The United States and Saudi Arabia Auditing Differences

The United States and Saudi Arabia Auditing Differences

Introduction

            Businesses operate within the framework of achieving most returns in terms of investment perceptions. The key concerns with the organizations are to ensure maximum utilization of resources as well as maintaining set standards for reporting. Usually, corporations hire employees who are the key stakeholder in achieving goals and company missions. Although, the hiring process is defined by the citizen’s intelligence as well as the competitiveness level. When hiring employees, difference countries use diverse mechanisms of evaluation based on different qualifications in different countries. To be qualified for a particular position in any country closer follow up of all statutory requirements is essential. Recent high-profile company collapse in the world has captured the attention of investors, government, and academicians who focus on the aptitude measures to curb this disease. As a result, more attention has been given to corporate governance as well as regulatory standards to ensure compliance. Auditing is the critical approach in evaluating company progress as well as guaranteeing authentic of presented information (Knechel & Salterio,2016). Verification is the process of examining books of financial information to ascertain how far both financial and non-financial disclosure gives an accurate and fair view. This research paper will focus on evaluating the differences in auditing approaches in the United States and Saudi Arabia.

PWC is an accounting and Auditing company found in the United States and Saudi Arabia. The two economic environments are different in terms of the accounting frameworks. This results from the education, financial, and political climates in the two countries. In attempts to enhance corporate governance in both countries, the institution seeks external body, which is entirely independent of the company’s mission and goal. This foreign organization is focused on the evaluation of the organization’s financial and non-financial reports. Although International Accounting standards give uniformity of accounting framework based on recording and summarization of accounting information. The audit plays a vital role in developing and enhancing the global and economy and business organizations. Auditors, in this case, PWC, express an opinion on the fairness of the financial statements in a specific country. The audit quality should not be affected by either the state or any statutory regulations. Therefore, a clear framework is required differentiating country audit take regarding the country accounting agenda. The critical concern arises when a particular firm operates within two different countries in which review has to be done.

Critical consideration of the experimental factors which influence the audit independence as well as impairing audit quality is inconclusive and entirely uncertain. The audit is generally accepted as a means of ensuring compliance to the set rules. Although it differs due to the common factors within different countries. The audit system in the United States differs from Saudi Arabia’s audit systems due to diverse operations in both countries. Price Water Coopers Company has laid particular standards that outline the means of accounting and auditing agendas. Right for the education framework, the two countries have experienced diverse systems that have allowed PWC to embrace countries’ cultural ideas before planning on the audit and accounting systems. This has been found a challenge because this is the same firm, and everything operations must be conducted the same. Still, the main goal of this research will be evaluating and discussing the differences between the two countries.

Differences in Education System

Accounting and Auditing begin with education. To build strong employee etiquette, the education framework is very much essential. Edification is considered as a significant factor in the progress of any nation in the world. Most countries in the world are committed to achieving the highest feedback from the education system in place. Investment in education is critically the critical idea of producing countries’ goals. The education system in Saudi Arabia and the United States is almost similar. Still, there are key differences that portray the kind of auditing framework as well as the accounting ideas. First, the linguistic in the schooling system of the two states is the one main distinguishing alteration. This variance is caused by the mother tongue language in the United States and Saudi Arabia. In the US, accounting scholars are taught in English because English is the countrywide language. While in Saudi Arabia, education is offered in both Arabic and English. In such a scenario, reporting can be done in both English and Arabic languages. To cater for the Arabic speaking nationals. PWC has a crucial responsibility of ensuring all the information gathered is primarily aimed at improving compliance, and thus, it should be published in both Arabic and English language.

The other notable difference in the edification systems between the two countries is the cost of education. Although the main aim of education is to improve the developmental agenda in any country, the price of education may differ. For instance, in Saudi Arabia, edification is free for all citizens, and college and university students are given a stipend by the government to cater to their wants. In the United States, each student must repay for the tuition fee, and they don’t receive monthly stipend like their counterparts in Saudi Arabia. The cost of education is, therefore, relatively high in the United States compared to Saudi Arabia. The only monetary support in the United States is in the form of a loan which is payable once students are employed. Due to competitiveness in the United States in terms of marketing for intellectual services, all student is allowed to finance their education. This can be done either by scholarship or through personal financing.

In the United States, students are allowed to choose the desired courses that they may wish to study, but they are further entitled to major in their third or fourth year. This gives student an enabling environment to evaluate their desire towards particular courses. For instance, Accounting students can decide to shift to the Auditing after two years of the study under course evaluations. In Saudi Arabia, however, students are allowed to choose their major courses in their first year of the study. All the choices made during the first year of study are relatively compelled towards achieving student desire without elective classes. For instance, if a student decides to study accounting and auditing should exclusively choose subjects which relate to the course during his first year in the college. This critical difference in the education system has created diversity on the professional etiquette when it comes to employment and hiring.

The garments are worn to the school also present the main variance in the education systems, which may fuel student’s perception of the intended course outcomes. For example, In the United States, students do not wear a uniform, although they are permitted to wear any sartorial which seems fit. Although in Saudi Arabia, students must be uniformly designed for every school. Furthermore, in Saudi Arabia, students are separated in terms of gender such that girls and boys don’t blend. In most cases, students in Saudi Arabia are divided in terms of courses offered. Such that students studying accounting are allowed to study separately from other students.

The other critical consideration is the environment upon which the education is offered. In the United States, Universities and colleges are made of a big building with many students taking different courses. Although in Saudi Arabia, the critical consideration is the number of students in a particular college. Although the turn-up is usually very small, especially for the student taking the auditing course, furthermore, the education system in Saudi Arabia values what students can memories during the lecturers. The student is not allowed to ask questions in the classroom; thus, they are fully trained to pass the examination. The application of the contextual framework of the studies is not allowed in Saudi Arabia’s education. In the United States, students are allowed to enquire for clarification as well as applying what learned in the class to the environment. The education student relies more on critical thinking as well as contextualizing all relevant information for the decision making as well as improving one’s skills. The application of the knowledge is entirely made to both related areas and non-related areas.

The auditing is a very different course which does not only allow the passing of exams but also focuses on the applications of the knowledge in the field. One of the key considerations in evaluating junior auditors and accountants is the level of experience in terms of applying what has been taught in school to the real world of business. The education system in both Saudi Arabia and the United States should be entirely be made towards achieving general business-related desires. PWC is mostly concerned with developing the country’s auditing competence, which can only be done through the engagement of both employees and another direct stakeholder. The critical determination towards organization success is the quality of workers in the firm. They are considering the diverse environment in terms of competitiveness. The PWC has outlined an employment requirement that incorporates the employee’s qualifications.

Considering the education systems in the two countries, the auditing framework differs in terms of employment considerations as well as remunerations. For instance, United States education systems are expensive and competitive. The hiring process is usually very competitive, and a closer evaluation of the interviewees is required to acquire the most competence person. This is quite different from Saudi Arabia’s perspectives (Alahmadi, Hassan, Karbhari & Nahar, 2017). The rate of competition is quite low, and only a few people are in the field of auditing. For the PWC company to hire auditors in the United States, it requires a lot of resources compared to Saudi Arabia’s perspective. The critical concerns are the quality of the employee to be utilized.

The Qualification License

One of the most critical considerations in hiring the Auditors and Accountant in both Saudi Arabia and the United States is the qualification license. To become a Certified Public Accountant, a closer examination of the individual creates a room for the certification. In Saudi Arabia, the Certified Public Accountant regulates the activities of all the accounting professionals. The organization outlines the requirements for the Public Accountant in terms of qualification.

Furthermore, it is mandated with the issuance of a qualification license to the professionals. The institute of Saudi Organization for Certified Public Accountants, in collaboration with the ministry of commerce, creates a forum for closer engagement of the Accountants in a mission to procure the best accounting professionals. The department of higher education has the authority to determine the critical qualification to be met by any professional accountant. This gives a restrictive environment in which auditors and Accountant have to consider before engaging in accounting professionals.

The CPA designation is usually protected under the law, which outlines the requirements for and individual to be fully certified. For CPA certification, individuals are required to be Saudi Arabian nationals with a least first degree in accounting or its equivalent. Furthermore, fulfilling practical experience requirements as well as becoming a member of SOCPA. Companies registered with KSA are required to comply with the accounting standards set by the SOCPA. These standards are usually based within the broad framework of the international accounting standards, which guides in accounting and auditing.

Every state in the United States has its CPA requirements, which guide on the evaluation progress for all the accounting professionals. The international financial reporting framework works in collaboration with the CPA institution in an aim to impact positively on the reporting ideas (Amulothu, Kapur & Shukla, 2018). PWC creates a significance in advocating for closer consideration between qualified professional in two countries by engaging CPA institutions in coming up with the modeled examination for evaluating candidates.

Accounting System Law

Accounting is a diverse environment that needs to be regulated not only by the professional bodies but also government regulatory framework. The regulatory systems are usually put in place to ensure uniformity in reporting as well as institutional compliance to the ser rules. For instance, in Saudi Arabia requires accountants to set a reporting framework based on international reporting standards. Therefore, recognizing both incomes and expenses in the books of accounts is mandatory. The Saudi Arabian accounting platforms allow organizations to choose the best accounting approach, which suites the company. The reporting framework in Saudi Arabia is constrained to the specific requirements depending on the capital base. For example, Companies and other establishments that have a capital base which exceeds SR100,00 are required to keep the following books of account, daily journal, general ledger, income account, and creditor aging report (Habbash & Alghamdi, 2017). Furthermore, the essential requirement for keeping inventory books which outlines the trial balance for all assets and liabilities in any financial year.

Although the reporting systems may look similar in terms of required financial data, the two countries have separate accounting frameworks that entirely guide on the means of reporting. PWC company studies not only the reporting framework in any country but also tries to engage both cultural and political understanding to avoid misrepresentation. Auditing is a very critical environment regarding the misallocation of the fund. Therefore it requires professional etiquette in both practice and presentation. Furthermore, organizations and businesses are required by the law to ensure the application of VAT as well as capital gains tax. The reporting framework engages the diverse use of accounting as well as reporting considerations. For instance, the resident companies are requiring to settle their liabilities within one year; payment is made quarterly.

To contextualize the financial reporting in both Saudi Arabia and the United States, PWC has ensured full compliance with the set international regulations are mostly made to ensure full accordance with the law. Although considerations are usually done to subsidize the recruitment and employment platforms. The critical part of this consideration is the number of CPA professionals in the country. The criteria in which employment is done in Saudi Arabia is ultimately different from the United States approach in a manner that employees are hired based on requisitions. Research on the international engagement of foreign employees has concluded that Saudi Arabian accountants are based on international countries. The educational systems limit the approach on which organizational prefer hiring staff

.

The United States has been in fore-front in achieving employee competitiveness. Considering the country’s culture and the competitive education system, employment, as well as the hiring process, are exclusively made regarding the market demand. The essential requirement for an accountant is a CPA certification and a degree in accounting (Bahrawe, Haron & Hasan, 2016). This tries to specify the mechanism in which the hiring process is done.PWC has been involved in many corporate organizations in the US and has recommended strictness in market demand. There are different perspectives associated with accounting in terms of competence and professional reporting. Companies are expected to ensure the engagement of independent accountants/Auditors to create and enable the environment, which excludes the conflict of interest within the working environment. The United States CPA certifications create an ideal environment that helps in differentiating between an accountant and an independent auditor.

Capitalism

The Saudi Arabian economy is regulated by the individual more than the state. This gives their organizations a zeal to control means in which accounting is done irrespective of the regulatory measures. In most cases, the industry-based environment also decides the mechanism in which organizations incorporate employees to achieve company goals (Aghimien, 2016). Currently, organizations are focusing on the improvement of auditing through artificial intelligence.PWC has created an environment for engaging stakeholders in both countries to achieve synthetic intelligence understanding.

Artificial intelligence is the development of computer science which embraces a system decision making based on the information. The idea of Artificial intelligence is very new in the Auditing environment; it has further received counter-attacks regarding the job requirements. The primary purpose of this platform is concerned with the amount of data required in analyzing, especially the one with massive amounts. Both the United States and Saudi Arabia are focused on incorporating machine learning as well as machine reasoning to come up with the most accurate auditing platform.

The United States is more of a commercial environment in which most of its business activities are in the hands of the government. Laws are formed regarding business activities, and therefore, there are better means of regulations compared to its counterpart Saudi Arabia. Businesses and organizations are formed within the framework, which entails yearly auditing to collect the taxes, which are the core government source of income. The critical concerns are based on engaging an independent auditor who examines business information to present a fair view of the essential organizational stakeholders.

The automation in auditing is regarded as the fundamental approach in evaluating auditing differences between nations. Capitalism in Saudi Arabia has created different reasoning regarding audit automation. The critical consideration is its impacts on business progress. To ensure audit performance is at the highest point possible, PWC has created an enabling environment in which enables the auditors to minimize their time spent on the structured tasks and spend more valuable time on the areas requiring professional etiquette and judgment.

Conclusion

The auditing profession requires basic qualifications in both the United States and Saudi Arabia. For instance, in Saudi Arabia accounting registration entails bachelor degree or any higher prerequisite in bookkeeping ,after-secondary certificate  and a graduate of one of the organizational disciplines and have conceded at least 15 hypothetical hours in auditing, however those who do not complete the declared 15 academic areas are required to; compulsory hours by excelling  topic relevant to 15 times in accounting.

The United States Accounting registration requires a necessary degree certificate as well as pass in CPA exams. Although some states require a general bachelor’s degree while others focus on a specific degree in accounting. The critical concerns in Auditing are not only the qualification but the ability to contemplate the required basic knowledge in auditing and accounting. Current innovations and inventions have initiated the adoption of modern auditing frameworks and technology, which tries to improve the authenticity of the verification.Auditing should be uniform in all countries irrespective of the culture and education systems.

Reference

Aghimien, P. A. (2016). Development of accounting standards in selected Middle Eastern countries in comparison to the United States of America. Review of International Business and Strategy, 26(1), 69-87.

Alahmadi, H. A., Hassan, A. F., Karbhari, Y., & Nahar, H. S. (2017). Unraveling Shariah Audit Practice in Saudi Islamic Banks. International Journal of Economic Research, 14(15), 255-269.

Amulothu, V. S. N., Kapur, A., & Shukla, V. (2018). U.S. Patent No. 10,084,676. Washington, DC: U.S. Patent and Trademark Office.

Bahrawe, S. H., Haron, H., & Hasan, A. N. B. (2016). Corporate Governance and Auditor Independence in Saudi Arabia: Literature Review and Proposed Conceptual Framework. International Business Research, 9(11), 1-15.

Habbash, M., & Alghamdi, S. (2017). Audit quality and earnings management in less developed economies: the case of Saudi Arabia. Journal of Management & Governance, 21(2), 351-373.

Knechel, W. R., & Salterio, S. E. (2016). Auditing: Assurance and risk. Routledge.