Year-End Closing for SMEs in Saudi Arabia: The Checklist Before Preparing the Financial Statements, and the Deadlines That Govern It

Closing the financial year is not “printing the trial balance and sending it to the auditor”. It is a sequence of adjustments that turns day-to-day ledger figures into financial statements that hold up before the auditor, before ZATCA and on the Qawaem platform. Small and medium businesses whose statements are late or whose returns are rejected usually do not lack an accountant; they lack an ordered checklist and clear deadlines.

This checklist is built from what we actually ask our clients for before preparing the statements, organised by caption, with the statutory deadlines that govern each step.

1. The deadlines that drive the close

A company’s financial year is twelve months as set in its articles, and the first financial year may run between six and eighteen months from the date of commercial registration (Companies Law, Article 16). The company must prepare financial statements at the end of each year under the accounting standards endorsed in the Kingdom and file them within six months of year end (Article 17). For a 31 December year end the calendar looks like this:

Deadline	Obligation	Basis
10 January	Withholding tax return and payment for December (and every month, within its first ten days)	Income Tax Law and Regulation
31 January	VAT return for the fourth quarter (or for December for monthly filers)	VAT Implementing Regulation, Article 58
January – February	Physical stock count, bank reconciliations, adjusting entries, draft statements	Internal process
February – April	External audit fieldwork, where the business must appoint an auditor	Companies Law
30 April (120 days)	Zakat return with the financial statements attached, and payment	Zakat Collection Regulation, Article 102
30 June (6 months)	Approval of the statements and filing on Qawaem	Companies Law, Article 17

Note that the zakat return falls two months before the filing deadline: the statements must be ready — and audited, where an audit is required — by the end of April, not the end of June.

2. The checklist, caption by caption

1. Cash and banks

• A bank reconciliation for every account to 31 December, clearing outstanding cheques, deposits in transit and unrecorded bank charges.
• A cash count with a signed minute, and settlement of employee floats.
• Classification of term deposits and short-term investments by maturity.

2. Customers and revenue

• Aged receivables, with major customers confirmed by signed statements of account.
• A provision for doubtful debts under a documented policy, bearing in mind that writing off a debt for zakat purposes has its own conditions.
• Cut-off testing: every revenue recorded in the year corresponds to a supply made in the year, with its e-invoices issued and cleared — see what changes in your books after integration.
• Deferred revenue and customer advances for contracts not yet performed.

3. Suppliers and expenses

• Reconciliation of major suppliers to their statements, and accrual of invoices received after the close for services of the year.
• Prepaid expenses (rent, insurance, subscriptions) allocated across periods.
• A document behind every expense; ZATCA may refuse any expense without supporting evidence.

4. Inventory

• A physical count at or near year end with a signed minute, and settlement of count differences.
• Valuation at the lower of cost and net realisable value, with a provision for slow-moving stock.
• The count result recorded in the inventory book as the Commercial Books Law requires.

5. Fixed assets

• The asset register updated for additions and disposals and reconciled to the general ledger.
• Depreciation computed on the approved useful lives, and completed capital work in progress transferred to assets.
• Purchase invoices and input-tax documents retained for every asset throughout its adjustment period — see record retention periods.

6. Liabilities and loans

• Loan and facility balances agreed to bank statements, split between current and non-current, with accrued interest recorded.
• Long-term lease liabilities under the applicable standard.
• Guarantees, contingent liabilities and pending claims, and their disclosure.

7. Employees

• Payroll sheets reconciled to Wage Protection System transfers and GOSI invoices.
• End-of-service benefit and accrued leave provisions for every employee to the closing date.
• Advances, floats and unpaid employee entitlements.

8. Zakat and taxes

• The VAT control account (output and input) reconciled to the returns filed during the year and to Fatoora data, with any differences recorded.
• Withholding tax: every payment to non-residents reported monthly, with withholding certificates on file.
• The zakat provision for the year computed and recorded before the statements are closed — see our zakat return guide.
• Settlement of earlier ZATCA claims, if any, and open objections.

9. Related parties and equity

• Partners’ current accounts and loans from and to partners, with their nature documented (capital, loan, distribution) because of the zakat effect.
• Share capital, statutory reserve and declared distributions updated by documented resolutions.
• Balances with sister companies reconciled.

10. Disclosures and subsequent events

• A list of events after the reporting date up to approval (large collections, claims, ZATCA decisions).
• The accounting policies applied and the reporting framework: the IFRS for SMEs or full IFRS — see our guide to the IFRS for SMEs.

3. What the auditor asks for next

If your business must appoint an auditor — see the exemption thresholds in the Companies Law — the checklist above is most of what the auditor will request: a final trial balance, the adjusting entries, the reconciliations, the count minutes and the contracts. Having them ready shortens the audit more than any other factor; we set this out in preparing your business for its first audit.

4. The most common closing errors

• Closing the year before December supplier invoices arrive, so the expenses land in the following year and the current year’s profit and zakat are overstated.
• Leaving partners’ current accounts unclassified, so they are treated for zakat in unexpected ways.
• Depreciating assets that no longer exist, or capitalising maintenance costs.
• Total sales in the statements differing from the sum of the VAT returns without a documented reconciliation — the first comparison an examiner makes.
• Postponing the physical count until weeks after the close without reconciling the movements between the two dates.

Within our accounting and bookkeeping service we run this checklist monthly rather than annually, so that the December close is simply the twelfth monthly close.

Frequently asked questions

Sources

• Companies Law — Articles 16 and 17 (Bureau of Experts)
• Zakat Collection Implementing Regulation 1445 AH — Articles 102 and 103
• VAT Implementing Regulation — Article 58
• Commercial Books Law — Article 4 (inventory book)