LCGPA Audit standards
Section 3 — Labor (employee compensation)
Verify total compensations split between Saudis and non-Saudis and the average headcount over the period.
10 min readUpdated 15 April 2026
What is in scope#
Total compensation = base salary + overtime − absence deductions + allowances + employer GOSI contribution + end-of-service accrual + leave + education / housing / transport allowances + other employee items.
| Included | Excluded |
|---|---|
| Salaries & wages | Outsourced labor |
| Allowances, commissions, overtime | Health care / medical insurance (goes to §4) |
| Employer GOSI share | EOSB interest expense |
| End-of-service accrual & board fees | Trainee/trainer compensation (goes to §6) |
Required procedures#
- Obtain the full-population payroll grid by month, employee, nationality, and component.
- Compute average monthly headcount by nationality (end-of-month basis).
- Reconcile the grid total to the FS payroll line via a documented bridge.
- Sample 40 employees (or ≥20% of cost) and inspect ID, contract, payslip, and bank transfer.
- Obtain a management letter confirming all included staff are legally employed under Saudi labor law.
Beware of double-counting
Capacity building (§5), training fees (§6), and goods/services (§4) often overlap with payroll. Make sure each cost is recorded in exactly one section.