• The following terms and phrases - wherever they appear in this document - shall have the meanings indicated next to each of them unless the context dictates otherwise:

• Authority: Local Content and Government Procurement Authority.

• Law of the Profession of Accounting and Auditing: Law of the Profession of Accounting and Auditing, issued by Royal Decree No. (M/59) dated 1442/7/27H, and its executive regulations, and any subsequent amendments thereto.

• Rules: Rules and instructions for qualifying audit offices to audit local content ratios.

• Procedure Engagements Agreed Upon to Measure Local Content Ratio: Procedures issued by the Authority to measure local content ratios, which are agreed upon between the qualified audit office and the party measuring its local content ratio (and, where applicable, other parties).

• Local Content Report: A set of documents provided by the qualified audit office to the entity after executing the agreed-upon procedure engagements to measure the entity's local content ratio, including (the agreed-upon procedures report to measure local content ratio, the local content measurement form prepared by the entity, the disclosure letter signed by the entity, a declaration signed by the individual qualified as an expert), and any other documents requested by the Authority.

• Audit Office: Any entity practicing the profession of accounting and auditing in accordance with the provisions of the Law of the Profession of Accounting and Auditing, whether it is an individual office or a professional company.

• Qualified Audit Office: The audit office that has been qualified by the Authority in accordance with the rules.

• Qualified Partner: The partner licensed to practice the profession of accounting and auditing in accordance with the provisions of the Law of the Profession of Accounting and Auditing, who has been qualified - by the Authority - as a qualified partner in accordance with the rules.

• Qualified Individual: The employee at the audit office who has been qualified - by the Authority - in accordance with the rules as an expert or practitioner.

The rules aim to establish a framework for regulating the qualification of audit offices, their partners, and employees to audit local content ratios.

• A- The audit office may not execute agreed-upon procedure engagements to measure the local content ratio unless it is qualified according to the rules.

• B- The qualification application is submitted under the rules through the authority's website or any other means specified by the authority.

• C- The authority publishes a list of qualified audit offices on its website and updates it periodically.

• D- The authority has the right to request documents, data, or information - deemed necessary for the application of the rules - from qualified audit offices to verify compliance with the requirements stated in the rules.

• E- A qualified partner may act as an individual qualified expert if he meets the qualification conditions specific to an individual qualified expert.

• F- The rules do not affect any regulations, instructions, or obligations issued by the competent authorities in the Kingdom, and these rules apply to audit offices, their partners, and their employees.

• G- The qualified audit office must ensure that the qualified partner and the qualified individual comply with the provisions of the rules.

• A- To qualify an audit firm to execute agreed-upon procedures for measuring the local content ratio, the following conditions must be met:

  • 1- It must be licensed to practice the profession of accounting and auditing according to the Law of the Profession of Accounting and Auditing.

  • 2- It must comply with the localization rates of jobs as issued by the competent authority or according to the relevant statutory or regulatory provisions.

  • 3- It must have a valid local content certificate and achieve the minimum local content ratio if required by the authority.

  • 4- It must have at least three qualified Saudi individuals at the time of submitting the qualification request; one at the expert level and two at the practitioner level according to the rules, and the authority may amend the minimum number of required qualified Saudi individuals according to the standards and regulations it determines.

  • 5- It must have a comprehensive program (or tool) used to carry out the agreed-upon procedures for measuring the local content ratio, document all procedures and execution steps, and archive the completed agreed-upon procedures.

  • 6- At least one of the partners in the audit firm must be qualified according to the rules.

  • 7- No final judgment should have been issued against the audit firm or any of its partners concerning the following:

    • - A judgment according to Article 10 of the Law of the Profession of Accounting and Auditing.

    • - A penalty related to fraud crimes or any act that breaches trust or integrity.

    • - A penalty of deletion under the Law of the Profession of Accounting and Auditing during the five years preceding the date of the qualification request.

    • - A penalty of suspension under the Law of the Profession of Accounting and Auditing during the two years preceding the date of the qualification request.

  • 8- Any other conditions specified by the authority.

  • 9- The licenses, certificates, and required documents must be submitted with the qualification request according to the conditions stipulated in this article.

• B- To qualify the partner responsible for the agreed-upon procedures for measuring the local content ratio, the following conditions must be met:

  • 1- Must be of Saudi nationality.

  • 2- Must be licensed to practice the profession of accounting and auditing according to the Law of the Profession of Accounting and Auditing.

  • 3- Must have practiced the profession of auditing after obtaining the license according to the Law of the Profession of Accounting and Auditing for no less than five years prior to submitting the qualification request.

  • 4- No final judgment should have been issued against him concerning the following, unless his status has been restored:

    • - A judgment according to Article 10 of the Law of the Profession of Accounting and Auditing.

    • - A penalty related to fraud crimes or any act that breaches trust or integrity.

    • - A penalty of deletion under the Law of the Profession of Accounting and Auditing during the five years preceding the date of the qualification request.

    • - A penalty of suspension under the Law of the Profession of Accounting and Auditing during the two years preceding the date of the qualification request.

  • 5- Any other conditions specified by the authority.

  • 6- The licenses, certificates, and required documents must be submitted with the qualification request according to the conditions stipulated in this article.

• C- To qualify an individual, the following conditions must be met:

  • First: Qualification conditions for the expert level:

    • 1- Must be of Saudi nationality.

    • 2- Must have at least a bachelor's degree in accounting, or a fellowship certificate from the Saudi Organization for Chartered and Professional Accountants, and if the bachelor's degree is issued by a non-Saudi university, it must be equated by the competent authority in the Kingdom.

    • 3- Must have experience in auditing work at one of the audit firms accredited by the competent authority in the Kingdom for no less than five years after obtaining the bachelor's degree or three years after obtaining the fellowship certificate from the Saudi Organization for Chartered and Professional Accountants.

    • 4- Must have worked on at least five reports of agreed-upon procedures during the twelve months preceding the date of the qualification request.

    • 5- If licensed to practice the profession of accounting and auditing, no final judgment should have been issued against him concerning a violation of Article 10 of the Law of the Profession of Accounting and Auditing, unless his status has been restored.

    • 6- No final judgment should have been issued against him convicting him of fraud crimes or any act that breaches trust or integrity, unless his status has been restored.

    • 7- Must pass the tests specified by the authority.

    • 8- Must complete the training programs specified by the authority as a mandatory requirement.

    • 9- Any other conditions specified by the authority.

    • 10- The licenses, certificates, and required documents must be submitted with the qualification request according to the conditions stipulated in this article.

  • Second: Qualification conditions for the practitioner level:

    • 1- Must have at least a bachelor's degree in accounting, or a fellowship certificate or affiliate membership from the Saudi Organization for Chartered and Professional Accountants, and if the bachelor's degree is issued by a non-Saudi university, it must be equated by the competent authority in the Kingdom.

    • 2- Must have experience in auditing work at one of the audit firms accredited by the competent authority in the Kingdom for no less than one year for Saudi individuals, and no less than three years for non-Saudi individuals, after obtaining the bachelor's degree or fellowship certificate or affiliate membership from the Saudi Organization for Chartered and Professional Accountants.

    • 3- If licensed to practice the profession of accounting and auditing, no final judgment should have been issued against him concerning a violation of Article 10 of the Law of the Profession of Accounting and Auditing, unless his status has been restored.

    • 4- No final judgment should have been issued against him convicting him of fraud crimes or any act that breaches trust or integrity, unless his status has been restored.

    • 5- Must pass the tests specified by the authority.

    • 6- Must complete the training programs specified by the authority as a mandatory requirement.

    • 7- Any other conditions specified by the authority.

    • 8- The licenses, certificates, and required documents must be submitted with the qualification request according to the conditions stipulated in this article.

• The acceptance of the Authority for the agreed-upon procedures report to measure the local content percentage requires the fulfillment of the following conditions:

  • A- The agreed-upon procedures report to measure the local content percentage must be signed by the qualified partner.

  • B- Any other conditions specified by the Authority.

• A- The qualified audit office is obligated - without prejudice to the qualification conditions and requirements stated in the rules - to continuously meet the following conditions during the validity of the qualification:

  • 1- Compliance with the provisions of the Law of the Profession of Accounting and Auditing.

  • 2- Adherence to the agreed-upon procedures for measuring the local content percentage, and completing the local content report within a period not exceeding fifteen working days from the date of obtaining all requirements from the entity or establishment measuring its local content percentage.

  • 3- Compliance with the rules, conduct, and ethics of the profession, and with accounting and auditing standards, and technical standards, issued by the competent authority.

  • 4- Compliance with all instructions and directives issued by the authority.

  • 5- Having at least one qualified partner according to the rules.

  • 6- The number of qualified individuals at the qualified audit office during the validity of the qualification should not be less than three qualified Saudi individuals - one expert and two practitioners - as a minimum, and the authority may amend the minimum number of qualified Saudi individuals according to the standards and regulations it determines.

  • 7- Not to outsource the implementation of the agreed-upon procedures for measuring the local content percentage to external sources and/or subcontracting for its implementation, whether in whole or in part.

  • 8- Retaining supporting documents related to the local content report for ten years from the date of issuing the report, without prejudice to the provisions of the Law of the Profession of Accounting and Auditing and related statutory provisions, and enabling the authority to review them upon request. If the report of the agreed-upon procedures for measuring the local content percentage and the supporting documents related to it are relevant to a contest or statutory investigation, they must be retained until the contest is settled or the investigation is concluded.

  • 9- Obtaining the authority's approval to execute the agreed-upon procedures for measuring the local content percentage in case of the existence or emergence of a conflict of interest between the qualified audit office and the entity and/or establishment measuring its local content percentage, whether before or during the preparation of the local content report.

  • 10- Having a valid local content certificate, and in case of its expiration, it must be renewed within a period not exceeding (3) months from its expiration.

  • 11- Achieving the minimum local content percentage if required by the authority.

• B- The qualified individual as an expert is obligated - without prejudice to the qualification conditions and requirements stated in the rules - to continuously meet the following conditions during the validity of the qualification:

  • 1- Compliance with the provisions of the Law of the Profession of Accounting and Auditing.

  • 2- Compliance with the rules, conduct, and ethics of the profession, and with accounting and auditing standards, and technical standards, issued by the competent authority.

  • 3- Compliance with all instructions and directives issued by the authority.

  • 4- Participation in executing at least five engagements of the agreed-upon procedures per year.

  • 5- Attending meetings held or requested by the authority.

  • 6- Attending at least 50% of the workshops - specified by the authority - provided during the year.

  • 7- Signing the admission included in the local content report confirming that he has performed his role.

The Authority - at its discretion and without prejudice to the provisions contained in the relevant laws and regulations - may exempt the applicant for qualification from some of the requirements stated in these rules.

• A- The qualified audit office must notify the authority in writing within ten working days from the date of occurrence of any of the following:

  • 1- If any of the qualification conditions stipulated in the rules are no longer met by the qualified audit office or by any of the qualified partners or qualified individuals working for it.

  • 2- Updating the list of qualified partners in the qualified audit office, when there is any reason to update the list of partners.

  • 3- Any updates affecting the qualification conditions of the qualified audit office or the qualified partner or the qualified individual working for it.

  • 4- Change in the information provided to the authority when submitting the qualification application.

  • 5- Exception from notifying the authority in writing within ten working days from the date of occurrence of the above cases; the qualified audit office must notify the authority in writing immediately upon the occurrence of any of the following cases:

    • 1-5 Filing a lawsuit against the qualified audit office or against the qualified partner in the office, if the subject of the lawsuit affects the office's business or the practice of the audit profession.

    • 2-5 Filing a lawsuit against the qualified individual working for the qualified audit office, if the subject of the lawsuit affects the qualified individual's business or the practice of the audit profession.

    • 3-5 Issuance of a final judgment or decision against the qualified audit office or the qualified partner or the qualified individual working for it, related to the practice of the audit profession or fraud crimes or actions violating trust or integrity.

• B- The qualified audit office must, upon ceasing to practice the profession or execute agreed-upon procedures to measure the local content ratio by its decision or by a judgment or decision issued by the competent authority, notify the authority immediately and provide it with a plan that includes at a minimum the following:

  • 1- Notify the authority in advance and in writing of the date on which the qualified audit office will cease to practice the profession or execute agreed-upon procedures to measure the local content ratio, the duration of the cessation, and the reasons for that.

  • 2- Notify its clients from entities and establishments that measure the local content ratio at the qualified audit office within a reasonable period of the decision or judgment issued regarding its cessation to practice the profession or execute agreed-upon procedures to measure the local content ratio.

  • 3- Complete any existing and remaining agreed-upon procedures to measure the local content ratio to the fullest extent or take appropriate measures to preserve the rights of its clients who measure local content ratios with it, without prejudice to other relevant regulations and instructions.

  • 4- Not to contract or agree with any entity or establishment or individual to execute agreed-upon procedures to measure the local content ratio.

  • 5- Submit a report to the authority on the measures taken to implement the plan, and provide the authority with any updates regarding it upon request.

• C- The qualified audit office or the qualified partner or the qualified individual as an expert at the qualified audit office is not exempt from liability arising from their actions in executing agreed-upon procedures to measure the local content ratio before ceasing to practice the qualified activities according to the rules.

• A- The authority, when reviewing the qualification application, may take any of the following procedures:

  • 1- Conduct any inquiries it deems appropriate.

  • 2- Request the attendance of the qualification applicant or their representative to answer any questions and explain any matter deemed related to the qualification application.

  • 3- Request the submission of additional information.

  • 4- Verify the accuracy of any information provided by the qualification applicant.

• B- The authority reviews the qualification applications and issues its decision within thirty working days from the date of receiving all information and documents related to the application.

• C- The authority may, after reviewing the qualification application, take any of the following actions:

  • 1- Approve the qualification application.

  • 2- Approve the qualification application with the conditions and restrictions it deems appropriate.

  • 3- Postpone the decision for a period deemed necessary for further study and verification, or to allow the submission of additional information.

  • 4- Reject the qualification application with reasons provided.

• D- The authority shall notify the qualification applicant of the decision issued under paragraph (C) of this article.

• A- The authority may, in the event of non-compliance by the qualified audit office - or the qualified partner or the individual qualified as an expert therein - with any of the provisions of the rules, instructions, or directives issued by the authority, take one or more of the following actions:

  • 1- Request correction of the non-compliance situation.

  • 2- Warning.

  • 3- Suspend the qualified audit office from receiving any engagement requests for agreed-upon procedures to measure local content ratio.

  • 4- Suspend the qualification of the qualified partner to sign the report of agreed-upon procedures to measure local content ratio.

  • 5- Suspend the qualification of the qualified audit office in executing engagements for agreed-upon procedures to measure local content ratio.

  • 6- Suspend the qualification of the individual qualified as an expert regarding the execution of agreed-upon procedures to measure local content ratio.

  • 7- Cancel the qualification of the qualified partner regarding the execution of agreed-upon procedures to measure local content ratio, and the authority may prevent the qualified partner from submitting a new qualification request for a specified period as it deems appropriate.

  • 8- Cancel the qualification of the qualified audit office to execute engagements for agreed-upon procedures to measure local content ratio, and the authority may prevent the qualified audit office from submitting a new qualification request for a specified period as it deems appropriate.

  • 9- Cancel the qualification of the individual qualified as an expert regarding the execution of agreed-upon procedures to measure local content ratio, and the authority may prevent the individual qualified as an expert from submitting a new qualification request for a specified period as it deems appropriate.

• B- In the event that the authority suspects a violation of the Law of the Profession of Accounting and Auditing in the reports submitted to the authority, the case shall be referred to the Saudi Organization for Chartered and Professional Accountants for consideration and completion of the necessary procedure, and the authority has the right to suspend the qualification of the qualified audit office or the qualified partner or the individual qualified as an expert therein - as a precautionary measure - until a final judgment or decision is issued by the competent authorities.

• C- The person against whom an action is issued by the authority pursuant to paragraph (A) or paragraph (B) of this article may submit to the authority within thirty days from the date of its decision and request a review of its decision, and the person against whom the decision is issued must submit the documents supporting the request for the authority to review its decision issued pursuant to this article.

• D- The authority shall make its decisions pursuant to paragraph (C) of this article within twenty working days from the date of completion of the relevant documents and papers.

• E- The person against whom the decision is issued, in the event of cancellation of his qualification, may submit a new qualification request, and the authority may consider the request and make the decision it deems appropriate in accordance with the provisions of Article (Nine) of the rules.

• F- The person against whom the decision is issued may appeal the authority's decisions issued pursuant to the rules before the competent judicial authority within sixty days from the date of the decision.