Accounting & Sustainability in Saudi Arabia: Transparency is the headline

By: Sara Al-Muaither

Certainly, I agree with you that public sector sustainability reporting guidance remains critical across the globe. This is because the public sector can compromise the capability of the future generation to meet their own needs. Certainly, it is critical to establish sustainable reporting guidance to ensure the public sector outlines various principles significant for the private sector to engage in a sustainable economy. Because the public sector provides capital for the establishment of the economy, the same public sector has a crucial role in ensuring the government spends capital sustainably. Indeed, government expenditure can be different across different regions of the country. Thus, it is essential to provide transparent reporting on how the government spends the capital to the public. This is so that citizens can pinpoint the critical areas that require sustainable development.

Notably, the establishment of public sector accounting reform represents an opportunity for the Saudi Arabia government to improve financial information quality, reliability, and comparability. The development of public sector-specific sustainability reporting guidance requires critical enablers. Additionally, I believe the proposal is quite feasible because it has formulated various critical enablers like appropriate financial and human resources for improving sustainable development in Saudi Arabia. However, the proposal needs to fully cover standardization and accounting convergence which is a significant challenge affecting accounting in both the state and private sectors in Saudi Arabia.

Standardization and accounting convergence refer to establishing a set of standards for accounting that can be uniformly applied in all sectors. Additionally, the convergence of accounting standards and financial reporting remains a valuable process that can lead to the free flow of investment across the country.

This process can lead to the achievement of essential benefits for all capital markets stakeholders. Indeed, the proposal is significant because it promotes transparency in governance, strategy, risks, and performance related to sustainability programs, which are significant for enabling accountability and providing helpful information for decision-making purposes, especially in Saudi Arabia. Considering that Saudi Arabia consumes a lot of petroleum, I believe the carbon tax programs are quite applicable. Notably, through carbon taxes, revenue would be available for financing sustainability programs, including climate change mitigation in Saudi Arabia.