Audit of Annual Financial Statements
A full audit engagement under the International Standards on Auditing as endorsed in Saudi Arabia, concluding with the independent auditor's report.
Assurance Services
Financial Statements Audit and Review
HHAB provides financial statements audit and review services under the International Standards on Auditing and the related professional standards endorsed in Saudi Arabia. The nature of the engagement is determined by the statutory or contractual requirement, the level of assurance needed, and the intended use of the financial statements.
Regulatory Framework
The Statutory Significance of Financial Statements and Their Audit
Article 17 of the Companies Law requires every company to prepare financial statements at the end of each financial year in accordance with the accounting standards endorsed in Saudi Arabia, and to file them within six months of the financial year end.
Article 18 establishes the general rule on appointing a licensed auditor, while Article 19 defines the cases to which the requirement does not apply. A review of financial statements does not substitute for an audit where an audit is required by law or by contract.
What the Service Covers
Audit and Review Engagements Matched to the Entity's Needs
The nature of the engagement is determined by the statutory or contractual requirement, the level of assurance needed, and the intended use of the financial statements.
Review of Financial Statements and Interim Financial Information
A review engagement providing limited assurance through procedures narrower in scope than an audit, generally performed on interim financial statements and information.
Audit of Consolidated and Group Financial Statements
Audit of consolidated financial statements of groups and their component companies, under the financial reporting framework applicable to them.
Audit of Special Purpose Framework Financial Statements
Audit engagements for financial statements prepared for a specific purpose defined by a regulatory or contractual requirement.
Audits Required for Regulatory, Financing, or Contractual Purposes
Meeting the requirements of regulators, financiers, or contracting parties that require audited financial statements.
Independence and Scope Boundaries
Two Levels of Assurance, With Clear Professional Boundaries
An audit provides reasonable, not absolute, assurance, while a review provides limited assurance and does not include full audit procedures.
The Audit Engagement
For entities where an audit is required by law or by contract, or those seeking the highest level of assurance on their financial statements.
- Reasonable, not absolute, assurance that the financial statements are free from material misstatement
- Procedures broader in scope for gathering audit evidence
- Concludes with an independent professional opinion on the financial statements
The Review Engagement
For entities that need limited assurance on their interim financial statements and information.
- Limited assurance through procedures narrower in scope
- Generally performed on interim financial statements and information
- Does not substitute for an audit, and does not apply to annual or statutory financial statements for which an audit is required
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Management Responsibility and Separation of Services
Management remains responsible for preparing the financial statements, selecting accounting policies, maintaining records, and the accuracy of the information provided. HHAB does not provide financial statements preparation services to the same client whose statements it audits or reviews, and assurance services are kept separate from the preparation and Qawaem filing of financial statements.
Who This Service Is For
Designed for Entities Subject to Financial Statements Requirements
Audit and review engagements serve every entity that needs an independent report on its financial statements, whether by law, by contract, or by the nature of its activity.
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Companies required by law to appoint an auditor
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Entities whose contracts or financing agreements require audited financial statements
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Companies that need a review of interim financial information
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Groups preparing consolidated financial statements
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Entities preparing financial statements for special, defined purposes
How It Works
How the Engagement Type Is Determined
No single numerical formula applies to this service. The engagement type is determined after establishing:
- The entity's legal form
- The entity's size
- The applicable financial reporting framework
- The purpose of the report
- Regulatory and contractual requirements
Where an audit is required, an audit engagement is performed.
A review engagement is generally performed on interim financial statements and information, and does not apply to annual or statutory financial statements for which an audit is required.
Financial statements preparation is a separate service that is not provided to audit clients themselves; the auditor does not prepare the financial statements that the auditor audits, preserving independence.
Methodology
A Structured Audit Path
A disciplined methodology under the International Standards on Auditing as endorsed in Saudi Arabia, from engagement acceptance to the issuance of the report.
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Engagement Acceptance
Assessment of independence, conflicts of interest, professional requirements, and the scope of the engagement.
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Understanding the Entity
Study of the business, operations, systems, and the applicable financial reporting framework.
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Risk Assessment
Identification of the risks of material misstatement and design of appropriate procedures.
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Performing the Procedures
Gathering evidence or performing review procedures and discussing significant matters with management.
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Completion and Reporting
Evaluation of findings, completion of professional reviews, and issuance of the appropriate report.
Technology Enabled
Specialized Tools for Performing and Documenting the Audit
HHAB deploys specialized audit tools that raise documentation quality and execution efficiency across audit and review engagements.
CaseWare
Audit management and documentation platform
HHAB uses the CaseWare platform to manage audit files electronically: engagement planning, execution of audit programmes, and documentation of procedures, evidence, and working papers in a single organized file that supports documentation quality and the requirements of professional standards.
DataSnipper
Intelligent automation of audit procedures
HHAB uses DataSnipper to automate audit procedures within working papers: matching evidence and supporting documents to audit tests and linking them directly, accelerating execution and strengthening the completeness and traceability of documentation.
The trade names above are marks owned by their respective owners and appear here to indicate the working tools used at HHAB.
Deliverables
Deliverables of the Audit or Review Engagement
Documented professional deliverables according to the nature of the engagement and the agreed level of assurance.
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The independent auditor's report or the review report, according to the nature of the engagement
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Communication with management on significant matters arising during the engagement
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Reporting to management of significant internal control deficiencies identified
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A structured list of the information and documents needed to complete the engagement
Why HHAB
A Licensed Professional Firm, With Prior Experience at the World's Largest Audit Firms
A Saudi Professional License
HHAB is a professional firm licensed by the Saudi Organization for Chartered and Professional Accountants to practice accounting and auditing in Saudi Arabia.
Commitment to Standards and Independence
HHAB adheres to the International Standards on Auditing and the professional standards endorsed in Saudi Arabia, with full separation between assurance services and financial statements preparation services to preserve independence.
Prior Experience With Listed Companies
Prior professional experience auditing companies listed on the capital market, gained at the Big Four global audit firms.
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HHAB is a professional firm licensed by the Saudi Organization for Chartered and Professional Accountants.
HHAB performs audit and review engagements under the International Standards on Auditing and the professional standards endorsed in Saudi Arabia, led by prior professional experience auditing listed companies at the Big Four global audit firms.
FAQ
Frequently Asked Questions on Financial Statements Audit and Review
Is a company required to prepare financial statements?
Yes. Article 17 of the Companies Law requires every company subject to the Law to prepare financial statements at the end of each financial year in accordance with the accounting standards endorsed in Saudi Arabia, and to file them within six months of the financial year end.
Must the financial statements be audited?
The general rule under Article 18 of the Companies Law is that a company appoints a licensed auditor. Article 19 exempts certain micro and small companies, subject to the exemption conditions and the cases to which the exemption does not apply.
What are the criteria for exemption from appointing an auditor?
Under Article 7 of the Implementing Regulation of the Companies Law, a company qualifies as micro or small when it meets two of the following criteria:
- Annual revenues not exceeding ten million Saudi riyals.
- Assets not exceeding ten million Saudi riyals.
- No more than forty nine employees.
The period over which the classification holds, the exceptions in Article 19 of the Law, and any statutory request by partners or shareholders must also be considered. Size alone is therefore not sufficient to establish the exemption.
When does the audit exemption not apply?
The exemption does not apply in the cases defined in Article 19 of the Companies Law, including a provision in the articles of incorporation or bylaws, listing on the capital market, the issuance of certain financial instruments, a requirement in another law, the company being foreign, or its ownership relationship with another company unless the classification applies to all companies of the group. Holders of at least ten percent of voting rights may also request the appointment of an auditor in accordance with the statutory controls.
Does exemption from the audit requirement waive preparation and filing?
No. Exemption from appointing an auditor does not exempt the company from preparing or filing its financial statements. An exempt company must submit the declaration and information required to establish that the exemption applies.
Must financial statements be filed on the Qawaem platform?
Yes, for companies subject to the filing requirements. Financial statements and the auditor's report, where applicable, are filed electronically with the Saudi Business Center under Article 5 of the Implementing Regulation of the Companies Law. Filing is due within six months of the financial year end.
Does HHAB provide financial statements preparation and Qawaem filing?
Yes, as a separate service for a client whose financial statements HHAB does not itself audit or review. Preparation is performed under International Standard on Related Services 4410, Compilation Engagements, using the IFRS framework applicable to the entity.
This service does not include an audit, a review, or any level of assurance. Management remains responsible for the information, the financial statements, and their approval.
What is the difference between an audit and a review of financial statements?
An audit provides reasonable assurance, requires broader procedures, and concludes with an independent professional opinion. A review provides limited assurance through narrower procedures, and does not substitute for an audit where an audit is required.
How long does an audit or review take?
Duration depends on the entity's size, the complexity of its operations, the quality of its records, the readiness of the statements and documents, and the required reporting date. The timeline is set after the engagement scope is assessed.
How much does a financial statements audit cost?
Fees depend on the size of the business, the complexity of operations, the engagement scope, the financial reporting framework, and the readiness of the records. A written fee proposal is issued after the necessary information is obtained, setting out the scope, assumptions, and timeline.
Does an audit guarantee the detection of all errors or fraud?
No. An audit aims to obtain reasonable assurance that the financial statements are free from material misstatement, whether due to fraud or error. Reasonable assurance is not a guarantee that every error or instance of fraud will be detected.
Note: This content is general information and does not constitute a legal opinion on the position of any specific entity. Whether an audit is required, or an exemption applies, depends on the legal form, the articles of incorporation or bylaws, the ownership structure, regulatory and contractual requirements, and the laws in force at the time of assessment. Acceptance of any engagement is subject to client acceptance procedures, independence assessment, conflict of interest checks, and scope definition.
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