Accounting Professionalisation in an Islamic Hegemony: The Case of Saudi Arabia

Abstract

The purpose of this study is to examine the accounting professionalisation in the Saudi Arabian context following the establishment of the local accounting professional body, the Saudi Organization of Certified Public Accountants (SOCPA), in 1992. It explained how the influence of Islamic hegemony on the accounting professionalisation project (APP) in the Kingdom of Saudi Arabia (KSA), against the background of globalisation, alters the accounting standards, accounting ethics, accountants’ practices, and the promotion to partnership level in audit firms. Drawing upon the theoretical lens of Gramsci’s concept of hegemony, the study investigated the interactions of the accounting occupational group, practitioners in audit firms (the international Big 4 and local audit firms) and the local socio-political context of KSA.

By using qualitative semi-structured interviews, archival records, and Gramscian theory, the analysis showed that the accounting profession in KSA is affected by three major powers: the Islamic state, Islamic society, and the oil-based economy. KSA is characterised by state dominance. Due to the country’s rapid economic development over the past few decades, the government initiated a nationalisation policy, referred to as Saudisation, to reduce the dominance of expatriates. It was expected that the policy would lead to the accounting profession being nationalised and accounting firms being controlled by local professionals. However, nationalisation within the setting of globalisation showed an intertwining of protection and resistance. The globalisation impact was also expected to open the Saudi market, both nationally and transnationally; however, SOCPA exerted more control to develop the profession under Islamic hegemony.

It was found that, with the support of the state: (1) Islamic hegemony protects local Islamic culture by integrating Sharia (Islamic) law with local accounting standards, ethics, and regulations. (2) Adoption of international accounting standards prompted a disagreement between supporters and opponents. However, Islamic ideology incorporated political and capitalist ideologies to endorse international standards to comply with Sharia law. (3) The nationalisation policy was introduced to protect the accounting profession from expatriates’ dominance; however, it also altered the partnership level of audit firms and the role of the SOCPA, to mitigate the tension between local and international practitioners and the conflict between the national and transnational settings.

The study contributes to the empirical literature by exploring accounting professionalisation affected by Islamic ideology and hegemony, and presenting a view of a hybrid professional body that is more a state agency than an autonomous professional body. It also adds to theoretical knowledge by providing different insights into market closure that is based on ideological perspectives. Islamic hegemony thus alters accounting professional and ethical standards and the role of the accounting professional body. While literature on accounting professionalisation in developing countries (DCs) has explored the effect of political ideological perspectives in the accounting profession, research on religious ideology’s impact on the profession and its regulations in DCs is lacking. This study examined the ideological perspective and respondents’ knowledge of practitioners in audit firms and the professional body, while the accountants in commercial and financial organisations, and the role of education were left for future research.