Essay on Accounting Environment in Saudi Arabia

Essay on Accounting Environment in Saudi Arabia

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1. introduction

Accounting systems in Saudi Arabia was shown to be imported from developed countries. Although in Saudi Arabia, the accounting principle and structures were primarily constructed from Western countries, the new accounting system has been reformed to adapt the unique Saudi Arabian environment. The various factors might explain how the new accounting system emerges. This paper will analyze how the three main factors-economy environment, taxation policies and foreign accounting standards and principles affect accounting systems in Saudi Arabia.

2. Economy environment

The commodities of the natural resources have enormous impact on accounting system in Saudi Arabia. Nature products involve minerals, oil and nature gas. According to the Organization of the Petroleum Exporting Countries (OPEC, 2013), 18% of the world’s proven petroleum was discovered in Saudi Arabia. Saudi Arabia now ranks as the largest exporter of petroleum (OPEC, 2013). The oil and gas account for nearly 50 per cent of gross domestic product. Although Saudi Arabia has the largest continuous sand desert all around the world, the earnings of oil and gas occupy most of its export revenues. Because the national revenue in Saudi Arabic rely on the export of petroleum, the revenue valuation focus on the annual production and the global price fluctuation, which is different from other developed countries like U.K. and U.S.A.

Before the oil was discovered in Saudi Arabic, the accounting system did not record the oil revenue. At that time, Saudi Arabic was highly dependent on the basic activities, such as fishing, pearling, agriculture, ship-building and commerce. Although people record the amount or the volume of each production they made in different...

... middle of paper ...

... Accounting and Finance, School of Management The University of Hull

2. Al-Aqeel, E (2013) Historical Introduction On Accounting and Auditing Profession in Saudi Arabia , King Saud University 2nd Semester , 1426-1427

3. SOCPA (2013) Saudi Organization for Certified Public Accountants [WWW] Available from: [Accessed03/11/13]

4. KPMG (2011) Saudi Arabic [WWW] Available from: [Accessed09/11/13]

5. (2009-2012) Saudi Arabia Tax Rates [WWW] Available from: [Accessed08/11/13]

6. OPEC (2013) Saudi Arabia facts and figures [WWW] Available from: [Accessed12/11/13]

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