Preparing and Submitting Company Financial Statements

The Ministry of Commerce’s call to prepare and submit company financial statements through the “Qawaem” platform underscores the importance of this step. Companies are required to prepare their financial statements at the end of each fiscal year according to approved accounting standards, and to submit them within a specified period — within six months from the end of the fiscal year — in accordance with the system’s provisions.

This requirement applies to various types of companies, including simplified joint stock companies, simplified limited liability companies, general partnerships, and limited partnerships.

Key Benefits of Preparing and Submitting Company Financial Statements Electronically:

1. Compliance with regulatory requirements and avoidance of legal violations.

2. Clear presentation of the company’s activities and performance over a specific period.

3. Enables shareholders and partners to monitor performance and conduct accurate financial analysis.

4. Easy access to all government services provided to companies.

5. Builds trust among financing and lending entities.

On the other hand, companies must be aware of the penalties that may be imposed for failing to comply within six months from the end of the fiscal year. A financial fine of up to 500,000 SAR may be levied against companies that fail to prepare or submit their company financial statements as stipulated by law.

The regulations require that all companies whose fiscal year ended before July 19, 2022, must submit audited financial statements, with no exceptions. Exceptions apply only to new companies whose fiscal year ends after this date. Furthermore, auditing is mandatory for all foreign companies without exception.

Exemption Criteria from Appointing Auditors

The executive regulations specify three criteria, and companies must meet at least two to be exempt from appointing external auditors:

1. The company’s annual revenue for the relevant fiscal year does not exceed 10 million SAR.

2. The company’s total assets for the relevant fiscal year do not exceed 10 million SAR.

3. The total number of employees does not exceed 49.

If a Saudi company meets two of these criteria and its fiscal year ends after July 19, 2022, it is exempt from appointing auditors according to the law.

When submitting the company financial statements, the company’s manager or chairman of the board must attach a statement confirming that the auditing requirement does not apply to the company. The regulation also stipulates that no partner or shareholder, or group of them representing the percentage stated in Article 19, paragraph (3) of the law, may request the appointment of an auditor for the company.

All exemptions are issued solely by the Ministry of Commerce and do not release companies from their obligations to other authorities. These authorities operate independently and may have their own requirements that companies must separately comply with.

For more details, please contact Business pillars.