Capital Market Authority: Amendments to the rules for registering auditors

has announced Capital Market Authority a public consultation period for all interested parties and participants in the financial market to submit their views and comments on the proposed amendments to the "Rules for Registering Auditors of Establishments Subject to the CMA's Supervision." The consultation period will last for 30 calendar days, ending on May 8, 2026. This strategic step is part of the CMA's ongoing efforts to develop the regulatory and legislative environment of the financial market in line with international best practices.

Historical background and organizational context

Historically, the Saudi Capital Market Authority (CMA) was established under the Capital Market Law issued in 2003. Since then, it has been responsible for regulating and developing the capital market and protecting investors from unfair practices. Within the framework of the Kingdom's Vision 2030, specifically the Financial Sector Development Program, the urgent need to update regulations and bylaws periodically to keep pace with economic changes has become apparent. The auditing profession is considered a cornerstone of financial market stability, as markets rely on it to ensure the accuracy and validity of financial statements, thereby mitigating risks and preventing financial crises that may arise from manipulation or deficiencies in financial disclosure.

Project objectives and binding requirements

According to the official statement, the proposed project aims to provide a legislative environment aligned with best practices for entities that independently supervise auditors. This approach is consistent with relevant regulations to enhance the quality of audit processes for entities under the Authority's supervision and improve the quality of disclosed information. The project includes the addition of mandatory requirements to ensure professional competence, most notably the requirement for a sufficient number of audit managers holding the Saudi Organization for Certified Public Accountants (SOCPA) fellowship or equivalent professional certifications accepted by the Authority. The amendments also stipulate the existence of a suitable quality management system and adherence by audit firms to approved professional standards when reviewing preliminary and annual financial statements.

Detailed instructions and enhanced transparency

Furthermore, the project mandates that accounting firms adhere to detailed instructions when undergoing audits by the Authority. This includes full cooperation and the provision of all required data and documents. In the event of any observations, firms are obligated to prepare and implement a corrective action plan. The project also requires firms to share the final audit results with the audit committees of listed companies, thus strengthening the oversight role of these committees. Regarding transparency reporting, the project emphasizes the necessity of clear and unambiguous information, including disclosure of the firm's legal structure, a description of its quality management system, and the results of its annual evaluation.

Importance and expected impact locally and internationally

The significance of this event extends beyond the local level to encompass broad regional and international implications. Locally, these amendments will protect shareholders' rights and enhance transparency in the Saudi Stock Exchange (Tadawul). Regionally and internationally, the application of stringent auditor standards will bolster the attractiveness of the Saudi market to foreign investors and international financial institutions, aligning it with its standing in global indices such as MSCI and FTSE. In conclusion, the Authority affirmed that all stakeholders' feedback will be carefully considered and thoroughly studied before the final version of the project is adopted.