Saudi financial statements describe their basis of preparation as IFRS “as endorsed in the Kingdom of Saudi Arabia”. The phrase is not a formality. It means the international standards apply, but through an endorsement process run by the Saudi Organization for Chartered and Professional Accountants (SOCPA), with a small number of local requirements layered on top. For a business reporting in the Kingdom, or a group consolidating a Saudi subsidiary, those differences are where the practical questions sit.

What the endorsed framework is

The framework has two parts: IFRS Accounting Standards as endorsed in Saudi Arabia, and other standards and pronouncements endorsed by SOCPA. The first part is the international standards themselves, adopted into Saudi practice. The second covers matters that IFRS does not address in the way the Kingdom requires, of which zakat is the most significant.

SOCPA is the professional body that endorses the standards and licenses the profession. Audits in the Kingdom are performed by SOCPA-licensed firms, and the audit report confirms whether the statements comply with the endorsed framework. Our guide to audited financial statements in Saudi Arabia covers the audit and the Qawaem filing in detail.

When the move to IFRS happened

Saudi Arabia moved from its former local standards to IFRS in two steps. Listed companies applied IFRS as endorsed for periods beginning on or after 1 January 2017. All other companies followed for periods beginning on or after 1 January 2018, with early application permitted. Banks and insurance companies, supervised by the Saudi Central Bank, were already reporting under IFRS before the general transition, and Saudi insurers adopted IFRS 17 and IFRS 9 together from 1 January 2023.

Full IFRS or IFRS for SMEs

The framework does not require every company to apply full IFRS. Entities without public accountability, which generally means private companies that are not listed and do not hold assets in a fiduciary capacity for a broad group of outsiders, apply the IFRS for SMEs Accounting Standard as endorsed in the Kingdom. The SME standard is shorter, with simplified recognition and measurement in areas such as financial instruments, and fewer disclosures.

A private company can choose full IFRS instead, and a business planning to raise capital, list, or report into an international group may prefer to. The condition is that the choice is made properly: full IFRS has to be applied in full and consistently, not as a selection of individual standards.

The CMA’s rules on fair value and revaluation

The most visible Saudi difference for listed companies is in how assets can be measured. IFRS allows property, plant and equipment to be carried at a revalued amount and investment property at fair value. When the Kingdom adopted IFRS, the Capital Market Authority (CMA) required listed companies to use the cost model instead, and it has relaxed that restriction in stages:

  • From fiscal years starting in 2022, listed companies may use fair value for investment property and the revaluation model for property.
  • From periods starting in 2025, the revaluation model is also available for machinery and equipment.
  • Intangible assets remain on the cost model, with the CMA due to review that restriction by the end of 2026.

Where revaluation is used, the CMA attaches conditions, including board approval and valuations by valuers accredited by the Saudi Authority for Accredited Valuers (Taqeem). For a listed company considering a move to revaluation, the decision affects reported equity, depreciation, and deferred tax, and is worth modelling before it is made.

Zakat: the largest local difference

Zakat has no equivalent in the international standards, so SOCPA sets out the accounting in its own zakat standard. Under that standard, the zakat expense is charged to the income statement and shown as a separate item. For Saudi and GCC-owned companies, which are subject to zakat rather than, or alongside, corporate income tax, this is a line that a group outside the Kingdom has no template for. Our guide to zakat and corporate income tax in Saudi Arabia explains how the liability itself is calculated and filed.

Presentation is where the open question sits. IFRS 18, the new standard on presentation in the income statement, introduces defined categories and subtotals. SOCPA has taken the view that zakat sits within the income taxes category, while the IFRS Interpretations Committee reached a different conclusion in early 2026, and the International Accounting Standards Board was still considering the point in mid-2026. The final presentation of zakat under IFRS 18 should be confirmed closer to the effective date and not assumed.

IFRS 18 and IFRS 19 from 2027

SOCPA has endorsed both of the IASB’s newest standards. IFRS 18 replaces IAS 1 and changes how the income statement is structured, with operating, investing, and financing categories, new required subtotals, and disclosure of management-defined performance measures. IFRS 19 lets eligible subsidiaries without public accountability apply reduced disclosures. Both are effective for annual periods beginning on or after 1 January 2027, and IFRS 19 is optional.

For listed companies, the CMA allows early adoption of IFRS 18 in 2026 and requires a preliminary assessment of its impact to be disclosed for periods from 1 April 2026. For everyone else, 2026 is the year to map the chart of accounts to the new categories, since the comparative figures for 2026 will need to be presented on the IFRS 18 basis in the first set of 2027 statements.

Sustainability reporting: IFRS S1 and S2

The ISSB’s sustainability standards, IFRS S1 and IFRS S2, are not mandatory for Saudi listed companies as of 2026. The Saudi Exchange’s ESG disclosure guidelines are voluntary and referenced to frameworks such as GRI and SASB. A company can align to the ISSB standards ahead of any requirement to meet investor or lender expectations, but the accounting framework for the financial statements and the sustainability framework are separate decisions.

What this means for a Bahrain group with a Saudi subsidiary

A group headquartered in Bahrain and consolidating a Saudi subsidiary is working from the same international base on both sides of the causeway, which keeps most of the consolidation straightforward. The adjustments sit mainly in the Saudi-specific areas: zakat, any SME-standard reporting at subsidiary level that has to be converted to full IFRS for the group, and, for listed groups, the measurement choices the CMA permits. The Saudi statements themselves have to be kept in Arabic and the records held in the Kingdom, so the group reporting process and the statutory set need to be planned together, not reconciled at the last minute.

A note on scope and sources

The position above reflects SOCPA’s endorsement framework, the IFRS Foundation’s jurisdiction profile for Saudi Arabia, and published Capital Market Authority decisions as they currently stand. The presentation of zakat under IFRS 18 and the CMA’s treatment of intangible assets are both under review, and the right framework for a particular entity depends on its circumstances, so the position for a specific company should be confirmed against current SOCPA and CMA publications.

SRR Consultants supports IFRS reporting in the Kingdom through bookkeeping and accounting in Saudi Arabia, audit support, and advisory work for regulated and institutional clients. SRR is a management and business advisory consultancy and is not a licensed audit firm, so the statutory audit itself is carried out and signed by a SOCPA-licensed auditor.