Saudi companies to adopt IFRS under new CMA plan
JEDDAH: Several companies, including National Gas and Industrialization Co. (GASCO) and Saudi Cement, are planning to adopt International Financial Reporting Standards (IFRS) under a new plan starting from Sept. 25.
Gasco has hired an external adviser for the transition, while an internal team was also appointed to supervise the process.
GASCO said that the first IFRSbased financial statements for Q1 and Q2 will be prepared by Oct.16, and Q3, 2016 financials will be finalized by Nov. 30.
The Saudi Capital Market Authority (CMA) recently called on listed firms to shift their accounting standards in line with IFRS.
The deadline for IFRS adoption has been set for Jan. 1.
The CMA explained that its decision to oblige listed companies on the stock market to disclose progress of transition to the IFRS endorsed by the Organization for Certified Public Accountants (SOCPA) in three stages came in consultation and coordination with participants in the stock market in order to urge companies to proceed with the application of the standards as of early 2017, according to the decision of SOCPA.
The disclosure of phases aims to verify the ability of listed companies to prepare financial statements in accordance with the IFRS before the due date.
The phases include a group of disclosures related to the extent of the IFRS transition plan preparation by listed companies, and the appointment of an external consultant as well as the formation of an internal team responsible for the transition plan.
Also, there are other disclosures that include the approval of accounting policies and identifying of constraints that may face the company, along with any significant effects as a result of the application of the IFRS.
CMA indicated that a high steer- ing committee has been formed to oversee the IFRS convergence by listed companies in order to follow the readiness of such companies for the IFRS transition and to address the challenges, which the companies may encounter.
The committee includes members with experience and compe- tence from both inside and outside the CMA.
One of the main steps taken by that committee is the recommendation of the companies' transition phases disclosure.
CMA considers that such disclosure would play a role in encouraging board of directors of listed companies toward accelerating the process in order to meet the requirements and to implement the transition plan, where the market conditions and the shareholders' interests can be achieved. It would also help CMA to support companies to surpass the challenges faced before the IFRS implementation date.
CMA also indicated that those decisions emanate from the CMA's role in regulating and monitoring the works and activities of parties subject to the control and supervision of the CMA, and regulating and monitoring the full disclosures of information regarding financial securities and their issuers.
As part of its efforts to spread awareness regarding the IFRS among listed companies and investors, CMA since Aug. 11 launched an awareness campaign via its social media accounts, aiming to introduce the IFRS, advantages of the IFRS convergence, and disclosures required by such standards.
The requirements of the IFRS differ from the Saudi standards that are currently applied. The campaign also provided other relevant information.
In the context of preparing for listed companies' implementation of those standards, CMA has also taken several steps.
CMA sent a circular on Aug. 12, 2015, including the need to prepare a plan for the implementation of the IFRS.
This plan must be completed before the end of 2015.
Also, CMA sent a circular on Jan. 13, 2016, indicating the necessity for the company's board of directors 2015 and 2016 reports to include the IFRS transition plan's details, the implementation phases, and the extent to which the company is ready to apply the IFRS.
JEDDAH: Americans and US businesses will play an important role in Saudi Arabia’s progress toward Vision 2030, a top Saudi envoy says.
Abdullah Al-Saud, Saudi ambassador to the United States, also said that the US business community is destined to play a major role in the future success of the Saudi economy.
He made the remarks in a keynote address delivered at the US-Saudi Arabian Business Council conference in Los Angeles titled "Localization, innovation and partnership opportunities for industrial development in Saudi Arabia."
The conference was designed to create a platform for senior business people and government representatives from both countries to review specific commercial and investment opportunities and network with potential business partners.
The program featured Davosstyle panels with the US and Saudi company executives successfully engaged in the Saudi market alongside Saudi government experts from a wide variety of fields.
In his speech, Al-Saud discussed the many ways that the transformation of Saudi society is driving changes in the Saudi economy and especially the business sector.
“We have a long and trusting relationship with the United States, perhaps more so than with any other country,” the envoy said, adding that the Saudi government is instituting major reform initiatives to ensure the Kingdom develops an economy that is both diversified and sustainable as part of Vision 2030.
He detailed the numerous changes under way in Saudi Arabia, including the modernization of its cities and infrastructure, the development of the private sector, the larger role of women and young people, and the welcoming of foreign investment.
Other Saudi officials participating in the event included Energy, Industry and Mineral Resources Minister Khalid A. Al-Falih and Acting Saudi General Investment Authority Gov. Prince Saud bin Khalid Al-Faisal.
Al-Falih said Saudi Aramco shares underwriting might be issued in the beginning of 2018.
However, it has not been decided yet in which stocks the underwriting will be conducted.
Al-Falih affirmed during the US conference that Saudi Aramco is not looking for strategic partners to enrol in the underwriting and that the underwriting will be available for all investors.
This step will make the company more attractive for the international partners of Saudi Arabia and will open new markets for it thanks to Saudi Aramco’s transparency, said the minister.
“If you are enlisted, this makes you more attractive to international partners and parties because of the company’s transparency,” said the energy minister, adding that the underwriting will enable the company to access foreign projects in the future.
He declared that Saudi Arabia will focus on diversifying energy sources in the Kingdom and will add, in the coming phase, renewable energy, especially the solar one to its local projects’ package.
In a speech he delivered after the conference, Al-Falih stated that huge emphasis will be put in the future on foreign investments.
“We have started the first foreign investment with Uber, one of the biggest investments in a technology private owned company. This strategy has started to see success and up to 80 percent of the company clients in Saudi Arabia are women.”
In a related development, OPEC members will meet on the sidelines of the International Energy Forum (IEF), which groups producers and consumers, in Algeria from Sept. 26-28.
Edward Burton, USSABC president and CEO, earlier said: "For US firms, Saudi Arabia's competitive package of land, utility and infrastructure services coupled with its access to Middle Eastern, European, Asian and African markets make it a destination that any serious industry investor with long-term aspirations in the region needs to look at very closely."