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    Country by Country Financial Reporting and Auditing Framework

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    Kuwait – Horwath Al Muhanna & Co. (prepared March 2015)

    Preparation and Filing of Statutory Financial Statements

     

    The requirements for preparation and filing of audited financial statements are as below in Kuwait:

    • Limited Liability Companies (WLL), Kuwaiti Shareholding Companies Closed (KSCC) (Unlisted) and Kuwait Public Shareholding Companies (KPSC) (Listed) registered in Kuwait are required to prepare annual financial statements and file these with the Ministry of Commerce and Industry, Kuwait ("MOCI") and the concerned authority, i.e., Kuwait Stock Exchange (for listed companies) and Central Bank of Kuwait (for KPSCs and KSCC banks). Further, all banks and investment companies (irrespective of whether they are listed or not), fall under additional compliance regulations of the Capital Markets Authority (CMA), Kuwait.
    • Audited financial statements are required to be filed within 3 months from the end of the financial year with MOCI and all concerned authorities. Additionally, for all the companies covered by the CMA Law (KPSCs and KSCC investment companies and banks), the financial statements are also required to be submitted to the CMA within 5 working days of the approval of financial statements.
    • The regulations in Kuwait require all companies to prepare and file a complete set of financial statements including the statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows, and other explanatory information.

    Listed companies are required to file their interim unaudited financial statements with the Kuwait Stock Exchange within 45 days after each quarter end.

     

    Financial Reporting Framework

    All companies in Kuwait are required to prepare their financial statements in accordance with International Financial Reporting Standards (IFRS).

    Audit Requirements for Companies Registered in Kuwait.

    In Kuwait, the following forms of companies are required to have their financial statements audited:

    • Limited Liability companies;
    • Kuwaiti Shareholding Companies Closed
    • Kuwait Public Shareholding Companies
    • Any other business in respect of which an audit is required by any other law, for example, Ministerial Decision no. 46601/67 for Private Education System (schools), Commercial Law no. 68 of 1980 for establishments.

     

    Audit is not mandatory in Kuwait for proprietorship entities. Normally such entities get their financial statements audited when they are required to do so by any regulatory body or financial institution or to meet any other special requirement (for instance, an audit is mandatory for those individuals who hold 5 or more establishments).

    Auditor's Appointment, Rotation and Joint Audits

    In Kuwait, auditor's appointment is done in the name of the individual partner of the firm. Auditors are appointed for a fixed period of one year and can continue as the auditor of the company after the first year, subject to approval of the shareholders/partners in the general assembly meeting. This rule is applicable for all the companies registered in Kuwait. Article 6 of CMA Decision no. 24 of 2012 requires auditor rotation for KPSCs to be done once every 4 years. Joint audits are required only in respect of KPSCs.

    Auditing Standards

    Auditors in Kuwait are required to undertake their audit and express an opinion on the financial statements in accordance with International Standards on Auditing issued by IFAC and applicable laws of the country.  

    Ethical Framework

    All auditors in Kuwait are expected to follow the ethical standards issued by IFAC and Law No. 5 of 1981 which governs the auditing profession in Kuwait.  

    Auditor Registration

    In Kuwait, audit reports can be issued only under individual licenses issued to Kuwaiti individuals by the Ministry of Commerce and Industry after fulfilling the local certification requirements.

    Transparency Report

    There is no transparency reporting requirement in Kuwait.

     


    Audit Regulation

    Horwath Al-Muhanna & Co., Kuwait is subject to the following external and internal monitoring processes with regard to their audit practice:

    External Monitoring

    Audited financial statements are subject to rigorous review by the following regulatory authorities in Kuwait:

    • By the Capital Markets Authority ("CMA") and the Kuwait Stock Exchange (now under CMA) in respect of the audited financial statements of listed entities and other entities covered by the CMA;
    • By the Ministry of Commerce and Industry in respect of the audited financial statements of all companies registered in Kuwait.

    Under the recently introduced regulations, the CMA will be conducting quality control reviews of work done by auditors in Kuwait who are registered under the CMA

    Internal Monitoring

    Horwath Al-Muhanna & Co. Kuwait has established a formal monitoring and review process which allows us to gain assurance that our firm's quality control systems are operating effectively. The review process includes reviews of individual audit files, and an assessment of compliance with firm's policies and procedures relating to independence and audit quality. Quality control reviews are done prior to the issuance of audit reports in respect of all listed entities. For other audits, files are selected using a risk-based approach with a weighting towards larger and more complex client engagements.



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    David Chitty - Audit
    London, United Kingdom
    +44 20.7842.7292


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