Is an audit mandatory for your company? A guide by Saudi company type

Most Saudi companies must appoint an auditor under the Companies Law (Royal Decree M/132). Micro and small companies can be exempt when they meet two of three tests, and the exemption does not apply in certain cases. Every company, audited or not, must prepare financial statements and file them within six months of year end.

1. The audit requirement by company type

Joint-stock companies

Art. 18 of the Companies Law requires companies to appoint an auditor licensed in the Kingdom; Art. 87 gives the ordinary general assembly of a joint-stock company the power to appoint the auditor and set the fee and term. Art. 19 allows micro and small companies to be exempt, unless the company is listed, has issued tradable debt instruments or sukuk or preferred or redeemable shares, its by-laws require an auditor, other laws require one, it is foreign, or it owns or is owned by a company the exemption does not cover.

Limited liability companies

The general rule in Art. 18 applies, and Art. 19(1) allows micro and small LLCs to be exempt under the conditions in the Implementing Regulations.

Simplified joint-stock companies

Also subject to Art. 18: an auditor is required unless the company qualifies as small and meets the exemption conditions.

Branches of foreign companies

A foreign company’s branch prepares Saudi financial statements under the standards endorsed in the Kingdom and files them with an auditor’s report within 6 months of its year end (Companies Law, Arts 238–239).

2. The small-company exemption

Micro and small companies are exempt from appointing an auditor when they meet two of three tests:

• Annual revenue not above SAR 10 million.
• Total assets not above SAR 10 million.
• No more than 49 employees.

When filing its financial statements, the manager or board chair attaches a statement that the auditor requirement does not apply, and that no partner or shareholder holding the percentage in Art. 19(3) has asked for an auditor. Banks, lenders and government tenders often ask for audited statements anyway.

When the exemption does not apply

• The articles or by-laws require an auditor.
• The company belongs to a group with a company that must be audited, or owns companies the exemption does not cover.
• The company has issued debt instruments or sukuk.
• The company is a branch of a foreign company.

3. Summary by company type

4. Filing deadline and fines

• Every company prepares financial statements at each year end under the standards endorsed in the Kingdom, and files them within six months of year end on the Qawaem platform: 30 June for a 31 December year end.
• The person responsible for filing is fined for late filing, according to the company form, capital and number of managers, up to SAR 20,000 for an unlisted joint-stock company; the fine rises by 50% for a repeat.

5. Changing auditors

• The auditor is appointed and changed by the general assembly or the partners (Art. 18).
• An auditor that resigns sends a reasoned statement to the company, and the company calls the partners or shareholders to appoint a replacement.
• We handle the engagement letter and the professional communication with the outgoing auditor, so your reporting timeline is not disrupted.

6. How Entry Post helps

Entry Post, licensed by SOCPA (No. 933), audits the financial statements of LLCs, joint-stock companies and foreign-company branches, with the same partner from scoping to sign-off. If your statements are not prepared yet, we can prepare them as a separate service, in which case another firm audits them.