Convergence of IFRS and its Implementation in Saudi Arabia



Convergence of IFRS and its Implementation in Saudi Arabia

Introduction

The most important objectives of the IASB and the IFRS Foundation are to keep the interests of the public paramount. This has to be done, and to do this, it is essential to develop a singular set of globally accepted, enforceable, understandable, high quality standards of financial reporting. These standards should be defined on the basis of principles of financial management, articulated globally. To attain these objectives, the IFRS Foundation and the IASB closely cooperate with concerned participant countries and stakeholders, across the globe. These stakeholders include regulators, national standard-setters, academics, auditors and others who are directly affected by the construction of such quality standards, which are followed globally. The concerned bodies have progressed seamlessly towards its goal to attain global similarity in financial practices of reporting. As such most of the bigger economies in the world have conformed their financial practices in line with the prescribed standards articulated in the IFRS (IFRS, 2013). Furthermore, trade blocs including the global 20 leaders, in a 2009 conference held in US, Pittsburgh aligned the economies goals to proscribe to similar set of accounting standards, of the IFRS. This intensity of attention by global economies, to streamline their country's practices through an independent standard setting process, to achieve their objectives of financial prudence and practice is easily observed. Moreover, the individual economies also call for these bodies, including US FASB and the IASB, to assist them in converging these projects into implementation (IFRS, 2013).

This research effort is concerned with the country of Saudi Arabia. The main aim of the paper is to provide an account of the steps and procedures that are to be followed in Saudi Arabia to implement IFRS and converge their financial institutions and other public and private businesses, with the most widely accepted set of global accounting standards. Currently only insurance companies and banking industry is required by the government to converge with the IFRS. Though, in recent times the IFRS transition plan has been approved by the Saudi Organization for Certified Public Accountants (SOCPA). The accounting body has officially approved an IFRS transition plan, to converge Saudi financial and accounting practices in the codes of the IFRS. Given this agreement, the plan would essentially be to converge Saudi Arabia's national standards with IFRS set of standards. Furthermore, all the non-publicly accounted ...