Contractor Classification: Audited Financial Statements and the Financial File

Preparing and auditing the statement of financial position and the income statement, certification by a licensed CPA, filing in the Qawaem programme, and certification of project revenue-and-expense statements — under the Saudi Contractors Classification Law and its Implementing Regulation, so your Balady application goes in with a complete financial file.

What the service covers

Contractor classification assesses a firm’s financial, technical, administrative and execution capacity to place it in the field, activity and grade it deserves. The financial side of that file is what we handle, as an accounting and audit firm licensed by the Saudi Organization for Chartered and Professional Accountants (SOCPA):

  • Audit of the latest year’s financial statements — the statement of financial position and the income statement — and issuance of the auditor’s report; the Implementing Regulation requires them to be “approved and certified by a chartered accountant licensed to practise”.
  • Filing the statements in the Qawaem programme (Saudi Business Center), a condition for accepting statements issued inside the Kingdom.
  • Certifying revenue-and-expense statements for projects counted towards the contractor’s track record: private-sector projects with a contract value of SAR 5 million or more, and projects executed outside the Kingdom worth SAR 10 million or more.
  • Analysis of the financial-capacity indicators the firm is scored on — net income, gross income, net property and equipment, total assets, cash and short-term investments, current liabilities, equity, total liabilities and diversification of income — measured against the financial limits of the target grade before the application is filed.
  • Newly established firms: preparing and auditing statements covering no less than six and no more than eighteen months from the date of commercial registration.
  • Branches of foreign companies: handling the parent company’s latest-year statements and the certification, translation and attestation they require.
  • The financial file for amendment requests: upgrading a grade, adding a field or activity, or re-classification before the certificate expires.

Legal basis: the Contractors Classification Law issued by Royal Decree No. M/9 dated 18/1/1443 AH, and its Implementing Regulation issued by Ministerial Decision No. 4700007402/1 dated 19/2/1447 AH.

When you need this service

  • A contractor applying for classification for the first time who needs CPA-certified financial statements filed in Qawaem before submitting on the Balady platform.
  • A classification certificate approaching expiry — the re-classification request is filed within the ninety days before the certificate expires, and it cannot be completed without the latest year’s statements.
  • A contractor targeting a higher grade — the grade is driven directly by the figures in the financial statements and by the value of projects documented with certified statements.
  • A newly established firm or a branch of a foreign company, to which special rules on the required statements apply.
  • A contractor whose work is mainly private-sector projects and who needs certified revenue-and-expense statements for those projects to count.
  • A joint venture or subcontract on a government project, where each party must be classified in the project’s field.

How we work

  • Initial diagnosis: reading the commercial registration, the target fields and activities and the financial limits of the grade sought, and identifying what the financial file lacks — before any commitment.
  • Organising the books and supporting documents; the Regulation obliges the contractor to keep regular books in Arabic that substantiate the certified and filed statements.
  • Audit and report on the statement of financial position and the income statement under the auditing standards endorsed in the Kingdom.
  • Filing in Qawaem and delivering the certified statements ready for upload to the Balady platform.
  • Certifying project statements that meet the counting thresholds, checked for consistency with the financial statements and the contracts.
  • Support while the application is reviewed: answering the Agency’s financial queries within the decision period, in coordination with whoever handles your technical and administrative file.

Our job is for the statements to reflect reality accurately and for the file to be complete and consistent — not to adjust figures to reach a grade. Inconsistency between the statements, the documents and the contracts is what most often delays applications or lowers grades.

Frequently asked questions

Must the financial statements be audited by a CPA for classification?
Yes. Article 5 of the Implementing Regulation requires the statement of financial position and the income statement for the latest year to be approved and certified by a chartered accountant licensed to practise, and statements issued inside the Kingdom must be filed in the Qawaem programme.

What are the classification grades and their financial limits?
Five grades, from the first to the fifth, with financial limits set by the Ministry for each activity. In general construction of residential buildings, for example, the fifth grade runs up to SAR 24 million and the first grade above SAR 211 million, according to the Financial Limits Guide for classification activities (third edition, July 2024).

How long is the certificate valid, and when is it renewed?
Two calendar years. A re-classification request is filed within ninety days before expiry, and validity may be extended once only, by ninety days, at the contractor’s request.

Do private-sector projects count towards the track record?
Yes, where the contract value is SAR 5 million or more; the value is taken from a revenue-and-expense statement certified by a licensed CPA. Government projects count from SAR 500,000 at the contract value itself, and projects are counted within ten years of the contract signing date.

My firm is new and has not completed a financial year — can it be classified?
The Regulation accepts financial statements covering no less than six and no more than eighteen months from the date of commercial registration, approved and certified by a CPA. A branch of a foreign company established less than eighteen months ago may submit the parent company’s latest-year statements.

Do you submit the classification application on Balady for us?
The application is submitted from the firm’s own Balady account. Our role is the financial side of the file: the certified statements, the Qawaem filing, the certified project statements and the answers to financial queries — in coordination with whoever handles your technical file.

Can a government entity contract with an unclassified contractor?
No. Article 3 of the Law prohibits government entities from awarding or accepting any bid for a project subject to classification unless the contractor is classified in the required field, activity and grade.

Related guides

Certificate expiring in a few months — or applying for classification for the first time?