based.
Legal context and the importance of oversight
These measures are based on Article 10 of the Accounting and Auditing Profession Law in the Kingdom of Saudi Arabia, which explicitly criminalizes any attempt to mislead the public or impersonate a licensed professional, whether by operating with a revoked or suspended license, or by manipulating financial data and providing false information. The Saudi Organization for Certified Public Accountants (SOCPA) has played a pivotal role since its inception in regulating this vital profession, acting as the first line of defense to ensure the quality of financial reports, which are crucial for making sound economic decisions.
Economic impact and boosting market confidence
These oversight measures are of paramount importance given the significant economic activity underway in the Kingdom as part of Vision 2030. A strong and reliable accounting and auditing sector is a cornerstone for attracting foreign and domestic investment, as investors consistently seek markets characterized by high transparency and accurate financial data. Neglecting such violations can undermine confidence in companies' financial statements, potentially damaging the reputation of the financial market and the overall economy.
The authority concluded its statement by affirming its continued monitoring and control of any practices that affect the integrity of the profession, urging all practitioners to fully comply with professional standards and applicable regulations, in order to avoid severe penalties that may include dismissal, imprisonment, and financial fines, and to preserve the honor and standing of the profession.
