أثر التحول من الأساس النقدي إلى أساس الاستحقاق في القطاع العام والقطاع غير الربحي في المملكة العربية السعودية مع عرض تجربة رابطة العالم الإسلامي لهذا التحول

Bayan Fayez Hasanain

doi:10.64190/abj.1.2.2026.11

Bayan Fayez Hasanain ⁽¹⁾

(1) Umm Al-Qura University, Saudi Arabia

https://doi.org/10.64190/abj.1.2.2026.11

Issue
Vol. 1 (2026): Early View - 2026

Submitted
November 24, 2025

Accepted
January 6, 2026

Published
February 15, 2026

Keywords:

Cash Basis, Accrual Basis, Government Accounting, Nonprofit Sector, Accounting Transformation, Financial Transparency, International Public Sector Accounting , Standards (IPSAS), Saudi Vision 2030, Muslim World League, Operational Efficiency

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Abstract

This study examines the impact of transitioning from cash-basis to accrual-basis accounting in the public and nonprofit sectors in the Kingdom of Saudi Arabia, with a particular focus on the Muslim World League as a pioneering case. The transformation is aligned with the objectives of Saudi Vision 2030, especially those related to transparency, financial efficiency, and compliance with International Public Sector Accounting Standards (IPSAS).
A descriptive-analytical approach was adopted, using a structured questionnaire administered to a sample of 150 respondents, including accountants and financial staff in public and nonprofit entities. The questionnaire addressed three main dimensions: the perceived impact of the transition, institutional responsiveness, and implementation challenges. Data were analyzed using SPSS, employing descriptive statistics (means and standard deviations).
The findings indicate that the transition to accrual-basis accounting has significantly improved the quality of financial reporting, enhanced transparency, and strengthened governance practices. The results further reveal a generally positive institutional response, particularly in terms of strong senior leadership support and integration with technological systems. However, several challenges were identified, including limited technical infrastructure, shortages of qualified personnel, and high implementation costs. The Muslim World League’s experience emerged as a practical model demonstrating effective adaptation to change and sound change management within the nonprofit sector.
The study concludes by recommending the expansion of accrual-basis accounting across public and nonprofit entities, the development of specialized and continuous training programs, increased investment in technical infrastructure, and targeted institutional support for lagging organizations. These measures are deemed essential to ensure the sustainability and effectiveness of the accounting transformation.

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References

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Authors

Bayan Fayez Hasanain

Umm Al-Qura University, Saudi Arabia

https://orcid.org/0009-0002-0136-3738

bayanhasanain@hotmail.com (Primary Contact)

Author Biography

Bayan Fayez Hasanain, Umm Al-Qura University

Bayan Fayez Hasanain, Department of Accounting, Umm Al-Qura University. Director of the Accounts Department, General Administration of Financial Affairs, Muslim World League.bayanhasanain@hotmail.com, https://orcid.org/0009-0002-0136-3738.

Hasanain, B. F. (2026). The Impact of the Transition from Cash Basis to Accrual Basis in the Public and Non-Profit Sectors in the Kingdom of Saudi Arabia, with a Presentation of the Muslim World League’s Experience with this Transition. Arado Business Journal, 1, 49–64. https://doi.org/10.64190/abj.1.2.2026.11

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Introduction

The transition from cash basis to accrual basis accounting is among the most significant contemporary developments in accounting systems within the public and nonprofit sectors globally. This transition reflects a trend towards increased transparency and financial accountability, enhancing effective decision-making and management of financial resources (Al-Zahrani, 2021). In the Saudi context, this transformation responds to the goals of Vision 2030, which calls for enhancing spending efficiency and improving the quality of financial reports by adopting accrual accounting standards compliant with international public sector standards (Ministry of Finance, 2020).

The Muslim World League is a leading nonprofit organization that has sought to align its financial system with best international practices, positively impacting the efficiency of its financial reports and raising the level of governance and internal control (Al-Muqbil, 2022). The key impacts of this transition include improving the accuracy of financial reports, enabling oversight bodies to track financial performance more accurately, and enhancing the disclosure of long-term liabilities and assets, which was not possible to the same extent under the cash basis (Hassan & Al-Dosari, 2023).

Moreover, the shift to accrual basis has enabled nonprofit entities to engage in better strategic planning by providing more comprehensive and flexible financial information to decision-makers, especially in civil society organizations with diverse activities and funding (Al-Shehri, 2022). Based on the aforementioned, this study necessitates a detailed analysis of the impact of this accounting transformation on financial and administrative performance in both the public and nonprofit sectors, emphasizing the obstacles and challenges accompanying the application process, in addition to the government’s role in preparing the necessary institutional and legislative framework to support this transformation.

Previous Studies

Several studies have highlighted the effect of the transition from cash basis to accrual basis accounting in the public and nonprofit sectors in the Kingdom of Saudi Arabia. The study by Abdullah Al-Qahtani and Hassan Al-Ghamdi (2018) was one of the first to address this topic, confirming the positive impact of this transition on improving transparency and accountability within the health sector, contributing to enhanced financial and administrative performance.

This was followed by the study conducted by Fahd Al-Suhaili and Mansour Al-Sharif (2019), which focused on the readiness of universities for transformation. The study indicated significant challenges faced by academic institutions in this area, such as a shortage of specialized personnel and technical problems, but it recommended the necessity of enhancing training and developing infrastructure for effective transformation.

In the same vein, Ahmed Al-Otaibi and Nasser Al-Buqami (2020) analyzed the impact of this transformation on measuring public expenditure returns and resource allocation. Their findings showed a positive correlation between the shift to accrual basis and improved measurement accuracy of government institution expenditures.

Subsequently, a study by Saeed Al-Zahrani and Mohammed Al-Qahtani (2021) reviewed the Muslim World League’s experience in implementing this transformation, noting the challenges faced in adopting this system, while simultaneously highlighting the opportunities provided by this transition in improving transparency and enhancing accountability within the nonprofit sector, thereby contributing to the League’s capacity to achieve its financial and organizational objectives.

Another study titled by Mubarak Al-Harbi and Youssef Al-Zahrani (2021) addressed the challenges that public institutions may face during the transformation process, such as a lack of specialized personnel and technical issues that may affect the success of the transition, emphasizing the importance of infrastructure support strategies and training provision to address these challenges.

On an international scale, the study by John Smith and David Brown (2017) titled “The Impact of Accrual Accounting on Public Sector Financial Reporting” demonstrated that this transformation improves the accuracy and transparency of financial reports, contributing to better management and distribution of public funds.

Conversely, Richard Miller and Sarah Johnson (2018) in their study titled “Accrual Accounting in the Nonprofit Sector: A Comparative Analysis” found that the transition in the nonprofit sector faces common challenges across nations; nonetheless, the benefits of this transition in enhancing transparency and strengthening public trust in nonprofit organizations remain substantial.

Furthermore, Jennifer Lee and Robert Williams (2019) discussed the implementation of the shift to accrual basis in government organizations, offering a practical guide on the steps and measures involved during the transition, stressing the importance of institutional readiness to adapt to this new system for ensuring its success.

George Anderson and Emily Davis (2020) focused on the significance of applying the accrual basis for enhancing financial transparency and oversight in nonprofit organizations, ultimately improving their capacity to implement projects and develop their financial resources.

Lastly, Michael Thomas and Lisa Miller (2021) discussed the challenges and benefits of accrual accounting in the public sector, demonstrating that despite the substantial challenges associated with implementing this system, the benefits realized by the public sector in improving transparency and accountability remain overwhelmingly significant, making the transition vital and necessary for the future.

The current study differentiates itself from previous studies by specifically focusing on the transition from cash basis to accrual basis in the Kingdom of Saudi Arabia, providing an in-depth analysis of the Muslim World League’s experience in this transition. While prior studies addressed broader fields like the health sector, universities, or the government sector, this study distinguishes itself by its emphasis on the nonprofit sector, which has been less explored. Furthermore, the current study highlights the technical and administrative challenges faced by the Muslim World League specifically, offering strategic recommendations for improvement similar to developments in other sectors. Additionally, the study reflects an interaction between theory and the

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The Impact of the Transition from Cash Basis to Accrual Basis in the Public and Non-Profit Sectors in the Kingdom of Saudi Arabia, with a Presentation of the Muslim World League's Experience with this Transition

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