The real challenge in Off Plan Projects lies in a three-dimensional equation: trust, money, and risk. The buyer places trust in a project that still exists only on paper, while the developer manages substantial funds before construction is completed. Between the two, risks of delays or financial mismanagement emerge.
From this perspective, the role of the certified public accountant is no longer merely procedural. It has become a fundamental pillar that ensures balance within this equation and transforms real estate promises into a tangible and secure reality, in accordance with legislative regulations in the Kingdom of Saudi Arabia.
In this article, we explore in depth the roles and responsibilities assigned to the certified public accountant in Off Plan Projects, as well as the requirements necessary to ensure financial management characterized by full transparency and full compliance with the Wafi program.
What is Off Plan Projects?
Off Plan Projects refer to purchasing a real estate unit before its construction is completed, based on approved plans and designs. From a regulatory perspective, it is an activity involving the sale or lease of real estate units—regardless of their purpose—before or during the development phase.
The developer is committed to execution according to a defined timeline, in exchange for payments made by the buyer, which must be deposited into an escrow account. This account is the cornerstone of the certified public accountant’s role, ensuring that funds are used exclusively for completing construction and fulfilling buyers’ rights.
Due to the long period between contract signing and delivery, the Real Estate General Authority imposes strict oversight, including the appointment of an escrow account trustee, a certified public accountant, and an engineering consultant to supervise cash flow and ensure proper fund allocation within the project.
What is an Escrow Account and How Does It Work?
An escrow account is a bank account designated for the real estate project, where all payments from buyers or financiers are deposited. The purpose of this account is to separate the financial liability of the project from the developer’s personal finances, ensuring that funds are not used for other projects or external obligations.
How the escrow account works:
- Deposits: All payments are deposited directly into this account. The developer is not allowed to receive any funds outside this framework.
- Monitoring: The certified public accountant reviews these deposits and ensures they align with schedules and contracts.
- Conditional disbursement: Funds are only released for the benefit of the project (such as construction materials, labor wages, and permits), based on technical reports from the engineering consultant and financial approval from the certified public accountant.
- Retention reserve: A percentage (typically 5% to 10%) remains in the account and is only released after project completion and unit delivery.
Difference Between the Certified Public Accountant and the Escrow Trustee
- Escrow Trustee: A licensed financial institution (bank) responsible for safeguarding funds and ensuring they are only moved according to approved regulatory instructions.
- Certified Public Accountant: The supervisory and approving authority who reviews documents, verifies eligibility for payments, and ensures sufficient liquidity before approving withdrawals.
Requirements for Qualifying a Certified Public Accountant in Off Plan Projects
- The firm must be accredited by the Saudi Organization for Chartered and Professional Accountants (SOCPA).
- At least 10% of the firm’s accountants—or a minimum of four accountants—must pass the qualification program for Off Plan Projects.
Requirements for obtaining the qualification certificate:
- Commercial registration and social insurance certificate.
- Valid SOCPA license.
- Certification of completing the accounting supervision course for Off Plan Projects.
Roles and Responsibilities of a Certified Public Accountant in Off Plan Projects
- Reviewing financial flows: Continuous auditing of all financial transactions.
- Supervising the escrow account: Ensuring proper use of funds and protecting buyers’ rights.
- Ensuring compliance and transparency: Preparing accurate reports for regulatory authorities.
- Governance of disbursement: Approving payments and monitoring project budgets.
Additional Responsibilities in Off Plan Projects
- Cash flow records: Documenting all incoming and outgoing funds.
- Financing review: Monitoring funds deposited in the escrow account.
- Cost review: Including construction, administrative, and marketing costs.
- Refund management: Supervising refunds to clients when necessary.
How Does the Accountant Protect Investors’ Funds?
- Preventing misuse of funds.
- Matching disbursement with actual construction progress.
- Detecting financial deviations.
- Ensuring fair refund processes.
Key Accounting Challenges in Off Plan Projects
- Revenue recognition under IFRS 15.
- Estimating future project costs.
- Separating financials between multiple projects.
- Managing and auditing large volumes of documentation.
Frequently Asked Questions
Why can’t developers rely only on internal accounting?
Because regulations require an independent certified public accountant to ensure transparency and protect buyers’ funds.
Can marketing and administrative expenses be paid from the escrow account?
Yes, within approved limits and with certified accountant approval.
When does the accountant’s responsibility end?
After project completion, delivery of units, and final settlement of the escrow account.
What happens if a financial issue is detected?
The accountant must notify the developer and escalate the issue to authorities if not resolved.
Having a specialized certified public accountant in Off Plan Projects is not optional—it is essential to ensure financial control, compliance, and investor confidence.