The General Authority of Zakat and Tax announced the approval of its Board of Directors on the electronic invoicing regulation, which was published today Friday, corresponding to the 4th of December 2020 AD, as the electronic invoice is defined according to the regulation as a tax invoice that is issued electronically through an electronic means, and is issued by each taxpayer subject to Value-added tax (VAT) in the Kingdom. The electronic invoicing regulation contains seven articles that regulate the mechanism for issuing and keeping electronic invoices for the taxpayers, and clarifies the provisions, procedures and individuals subject to it, in addition to the procedural rules and time limits, as the authority confirmed that the regulation has come into force from the date of publication, noting that it will be “mandatory” for taxpayers subject to it to issue and save invoices on the 4th of December 2021 AD. The General Authority for Zakat and Tax invites all taxpayers to view the E-invoicing list through its website via the following link, and to contact it via the unified number (19993), which will be available 24 hours a day, and seven days a week, for any inquiries or questions related to electronic invoicing. It is worth noting that the electronic invoicing system aims to limit the volume of Shadow Economy transactions, in addition to combating Commercial Concealment. The General Authority for Zakat and Tax had previously published the draft regulations for public feedback on the 17th of last September. Translated from: https://gazt.gov.sa/ar/MediaCenter/News/Pages/News_521.aspx

Okaz sources revealed that the date of implementation of the Ministry of Human Resources and Social Development’s decision to resettle the accounting profession begins at the beginning of Dhu al-Qa'dah 1442, that is, after 170 days, and includes 19 classifications of the profession. The sources also confirmed that the ministry will provide a package of incentives and support to the private sector in employing Saudi accountants, including support for the recruitment process, searching for suitable employees, supporting training and qualification necessary to ensure job stability for accountants and giving priority to benefiting from all Saudization support programs available to the system. The sources indicated that the ministry has classified 19 accounting professions targeted by the Saudization, which include: Director of Financial Affairs and Accounting, Director of Accounts and Budget, Director of the Financial Reports Department, Director of the Zakat and Taxes Department, Director of the Internal Auditing Department, Director of the General Auditing Department, Head of the Internal Audit Program, Financial Controller, Internal Auditor, Senior Financial Auditor, General Accountant, Cost Accountant, Auditor, General Accounts Technician, Auditing Technician, Cost Accounts Technician, Financial Audit Supervisor, Cost Clerk, Finance Clerk. According to the procedural guide for the decision to localize the accounting professions, the Ministry stated that in the case the establishment does not adhere to the required nationalization percentage, all electronic transactions for the accounting professions will be stopped (such as issuing visas for professionals, transferring a service to the profession, changing the profession, work permits for the profession automatically for the establishment) in addition to the penalty for violating the localization of professions limited to Saudis, according to the system. While the Ministry stressed that it will impose statutory penalties for any fraud in the event that any worker in the facility is caught practicing any of the targeted accounting professions under another professional title, different from the name written in the work permit. Saudi accountants are required to obtain professional accreditation from the Saudi Organization for Accountants. With respect to the salaries, for holders of Bachelor’s degree, it will not be less than 6000 riyals and for Diploma degree, not less than 4,500 riyals. The Ministry seeks to raise the contribution of national forces in the labour market, and raise the productivity of national human cadres through various possibilities and continuous training. Translated from: https://www.okaz.com.sa/news/local/2052861

The Ministry of Commerce and several other ministries are facing an intense battle, at this time, to reduce the trade cover-up, in order to achieve noble goals, to achieve national financial stability and sustainability. Therefore, it is essential that we all contribute to achieving the objectives of the national program to combat trade concealment, and give our opinion on that. The issue of the commercial cover-up is closely related to the topic of this article in several ways. One of the most important tools for controlling businesses, including Small & Medium Enterprises SMEs, is financial statements. The financial statements are the product of bookkeeping in which all financial operations are recorded, in order to identify their financial position, the results of doing business and their profitability. Which is performed in order to preserve the rights of the owners of these companies first, and then in order to implement a high-governance environment that preserves all the rights of stakeholders, including creditors, customers, workers and the state. The international trend towards implementing governance in all activities, and as a result of the failure of a large number of companies to continue or fulfil their obligations, the need to apply the concept of convergence or harmonization arose with regard to the accounting standards used in establishing and recording large or small business activities. This activity began since the beginning of this century, after the major American companies failed to continue and resist. The reasons for these collapses were attributed to weak governance, including the interpretations of American accounting standards FASB. Which is why the global trend towards standardization of accounting standards has become supported by organizations and countries to achieve uniformity to provide an appropriate environment to enhance investment tools and preserve the rights of capital owners. The International Financial Reporting Standards, known as IFRS, began as a guarantee of generally accepted accounting principles GAAP to standardize the standards used worldwide within a project sponsored by the International Accounting Standards Board known as IASB, and countries began to adopt and implement them for the gains that they will achieve through the process of standardizing standards in order to attract investors, and unify tools for communicating messages related to financial results for the sake of globalization in which the world is moving. In the Kingdom of Saudi Arabia, the shift towards international standards (IFRS) began to be applied to joint stock companies listed in the financial market from the beginning of 2017, to be followed in the following year by the rest of the companies. The experience of applying international standards is rich and deserves to be studied to see the extent of its benefits. However, in the field of small and medium enterprises (SMES), including the micro-enterprises, which represent a very large percentage of the authorized establishments in the Kingdom (more than 97 percent) the existence of accounting records is not a legal requirement. The point of view, may be that complying with this will add very high costs to this type of facility. Although bookkeeping, presenting and auditing financial statements, it will have a greater positive impact in providing financing for these facilities, an opportunity to capture investors in the market to achieve growth for them, and evidence that proves the sources of funds and the absence of manipulation or exploitation of these facilities by a group that satisfies a little in exchange for the concealment of a lot. Cultivating a culture of registration, registration, bookkeeping, and the regularity of financial transactions, will enhance the growth of small and medium enterprises, and the sustainability of their business, and will contribute to the localization of many accounting functions within the chain of accounting and financial services required by this process. It may eliminate illegal financial operations. One of the steps in corporate governance will be through the application of international standards. Translated from: https://www.aleqt.com/2020/09/02/article_1911271.html

There is no doubt that the accounting sense for you as an investment manager makes you more capable of making decisions, and gives you a broader horizon to evaluate the performance of the project and determine the extent of its progress and success, or God forbid failure and regression. Additionally, it gives you the ability to identify and diagnose project problems at the level of the overall or partial performance, identifying its weaknesses and working to make decisions as of the cost and return of each decision. A manager that lacks accounting and financial senses, is like a captain that lost the compass directing him toward the accurate destination. Basic accounting concepts: Dear investment manager, before entering into financial transactions, it is essential that you first know the basic concepts related to accounting, which include several aspects that will be presented to you in the following presentation: The concept of accounting: 1- What is accounting: Accounting is the process of recording the financial operations that occurred in a facility during a specific period, classifying those operations and organizing them into interrelated groups, summarizing and presenting this information to the benefiting parties, analyzing and interpreting the financial information and using them to rationalize the administrative decision-making process. 2- Definition of accounting: Accounting is the process of identifying, measuring, and communicating economical information toward rationalizing personal judgment on matters, and making decisions based on the users of these information. In another simpler and profounder description, accounting is defined as a set of assumptions, principles and concepts that aim to convert economic performance results into a quantitative form, and then communicating the results to the beneficiaries through financial statements and reports. 3- Accounting functions: The following figure shows you the most important accounting functions that provide financial information for the following purposes: • Directing and allocating the project's financial and human resources. • Controlling and managing project resources. • Rationalizing the administrative decision-making process. • Defining administrative objectives. The objectives of the accounting function as an information system can be elaborated as follows: • Determining the outcome of the project’s effort, from profit or loss. • Determining the project's properties, commitments, and changes that may occur to them. • Providing the necessary financial information to the beneficiaries outside the project, to help them make both investment & granting-loans decisions. • Evaluating the degree of cash liquidity and economical resources available for the enterprise. Who benefits from accounting tasks: From the following view, you can interpret the beneficiary of accounting: Fourth - Basic branches of the science of accounting: The following figure shows you the most basic branches of accounting science: Basic accounting conventions. Dear investment managers, you should know that the basic conventions in accounting are defined as all the economic resources owned by the project, which can be measured according to recognized accounting rules, and are divided into: 1- Assets: • Fixed assets: These are properties that are acquired with the aim of assisting in work and production, and not with the aim of reselling them. They are expected to be used for a long time, such as buildings and furniture. • Current assets: They are the cash, or other assets that are expected to be converted into cash, sold or used within the year, such as cash, accounts receivable, stock inventory and short-term investments. • Intangible assets: They are properties that do not have a tangible physical entity, but which contribute to the project activity, such as goodwill, copyrights and patents. 2- Liabilities: They are the obligations that the project has towards others, that can be measured according to generally accepted accounting principles and are divided into: • Long-term liabilities: They are debts or obligations that the project owes to other parties, and are due in over a year’s time. • Short-term liabilities: They are obligations and debts that the project owes to other parties and are due to be paid during the current year, such as creditors and installments due annually on long-term debts. 3- Equity (Owner’s equity): They are values and commitment that can be attributed to owners toward the project. They occur when resources are invested by the owner or owners in the project, and can be calculated by deducting liabilities from assets. 4- Balance sheet: It is a list that displays the financial condition of the facility on a specific date and includes a summary of all the assets, liabilities and ownerships of the business. 5- Income statement: It is a list that shows the result of the project's activity, from profit or loss, by matching the revenues with the expenses associated with them during the year or the accounting cycle. 6- Revenue: It represents all sort of income the project gained in exchange of selling goods and implementing services, in addition to the investment profits. 7- Expenses: They are total costs the project bears in exchange for gaining a revenue, such as the cost of goods and services in operations. 8- Trial Balance: It’s a list that contains all ledger accounts, the balance of its budget is an indication of the accuracy of these accounts’ credits, but it is not a definitive evidence that they hold no errors. 9- Chart of Accounts: It is a list that includes the names of all the ledger accounts, and these accounts are usually arranged according to their sequence in the balance sheet and the income statement. Local accounting standards have been prepared for each country in accordance with the international accounting work issued by “The International Federation of Accountants (IFAC)”, with the exception of some minor amendments that were made to them to match the local location of each country. Source: Entrepreneurship Magazine - Issue 1

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