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In-Kingdom Total Value Add
2019 iktva Survey Guide
[Publish Date]
1
Contents Introduction ................................................................................................. 2
Calculating the iktva Ratio ................................................................................ 3
New for iktva 2019 ......................................................................................... 4
General Instructions for Completing the Survey ....................................................... 7
Page 1: Company Information .......................................................................... 10
Page 2: iktva Schedule ................................................................................... 12
Section 1. In-Kingdom Based Revenue ............................................................... 12
Section 2. In-Kingdom Goods and Services .......................................................... 13
Section 3. Saudi Compensation ....................................................................... 16
Section 4. Training and Development of Saudis .................................................... 16
Section 5. Supplier Development ..................................................................... 18
Section 6. In-Kingdom Research and Development ................................................ 18
Section 7. In-Kingdom Investments .................................................................. 18
Page 3: Top In-Kingdom Suppliers (Section 8) ........................................................ 20
Page 4: Labor (Section 9) ................................................................................ 24
Page 5: Capital Investments (Section 10) ............................................................. 27
Page 6: Depreciation and Amortization (Section 11) ................................................ 31
Page 7: Supplier Development (Section 12) .......................................................... 33
Page 7: Research & Development (Section 13) ....................................................... 34
Page 8: Female Employment (Section 14) ............................................................ 36
Page 9: Reconciliation Table (Section 15) ............................................................ 38
Possible Inquiries .......................................................................................... 41
Auditor Reminders......................................................................................... 41
Submitting the Company’s Survey ...................................................................... 43
Health, Safety, and Environment ....................................................................... 45
Final Thoughts ............................................................................................. 47
2
Introduction A bedrock of our strategy at Saudi Aramco is to create value in every aspect of our business,
maximizing long-term economic growth and diversification. Through the In-Kingdom Total
Value Add (iktva) program, we are taking action to drive additional domestic value creation to
support a rapidly changing economic environment and foster future prosperity.
For the last five years, we have been encouraging and working with our suppliers to either
establish or broaden their local presence in order to increase local content of the goods and
services they provide to the Company. Through this effort, we are capturing value that
produces long-term tangible benefits for the Company and the Kingdom – quality jobs for a
growing Saudi population, innovation and diversification of industry, and increased global
competitiveness. As well as driving domestic value creation, iktva prioritizes consistency and
transparency to create a level playing field for more than 1000 suppliers we are engaged with
across our local and international network.
One aspect of the iktva program is the requirement placed on suppliers to report their progress
towards improving their own iktva ratios which in turn supports Saudi Aramco in obtaining our
iktva vision. This reporting is accomplished through the submission of a certified iktva survey.
This survey guide outlines the requirements and answers many of the questions you may have
when completing your company’s survey.
We require that our suppliers submit the survey on an annual basis. The surveys are not
designed to skip a year. For those companies submitting their iktva results for the first time,
the certified iktva survey is due within seven months after the company’s fiscal year end.
All others will be due within five months after the company’s fiscal year end. If you will be
unable to submit your survey by the deadline, you will need to request an extension from Saudi
Aramco. In requesting the extension, you will need to provide us with a commitment of the
expected date your company’s survey will be filed.
Throughout this guide, the Page Number headings correspond to the separate tabs which have
been incorporated into the Excel survey tool that is used to complete the survey.
3
Calculating the iktva Ratio The survey contains qualitative and quantitative information that falls into seven major
categories:
1. Category A: Local Goods, Services, and Depreciation/Amortization;
2. Category B: Saudi Compensation;
3. Category C: Training and Development of Saudis;
4. Category D: Development of Local Suppliers;
5. Category R: Research and Development;
6. Category E: In-Kingdom Revenue (including exports);
7. Other: Capital investments, female employee, SME spend, etc.
From this data, Saudi Aramco calculates an iktva ratio that approximates the percent of Saudi
Aramco’s spend with you that remains in-Kingdom or develops the Kingdom’s supply chain and
capabilities. The iktva ratio formula is illustrated below:
In most cases, Saudi Aramco requires third party verification of the company’s iktva survey.
See the iktva website (www.iktva.sa/auditfirms/) for a list of auditors that have been trained
and approved to perform these services. However, if the company only has operations outside
of the Kingdom and/or the amount of In-Kingdom content is minimal (less than 5%), then it may
self-certify. In addition, suppliers that are just starting their operations and have costs
exceeding revenues can also self-certify. Please contact Saudi Aramco’s iktva Certification
Unit for further guidance or other iktva related inquiries at [email protected].
4
New for iktva 2019 Each year Saudi Aramco reassesses the iktva program and how the parameters might be
improved to better meet the key objectives of the iktva vision. We also gather feedback from
our suppliers and incorporate lessons learned into improving the program and the tools utilized.
For 2019, the following revisions have been made:
Supplier Development Bonus – One of the key aspects of the iktva program is to develop
and broaden the in-Kingdom supply chain for local goods and services. While
respectable progress has been made in this area during the last four years, Saudi Aramco
wants to pick up the pace. To encourage suppliers to accelerate and broaden their
supplier development efforts, we have added a bonus factor to the Supplier
Development category. This bonus is calculated based on a multiplier factor (5X) applied
to your spend in Category D. The final calculated bonus will be added to your company’s
iktva score and is capped at 5 percentage points. With this change also comes a
narrowing of the activities qualifying in Category D. In the past and in very limited
circumstances, Category D included certain customer development activities. The
customer development portion has been eliminated. Only supplier development
activities can now be claimed. In addition, donations-in-kind claimed in this category
must be pre-approved by Saudi Aramco.
Research and Development Bonus – Innovation is one of the major drivers of economic
growth and is a key component of the iktva vision. To encourage additional focus on
R&D among our suppliers, Saudi Aramco is also going to place a bonus factor on amounts
spent conducting research and development activities in the Kingdom. Similar to
Category D - Supplier Development, the bonus is calculated based on a multiplier factor
(5X) applied to your spend in Category R. The final calculated bonus will be added to
your company’s iktva score and is capped at 5 percentage points. Donations-in-kind must
also be pre-approved by Saudi Aramco.
Government Spending – In the past, costs related to taxes, zakat, customs, duties,
nonrefundable VAT, and expat related iqama, dependent, and visa fees were excluded
from iktva. These costs can now be captured and reported in Category A – Goods and
Services. Payroll related government spending will continue to be included as
compensation cost.
Export Revenue Factor – A slight adjustment has been made to the Export Revenue
Factor (Category X) to simplify the calculation which will allow companies that export
to more easily obtain iktva credit. The maximum credit allowed will not change.
Category X will still be limited to no more than 10%.
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Former X Factor Calculation:
Revised X Factor Calculation:
Possible Inquiries – As part of Saudi Aramco’s quality review of the iktva surveys, many
times we would revert to the company with inquiries and wait for responses before
finalizing the survey and issuing the iktva score. To expedite that process, a new tab
has been added to the survey listing some of the potential questions that we might ask.
By providing your answers as part of the survey submission process, our hope is to be
more efficient and issue your company’s iktva summary much quicker.
Auditor Reminders – A new tab has been added to the survey to facilitate the auditing
process. The information contained on this tab is directed toward the auditing firm
selected to audit your company’s survey.
Survey Signatures – Once completed, the survey will need to be signed by the local
company’s CEO or General Manager and top financial executive. A signature block has
been added to Page 1.
Significant Changes in Inventory and Accruals – As outlined throughout this guide, the
iktva survey should be prepared on an accrual basis. For many companies, annual
purchasing data is readily available, but consumption data may or may not be available,
making it more difficult to complete Page 3: Top In-Kingdom Suppliers on an accrual
basis. If end of year changes to inventories or other accruals are relatively small, the
guidance has been to ignore the change and report purchasing data. Otherwise, the
guidance was to “adjust [your] purchasing data for timing differences and/or changes
in inventory.” None of this guidance will change from prior years. However, Page 3 has
been updated to include a line entitled “Significant Changes in Inventory and Accruals”
which can be used when you are unable to associate significant changes in inventory and
accruals to a specific supplier.
Health, Safety and Environment – Independent of the 2019 iktva survey submission, we
are requesting that suppliers provide us with an overview of their Health, Safety, and
Environment (HSE) activities. An HSE questionnaire is available at www.iktva.sa/HSE.
Please see page 45 for more details.
X = [𝑬𝒙𝒑𝒐𝒓𝒕 𝑹𝒆𝒗𝒆𝒏𝒖𝒆 𝒂𝒔 𝒂 % 𝒐𝒇 𝑻𝒐𝒕𝒂𝒍 𝑰𝑲 𝑹𝒆𝒗𝒆𝒏𝒖𝒆
𝟑𝟎% 𝑬𝒙𝒑𝒐𝒓𝒕 𝑻𝒂𝒓𝒈𝒆𝒕] * 10% points (max of 10%)
X = [𝑬𝒙𝒑𝒐𝒓𝒕 𝑹𝒆𝒗𝒆𝒏𝒖𝒆
𝑻𝒐𝒕𝒂𝒍 "𝒊𝒏−𝑲𝒊𝒏𝒈𝒅𝒐𝒎 𝑹𝒆𝒗𝒆𝒏𝒖𝒆"] * 10% points (max of 10%)
6
General Instructions
7
General Instructions for Completing the
Survey The following general guidelines should be followed when completing the survey:
All financial amounts should be reported in United States Dollars (USD).
Amounts reported should correspond to the company’s fiscal year end audited financial
statements. Numbers reported in the company’s iktva survey should be a subset of the
company’s audited financial results. If a company changes its fiscal year end, it should
consult with Saudi Aramco as to how to complete its survey based on varying fiscal year
ends.
Revenues and costs reported in the iktva survey should be consistent with the revenues
and costs the company would report utilizing International Financial Reporting Standards
(IFRS) or Generally Accepted Accounting Principles (GAAP) in Saudi Arabia. For example,
if the company does not recognize an item as revenue or an expense in its income
statement, then it cannot be claimed in the iktva report. The information provided in
the iktva survey should be on an accrual basis.
Amounts reported in Sections 1.0 through 6.0 should not be double counted. For
example, if an In-Kingdom training service provider’s costs are shown in Section 2.0 In-
Kingdom Goods, Services, & Depreciation/Amortization, these costs cannot be counted
again in Section 4.0 Training & Development of Saudis. The company may only assign
costs to a single category.
In most instances, companies are required to submit an iktva survey covering all of their
in-Kingdom (IK) operations and revenue. The company’s submission should include all
related entities that do business with Saudi Aramco and/or other Kingdom of Saudi
Arabia (KSA) customers, even if these related entities are located out-of-Kingdom. In
the past, Saudi Aramco has required at a minimum a single consolidated iktva survey
per company. However, many companies have elected to submit multiple surveys to
obtain a better picture of the iktva ratio for their various and diverse operations. This
has been very helpful as they bid on new work. As a result, Saudi Aramco may require
separate iktva surveys if your company operates in multiple segments. Companies
should contact Saudi Aramco at [email protected] to confirm whether
multiple iktva surveys will be required.
For companies with partially owned Joint Ventures (JVs), affiliates and subsidiaries that
file a consolidated return, they will only recognize their ownership share of the related
companies’ results. For example, if the company owns 40% of a joint venture, then it
can incorporate 40% of the In-Kingdom revenues, costs, headcounts, and investments
into its iktva results. If the ownership is less than 20%, then the related entity can be
excluded at the company’s option.
8
The company will need to eliminate any intercompany transactions between related
entities that are included in the survey when completing a consolidated iktva survey.
Related entities that are outside the scope of the iktva survey are considered the same
as any other supplier.
The assumptions and calculation methodologies utilized in preparing the survey should
be consistent from year to year and with the guidelines provided by Saudi Aramco or
provided on www.iktva.sa. For example, if the company uses the Revenue Ratio (see
Allocation of Costs to Saudi Aramco on page 15 of this guide) for its first iktva survey
(its Baseline Survey), then it should use the Revenue Ratio in all subsequent years. Any
changes to the methodology must be discussed with your auditor and Saudi Aramco so
that prior year numbers can be restated for comparability purposes.
There are two columns for data for each year in the iktva survey: one column is for
Saudi Aramco only and the other is for all in-Kingdom customers (Total KSA), including
Saudi Aramco, and exports.
All amounts reported in the iktva surveys need to be supported by appropriate and
auditable documentation as they will undergo the same scrutiny as amounts presented
in the company’s year-end audited financial statements.
Survey fields/cells with BLACK numbers contain formulas and calculations derived from
the input fields and supporting schedules. These should not be changed. Most are
password protected. Fields/cells that contain numbers in GREEN are for data input. For
convenience, some input fields/cells in GREEN contain formulas, but can be overwritten
by companies that choose not to use the default Revenue Ratio methodology described
on page 15 to assign costs and headcounts to Saudi Aramco. The overwritten numbers
will change to PURPLE to highlight this change.
IMPORTANT: The Excel survey tool has been password protected to maintain the
integrity of the formulas used to calculate and analyze your company’s iktva data. All
data input cells necessary to complete the survey are unlocked. This password
protection feature should not be tampered with. Any Excel files submitted without
the password protection in place will not be accepted and the company will need to
refile its survey using the approved Excel file.
Companies should select the appropriate survey tool: first time filers of a certified iktva
report should use the “First Time Filer iktva Workbook” and others should use the
regular survey tool. Both are located on the iktva website (https://www.iktva.sa/iktva-
package/).
9
Company Information
Page 1
10
Page 1: Company Information Page 1 outlines general company information including the types of products and services
offered, iktva initiatives undertaken, and operating locations. Companies are to complete the
following:
1. Provide the company’s name, address, and contact information for the CEO, CFO and
the main point of contact for completing and answering questions regarding the iktva
survey. Also provide the company’s fiscal year end, commercial registration number(s),
and Saudi Aramco vendor identification number(s), if applicable.
2. Give a brief description of the goods and services provided by the company. This
summary should be limited to just a sentence or two.
3. Provide highlights of the company’s progress and support for the iktva program during
the last year.
4. List the city and country of all company’s operations which support Saudi Aramco or
other KSA customers.
5. Provide a list of the company’s related entities (wholly or partially owned subsidiaries,
affiliates, JVs), including percentage ownership and vendor identification number if
applicable, whose results are incorporated into the survey. If the related companies’
iktva results are not consolidated into the iktva survey, they should not be listed here.
When the survey is finalized, it will need to be signed by both the local company’s CEO/General
Manager and the top financial executive.
11
iktva Schedule
Page 2
12
Page 2: iktva Schedule Page 2 contains all of the data necessary to calculate your company’s iktva score. Some of that
data (numbers in BLACK) come from supporting tabs in the survey. Except for Section 1, the
GREEN numbers are also calculations but these numbers can be overridden if the company uses
direct costing to assign costs to Saudi Aramco instead of the Revenue Ratio.
As mentioned earlier, the survey which your company utilizes will be slightly different
depending on whether you are submitting a certified iktva survey for the first time or have
previously submitted a survey.
The main difference between the two versions of the survey is the source of the historical
information contained in Page 2. If the company submitted a certified iktva survey in the prior
year, then you will use the regular survey tool. Only the current year data will need to undergo
the full testing by the company’s auditor. To complete the information required for the
historical periods (2013 to 2018), you will use the company’s previous year’s final survey
summary provided by Saudi Aramco to populate the amounts. To obtain a copy of the final
survey summary from the prior year, send an email request to [email protected].
Those submitting a certified iktva survey for the first time will use the first time filer survey
tool. This survey requires companies to provide three years of detailed data that is reviewed
by its appointed iktva auditor.
Regardless of which survey tool the company utilizes, the instructions provided below will
apply.
Section 1. In-Kingdom Based Revenue The revenue section captures revenue generated from goods and services provided to Saudi
Aramco, other KSA customers and exports from in-Kingdom operations. The amounts reported
should include the total revenue, whether derived from the company’s in-Kingdom (IK) or
related entities’ out-of-Kingdom (OOK) operations.
Revenue is broken down into three separate lines on the survey:
1. IK revenue derived from IK operations.
2. IK revenue derived from OOK operations, including revenue from other related
companies.
3. OOK revenue generated through IK operations (export revenue).
Please note that the Saudi Aramco revenue amounts should include revenue received directly
and indirectly from Saudi Aramco. For example, if the company is an Engineering, Procurement
and Construction (EPC) firm and is working as a subcontractor on a Saudi Aramco project, it
should report revenue from this contract as Saudi Aramco revenue even though the company
may invoice and receive payment from the main contractor. The same philosophy applies if
the company sells goods and/or services through a broker or agent to one of our overseas
affiliates (such as Aramco Overseas Company and Aramco Services Company). If the ship-to
13
address, unique product characteristics, project location, or other facts and circumstances link
the revenue to Saudi Aramco’s IK operations, then the revenue should be included as part of
the Saudi Aramco revenue and the Total KSA revenue amounts.
However, revenue derived from partially owned subsidiaries, affiliates and JVs of Saudi Aramco
should not be included in the Saudi Aramco column. As a general rule, revenue generated from
JVs or partially owned companies such as SANAD, ARO, SADARA, PetroRabigh, YASREF, SAMREF
and others should be captured in Total KSA revenue, but not included in Saudi Aramco revenue.
Since Category X – Export Revenue Factor provides additional iktva credit for any in-Kingdom
company involved in exporting activities, properly classifying revenue is very important. In
order to qualify as export revenue, the good or service must be from local operations and sold
to an end user located outside the Kingdom of Saudi Arabia. In addition, the economic activity
for the transaction(s) should involve the transfer of goods or the rendering of services for these
end users. Bill-to address is not important. What is important is the ship-to/end consumer
location. Exported goods or services resold to KSA based customers do not qualify as exports.
Your company’s total annual revenue from Saudi Aramco should closely match Saudi Aramco’s
records. When your iktva survey is audited, the company’s approved auditor will confirm the
reported revenue with Saudi Aramco to ensure accuracy. Confirmation can be obtained by
sending annual revenue amounts to [email protected] with Revenue Confirmation
in the subject line.
Section 2. In-Kingdom Goods and Services The Goods, Services and Depreciation/Amortization section provides the company’s IK supply
chain purchases. The Saudi Aramco and IK Portion columns totals from Section 8.0 should equal
the amounts reported on the Goods and Services line in Section 2.0 for both Saudi Aramco and
Total KSA. The Depreciation and Amortization line for Total KSA in Section 2.0 includes a
portion of the cost of fixed or other tangible and intangible long term assets as summarized in
Section 11.0. The Expat Compensation allowances are derived from Section 9.0 Labor. The
portion of Goods and Services, Depreciation and Amortization, and Expat Compensation
assigned to Saudi Aramco can either be based on the Revenue Ratio or Direct Costing as
described below (see Allocation of Costs to Saudi Aramco on page 15 of this guide).
Goods and Services
For iktva purposes, Goods and Services are not meant to be limited to costs used to derive gross
margins. In addition to expenditures that would normally be included in Cost of Goods Sold,
Cost of Sales, or Cost of Services, the Goods and Services category is intended to capture
purchases from all IK suppliers regardless of how they are classified on a traditional income
statement. As a result, general and administrative, selling, marketing, and financing charges
can be included in Goods and Services if procured from a local supplier. These types of expenses
must be supported by auditable documentation.
14
However, some types of costs, even though IK based, are purposefully excluded from iktva.
Capital expenditures are excluded. The related depreciation and amortization expenses are
captured on a separate line item within the Goods and Services category.
Table A provides some specific examples of types of expenses that are to be included (if
procured from IK suppliers) and excluded. See frequently asked questions (FAQs) on
www.iktva.sa for additional guidance.
Table A
Types of Goods and Services Procured from IK Suppliers and Services Providers
Included Excluded
• Materials and supplies
• Transportation/shipping
• Professional services
• Catering
• Equipment rental
• Temporary manpower
• Utilities
• Contractors/consultants
• Insurance
• Financing (interest and financing
costs, not including payments of
principal)
• Travel & accommodations
• Security services
• Custom clearance services
• Government payment (taxes, zakat, customs, duties, nonrefundable VAT, iqama, visa, and dependent fees, etc.) • Corporate social responsibility
• Contract and government related
penalties
• Intercompany costs for consolidated
entities
• Costs reported in other sections of the
iktva survey
• Capital expenditures
• Non-cash transactions (e.g., provisions,
FX gains and losses)
• Dividend payments
• Refundable VAT
• Payroll related government spending
15
Depreciation and Amortization
The depreciation and amortization amounts for capital expenditures are derived from Section
11.0 Asset Depreciation & Amortization. See Section 11.0 on page 31 of this guide for more
details.
Expat Compensation
The Expat Compensation amounts are derived from Section 9.0 Labor. See Section 9.0 on 26 of
this guide for more details.
Allocation of Costs to Saudi Aramco
After the company calculates the portion of IK based purchases and other costs for the Total
KSA revenue, it must allocate a portion of these costs to Saudi Aramco. There are two approved
methodologies to calculate the Saudi Aramco portion, the Revenue Ratio and Direct Costing.
1. Revenue Ratio: The Revenue Ratio methodology assigns costs to Saudi Aramco based on
the proportion of revenue from in-Kingdom operations that Saudi Aramco represents. It
is calculated by dividing Saudi Aramco revenue by KSA revenue and multiplying this ratio
by costs/headcounts. The resulting calculation is illustrated below:
In the example provided above, the calculation for Saudi Aramco Goods and Services would be
as follows:
[$20,000,000 / ($48,000,000 + $2,000,000)] * $10,000,000 = $4,000,000
[𝑺𝒂𝒖𝒅𝒊 𝑨𝒓𝒂𝒎𝒄𝒐 𝑹𝒆𝒗𝒆𝒏𝒖𝒆 𝒇𝒓𝒐𝒎 𝑰𝑲 𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒐𝒏𝒔
𝑻𝒐𝒕𝒂𝒍 𝑲𝑺𝑨 𝑹𝒆𝒗𝒆𝒏𝒖𝒆 𝒇𝒓𝒐𝒎 𝑰𝑲 𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒐𝒏𝒔+𝑬𝒙𝒑𝒐𝒓𝒕𝒔 ] x Total Goods and Services
16
This same ratio (40%) can be used to allocate costs and headcounts to Saudi Aramco in the other
sections of the iktva survey.
2. Direct Costing: If the company has a project accounting system or its accounting books
and records are kept in sufficient detail that it can directly track goods and services
provided to Saudi Aramco, then the company may utilize its own internal methodology.
The iktva survey is set up to default to the Revenue Ratio methodology. Both Page 2: iktva
Schedule (see Depreciation & Amortization, Expat Compensation, Saudi headcount and
compensation, Training and Development Costs, Supplier Development, and Research and
Development line items under the “Saudi Aramco” columns) and Page 3: In-Kingdom Suppliers
(see column headings “Saudi Aramco Portion %” and “Saudi Aramco Portion $”) are set up to
allocate costs based on the default Revenue Ratio. Note, however, that these numbers are
GREEN in color and as a result, may be overridden by manual input. If overwritten, the numbers
will turn PURPLE.
If the company chooses the Direct Costing methodology, then it will need to describe its
approach in the Remarks column, manually input the correct amounts, and provide appropriate
supporting documentation to the auditor.
Section 3. Saudi Compensation Saudi Compensation amounts are derived from Section 9.0 Labor. See Section 9.0 on page 24
of this guide for more details.
Assignment of Saudi Headcount and Costs to Saudi Aramco
Similar to Section 2.0, the company can use the same Revenue Ratio to assign Saudi headcounts
and payroll costs to Saudi Aramco. The same will apply to Sections 4.0, 5.0 and 6.0 of the iktva
survey. If the company utilizes an alternative methodology, it will need to provide an overview
of this methodology in the Remarks column.
Section 4. Training and Development of Saudis An important component of the iktva vision is to encourage the training and development of
the Saudi workforce to ensure the Kingdom has enough skilled workers available to fill the
positions that are being created. Investments in human capital are included in the iktva formula
regardless of the geographic location or sources of the related services.
This section has two main components: (a) trained headcount and (b) training and development
costs.
17
Headcount
Saudi Aramco’s goal in analyzing Training & Development of Saudis is to gauge the percentage
of the company’s Saudi workforce which receives training during the year and the average
spend per trainee. In order to do so, we are requesting that the company provides the number
of Saudis trained during the year, regardless of where the training occurred, IK or OOK. Please
note, however, that if a Saudi trainee attends more than one training course, the company may
only count that employee as one trained headcount. For example, if an employee attended
three training courses during the year, the company would only report one headcount for that
employee. However, all of the expenses related to the three training sessions can be reported
as Training and Development costs.
Training and Development Costs
Training and development costs can include a wide variety of activities that are geared toward
increasing the knowledge base and skillset of the Saudi workforce. It can include all types of
training, whether performed in-house or externally, and technical or non-technical. Safety,
leadership, soft skills, technical, and onboarding are all types of training that qualify.
Sponsorships of the various training institutes and educational institutions located throughout
the Kingdom can also be included. On-the-job training might qualify if properly documented
and tied to an employee that is new to his or her position.
As a general rule, costs incurred with OOK suppliers and foreign expat salary and wage costs
should be excluded from the iktva survey. However, in the case of Training and Development
of Saudis, Section 5.0 Supplier Development, and Section 6.0 Research and Development, these
costs may be captured and reported in the company’s iktva survey. Examples of costs to include
would be:
Travel and accommodations.
Training and development courses.
Annual software license fees related to training.
Outside training consultants.
The portion of compensation for expats related to training Saudis.
Technical training academies, internship, and co-op sponsorship costs.
Donations and contributions to training academies and institutes.
If a training session includes both Saudi and non-Saudi participants, then a proportional share
of the training costs should be allocated among the trainees. Also, if the compensation cost of
Saudi employees participating in the training as either trainers or trainees are included in
18
Section 3.0 above, then the costs cannot be included in this section. No costs should be counted
twice.
Unless approved by Saudi Aramco’s iktva Certification Unit in advance of filing the survey, any
donations-in-kind attributed to Section 4.0 Training and Development of Saudis will be limited
to 1% of total revenue.
Section 5. Supplier Development Supplier Development amounts listed in Section 5.0 are derived from Section 12.0 Supplier
Development on Page 7 of the iktva survey. See Section 12.0 on page 33 of this guide for more
details.
Section 6. In-Kingdom Research and Development Research and Development amounts listed in Section 6.0 are derived from Section 13.0 Research
and Development on Page 7 of the iktva survey. See Section 13.0 on page 33 of this guide for
more details.
Section 7. In-Kingdom Investments This section captures the net capital expenditure additions for each year. The Capital
Expenditures amounts are derived from the amounts entered in Section 10.0 Capital
Investments on Page 5 of the iktva survey. See Section 10.0 on page 27 of this guide for more
details.
19
In-Kingdom Suppliers
Page 3
20
Page 3: Top In-Kingdom Suppliers (Section
8) This section captures the company’s IK spend with its supply chain. In order to complete this
section, most companies will utilize data from their purchasing system to accumulate total
purchases during the year by supplier. Consumption data, not purchasing data, should be
utilized if readily available.
Next, they will eliminate OOK suppliers and any intercompany supply sources that are
consolidated into the iktva survey. They will then remove those suppliers whose costs cannot
be included. For an overview of the types of costs that are included and those that should be
excluded, please see Section 2.0 on page 13 of this guide. Also, please keep in mind that these
costs should represent income statement expenditures during the year on an accrual basis. For
example, if consumption data is not readily available and inventory fluctuations are significant,
the company might need to adjust their purchasing data for timing differences and/or changes
in inventory.
After the supplier spend list is compiled, the company must sort the list in descending order
based on amounts consumed/purchased for the most recent year reported. Once the company
has the list, it can populate the table. Starting at the top of the list, input the following
information into the table:
Supplier’s name.
Supplier’s commercial registration number.
Small and Medium Sized Enterprise (SME) designation. SMEs have been defined by
Monshaat as any enterprise with an independent commercial registration that has less
than 250 employees, and less than $53 million in revenue. Since this is a relatively new
designation, you may need to reach out to your suppliers to see if they qualify. For those
suppliers who are unresponsive, you may use your best judgement to complete the
survey. Yes/No can be selected from the drop-down menu.
Brief description of the types of goods and/or services that the company procures. This
should not simply be a repeat of what is listed in the next column, Business Segment.
For example, pumps and compressors are included in the Rotating Equipment business
segment. In this column, companies would be specific and list “Pumps and Compressors”
as the good/service procured and designate Rotating Equipment Manufacturing from the
drop-down menu in the next column.
From the drop-down menu, considering the types of goods and services provided, select
the right segment for that supplier.
For materials, select the correct option from the drop-down menu to indicate whether
they are produced IK or imported. If there are any IK value adding activities performed
21
on the imported goods, they should be classified as “Produced Locally”. For example,
goods that are assembled or fabricated IK would be considered “Produced Locally.” If
the material is purchased from a local agent but manufactured OOK, “Imported” should
be selected. If, however, the original manufacturer is IK, then the iktva ratio used
should be 10 percentage points less than the iktva ratio normally assigned to the
manufacturer’s segment.
From the drop-down menu, select the source of iktva ratio. If the company has
estimated the supplier’s iktva ratio or has used Saudi Aramco guidance by keeping the
auto-generated estimates, select “Estimated.” However, if the iktva ratio was provided
by that supplier, you should select “Provided.”
If the company is using the Revenue Ratio to assign costs to Saudi Aramco, the next
column is auto populated by a formula. Nothing needs to be input. You can use the
default calculation built into the spreadsheet. This should only be overwritten if the
company is using Direct Costing to assign its costs to Saudi Aramco.
Total consumption/purchases for the year for that supplier.
Supplier’s iktva ratio. The default setting for this field relies on the inputs for “Business
Segment” and for materials “Procured Locally or Imported” fields. This field
automatically will be populated after selecting the supplier’s segment. On the other
hand, the ratio will be adjusted to 0% for materials if they are imported except for car
and tire agencies. However, the iktva ratio can be overwritten if a final Saudi Aramco
approved ratio is provided by that supplier, or if the company has a strong justification
for disregarding the estimated ratio provided by Saudi Aramco. Such justification should
be outlined in the audit report.
You will likely need to use an estimated iktva ratio for the majority of your suppliers. In order
to give the company guidance and to ensure that all submissions are using the same ratio for
the same tier 2 supplier, Saudi Aramco has compiled a list of types of businesses and estimated
iktva ratios, and incorporated these ratios into the survey tool. This list is updated annually
based on the prior year iktva surveys submitted. For the most recent copy of the list, please
visit our website (https://www.iktva.sa/iktva-package/). Please note that only the 2019
guidance can be used with the 2019 survey. If you are completing the 2017 or 2018 survey, you
must use the guidance provided for that specific year.
Sometimes you will discover suppliers that provide goods or services that fit into multiple
categories with different iktva rates. In these instances, you should assign the category and
iktva score that represent the majority of the goods/services that your company buys from the
named supplier or list the supplier on two separate lines in the supplier table.
It is also important to note the segment selected for that supplier should not be used to
complete the “Brief Description of Goods/Services Provided” column. This column should be
more definitive and describe what you are actually procuring from that supplier.
22
Once the by-supplier detail equals at least 70% of the company’s Total IK spend, the company
can stop adding suppliers to the list. Any remaining IK purchases, which will likely include
purchases from start-ups, micro, small and medium sized enterprises, can be listed as “Other”
(see row 63 in the table) and the company can use an iktva ratio of 100% for this line. Please
keep in mind, however, that the details for the “Other” category should be readily available
for auditing purposes. Alternatively when the company reaches 50 suppliers, the company can
also stop and add the remaining IK spend in “Other.” However, if the supplier detail provided
is less than 70% of the total IK spend, then the iktva ratio applied to the “Other” row will be
reduced accordingly. If you would like to add additional rows to the supplier table to reach
70%, you can contact Saudi Aramco and request a modified survey. Your auditors would also
do additional testing on the extra suppliers.
The top IK supplier table also includes three predefined rows that are designated for a
specific grouping of expenses, not for a specific supplier (see rows 60 to 62), where only
summary totals can be entered.
Row 60 - Significant Changes in Inventory and Accruals – As outlined throughout this
guide, the iktva survey should be prepared on an accrual basis. For many companies,
annual purchasing data is readily available, but consumption data may or may not be
available, making it more difficult to complete the top IK supplier table on an accrual
basis. If end of year changes to inventories and other accruals are relatively small,
companies can ignore the changes and report purchasing data. Otherwise, the
purchasing data should be adjusted to reflect timing differences and/or changes in
inventory. This row should include significant changes in inventory and accruals which
you are unable to associate with a specific supplier. For example, let’s assume a
company has a $10M decrease in inventory during the year and that it purchases 60% of
its material though IK suppliers. The company deals with hundreds of suppliers so it is
difficult to identify which suppliers’ purchasing volume decreased due to the
utilization of existing inventory. In this case, the company would report a -$6M on row
60 to account for this inventory fluctuation. The iktva ratio used on this amount will
default to the weighted average iktva ratio generated by the other suppliers and
expense groupings listed for that year. The default can be overridden if justified.
Row 61 Government Payments - Government payments row should include taxes,
zakat, withholding taxes, customs, duties, nonrefundable VAT, expat related fees,
etc. They are assigned an iktva ratio of 100%. Payroll related government payments
should be excluded and instead reported as part of compensation costs.
Row 62 Financing Costs - Financing costs include any interest and finance changes paid
to local banks, lending institutions, lessors, etc. It does not include principal
payments made to these entities. They receive an iktva ratio of 70%.
In some cases, completing the Government Payments and Financing Costs lines is not
required. If each one’s summarized costs are not part of the top 70% detail of the total IK
goods and services, these costs can be added to “Other” (row 63).
The Total In-Kingdom Portion and Saudi Aramco Portion amounts from the table will
automatically update Page 2 iktva Schedule’s Goods and Services in Section 2.0.
23
Labor
Page 4
24
Page 4: Labor (Section 9) One of the primary objectives of iktva is the creation of quality jobs for the Saudi workforce.
In order to measure progress toward obtaining this goal, we have included Section 9.0 Labor in
the survey. In this section, the company will categorize its employee base by job classification
and provide total Saudi and Expat compensation.
Headcount and Job Categories
The headcount numbers and trends are reported as part of the company’s iktva Summary Report
that is provided to Saudi Aramco Management. The report also includes a simplified Saudization
rate which is calculated by dividing the total number of Saudi employees by the total company
headcount for that year.
The company will need to categorize its total employee base into one of 10 categories according
to the International Standard Classification of Occupations. This standard is published by the
International Labour Organization based in Geneva, Switzerland (see
http://www.ilo.org/public/english/bureau/stat/isco/docs/resol08.pdf for a copy of the
standard).
The standard is very detailed and lists several hundred jobs under each major category group.
We only require employees to be assigned to one of the major categories. However, if you
have questions about which category is appropriate, you can use the standard to drill down to
specific job types to determine which major category is appropriate.
Compensation
Below the Job Classification Table, the company will separately report total Saudi and expat
compensation by year. The amounts should come from the company’s payroll records.
Compensation costs include items such as salaries, wages, bonuses, commissions, overtime, and
benefits. Benefits would include car allowances, transportation, healthcare, end of service
awards, and other compensation related perks provided to the company’s employees.
Compensation costs related to trainers, supplier development, and research and development
can be included in this section or in Section 4.0 Training & Development of Saudis, Section 5.0
Supplier Development, or Section 6.0 In-Kingdom Research & Development. Please keep in
mind, however, that these costs cannot be included in more than one section. For example, if
the company has an expat dedicated to training Saudis, the company has to exclude his/her
compensation costs from Section 9.0 Labor and instead include 100% of the expat compensation
costs in Section 4.0 Training and Development. Alternatively, it could keep 37% of the expat
employee’s compensation costs in this section and report the remaining 63% as part of Training
and Development.
25
Owner/Management Remuneration
Sometimes companies will offer substantial compensation to their owners or managers based
on the performance of the company. For all practical purposes, such amounts, if directed only
to the owners, are essence dividends, not compensation. As a result, in order to be included
in Section 3.0, the compensation must be GOSI registered.
Saudi Expats
If the company employs any Saudi Nationals outside the Kingdom that are not reported in the
company’s GOSI numbers or local financial records, then the company can add these employees’
headcount and compensation amounts to the company’s IK payroll amounts.
Human Resource Development Fund (HRDF) Reimbursements
If the company receives funding to help cover employee compensation and/or training costs
from the government through programs such as HRDF, these reimbursements do not need to be
netted with compensation costs. Instead, these reimbursements can be excluded from the
iktva survey. In other words, the company is allowed to take credit for the compensation and
training costs even though the costs may be partially offset by government funding.
26
Capital Investments
Page 5
27
Page 5: Capital Investments (Section 10) The iktva survey includes capital expenditures that the company has made for its IK operations.
For first time filers, the details for its annual capital expenditures are listed on Page 5a: CAPEX
Table, and summarized on Page 5: Capital Investments. Repeat filers are only required to
provide detail for one year on Page 5: Capital Investments.
Consistent with standard accounting practices, major refurbishments and repairs, if capitalized
for financial reporting purposes, should also be included. However, construction in progress or
assets that have not yet been placed in service should be excluded. These assets can be
included once they are finished and placed in service. In addition, investment properties and
personal use assets that are not needed to support the company’s operations should be
excluded.
For this section, the company will likely utilize data from its fixed asset system and list fixed
asset additions and disposals (including transfers in and transfer out) summarized by asset type
during the current year. Please note that disposals should only be deducted if included
previously in the depreciation table. The amount deducted will be the net book value after
allowing for depreciation on a 10-year straight-line basis. Disposals are netted with acquisitions
by Asset Class to be reported in the iktva survey.
The company can determine the level of detail it would like to provide in this section. For
those companies whose operations are not capital intensive and its IK depreciation and
amortization are a relatively minor component of their cost structure, they can simply
categorize their capital asset additions and disposals by Asset Class for the relevant years on
the OOK line, and move on to the next section. Their total net capital expenditure additions
will be included in Section 7.0 In-Kingdom Investments and only 20% of the costs of these assets
will impact their iktva ratio.
Companies can choose to perform a more detailed analysis to categorize their capital asset
additions and disposals by year into Asset Classes and then further divide them into two
categories - those manufactured IK and those imported or acquired OOK. The company will
need to know the description of the assets, their costs, and their acquisition sources. These
details are necessary to complete the schedule. Please note that the additional effort required
may only benefit companies that are in capital intensive industries.
The remainder of this section applies to companies who have chosen to prepare the more
detailed analysis.
Asset Class categories include:
28
Category Examples
Land Raw real estate
Land Improvements Site improvements, utilities, fencing, paving, grading,
concrete, infrastructure
Buildings Open/enclosed sheds, office buildings, manufacturing
facilities, warehouses, camps, portables
Building Improvements
Water treatment, water heating, compressed air system,
air conditioning, process cooling water, major electrical
components (transformers, switchgear), lighting, poles,
interconnect
Furniture and Fixtures Office furniture, desks, cubicles, file cabinets, office
chairs, etc.
Appliances Refrigerators, ovens, washers/dryers
Manufacturing Equipment Lathes, milling machines, CNC, grinders, rolling mills,
welders, coating equipment, tooling, etc.
IT and Telecom Equipment Computers, copiers, telephone switches
Software Computer software
Vehicles Trucks, vans, cars, trailers, fork lifts, construction
equipment, semi's, mobile cranes, etc.
Other Equipment Vessels, pumps, tanks, compressors, heat transfer, furnace,
cranes, stands, dollies, racks, testing, etc.
Drilling Onshore & offshore rigs
Other
Please notice that the percentage of costs allowed for iktva has already been populated based
on the source of the asset. Any assets manufactured IK will receive a 100%. Assets imported
or procured from OOK suppliers will be assigned 20%. The allowable costs of these assets will
be depreciated over a 10 year period.
The same steps can be utilized for populating this schedule for the previous years (2008 to
2018). Please note that providing capital asset information going back 12 years is optional. At
a minimum, first time filers should include capital asset information on Page 5a: CAPEX Table
for the years referenced on Page 2: iktva Schedule.
29
Optional Restatement
In the past, only capital assets that were acquired in-Kingdom were eligible to be depreciated
and captured as part of the iktva formula. An iktva ratio was applied to the cost of the asset
so that only the in-Kingdom content portion of that asset was depreciated. In the 2018 survey,
we switched to the current methodology which allows for 100% of the cost of any capital assets
manufactured in-Kingdom and 20% of the cost of any capital assets imported to be depreciated
and included in Goods and Services.
We recognize that some companies may have made substantial capital expenditure investments
in the Kingdom prior to 2018. The iktva depreciation allowed based on the prior methodology
would be much less than if the investment was made in 2018 or 2019.
To level the playing field for repeat filers, we have added an optional schedule which allow
depreciation to be recalculated and restated based on the new methodology. While we will
not restate prior year iktva ratios, the revised depreciation amounts will impact 2019 and future
years.
Recent Changes to the Accounting Standards
Recent changes to the accounting standards, especially related to Lease Accounting (IFRS 16),
will result in most leases that have historically been treated as operating leases and operating
expenses will now be capitalized. As a result, companies will be recognizing depreciation and
finance charges.
The application of the iktva guidelines in these cases will not change. Capitalized leases will
be treated as fixed asset additions in the year they were capitalized. If the lease payments are
made to an in-Kingdom entity, then the interest portion of the payment can be included in
Category A – Goods and Services.
30
Depreciation and
Amortization
Page 6
31
Page 6: Depreciation and Amortization
(Section 11) For first time filers, Section 11.0 is automatically populated based on capital expenditure
details provided in Section 10.0 Capital Investments. For estimated useful lives and
depreciation methodology, we selected a very simplified method. All of the assets acquired
during the year, even including land which is not normally depreciated, are depreciated or
amortized on a straight line basis over a 10 year life regardless of their actual useful life.
For repeat filers who choose to complete the schedule Page 5a: Optional 2010 to 2018
mentioned above and for first time filers, the In-Kingdom Portion column also will be
automatically populated.
Repeat filers that do not complete the optional schedule will input the in-Kingdom portion for
years 2010 to 2018 from the prior year certified survey. Saudi Aramco will provide this data to
your auditors at the same time revenue is confirmed.
32
Supplier Development
and Research and
Development
Page 7
33
Page 7: Supplier Development (Section 12) Another important component of the iktva ratio consists of costs related to Supplier
Development. Supplier Development can be defined as “any effort of a buying firm working
with its supplier(s) to increase the performance and/or capabilities of the supplier and meet
the buying firm’s short- and/or long-term supply needs. Moreover, Supplier Development
promotes ongoing improvements that are intended to benefit both buyer and supplier(s)”1.
Types of activities that qualify for Supplier Development might include2:
Related Areas Capabilities
Product Related
Process Related
Operating System Related
Technical Capability
Design
New product intro.
Feasibility testing
Product improvement
Process capability
Process design
Automation
Reconfiguration
CAD/CAM
CIM/FMS
JIT/MRP
Quality Capability
Specification limits
Incoming materials control
Process capability
Testing equipment
Workman-ship
Quality assurance program
Quality circles
S.P.C. program
Worker training
Delivery Capability
Product mix
Materials lead time
Capacity level
Process flexibility
Set-up times
Order entry system
Scheduling flexibility
Transportation/ inventory system
Cost Capability Value analysis
R&D expenditure
Cost reduction programs
Process efficiency
Capital investment
Rationalization of workplace
Work productivity
Indirect costs control
However, activities that are contractually required or costs that are charged directly or
indirectly to the supplier do not qualify.
Similar to Section 4.0 Training & Development of Saudis, the company may include costs
incurred from OOK suppliers or expat employees in this section. However, if any costs have
already been included in Section 2.0 through 6.0, then they should be excluded here.
Unless approved by Saudi Aramco’s iktva Certification Unit in advance of filing the survey, any
donations-in-kind attributed to Supplier Development must be preapproved by Saudi Aramco.
In Section 12.0 on this page, you will describe the types of activities performed, the companies
benefited and the costs related to these activities. The table will automatically calculate the
bonus factor (up to 5 percentage points of iktva credit). The totals from Section 12.0 will
automatically populate Section 5.0 on Page 2 of the survey.
1 Ahmed, M., & Lancaster University. Theses. (2014). Enhanced Supplier Development Framework: A Systematic Approach to Improve Supplier Performance. 2 Larsson, Johan. (2001). Supplier Development.
34
Page 7: Research & Development (Section
13) Costs related to performing research and development activities in the Kingdom are another
component of the iktva ratio. Research & Development costs include the total amount of annual
operating expenses related to research and development (R&D) activities conducted IK.
Corporate allocations from the company’s R&D centers located outside the Kingdom do not
qualify. R&D costs can include expat compensation as well as IK and OOK goods and services.
The types of R&D activities along with the justification under the accounting standards for
treating these as R&D should be provided.
Any capitalized costs on the books of the company (such as depreciation) can only be included
in R&D to the extent they are amortized. The types of costs that can be classified as R&D
should be consistent with guidance provided by IFRS or Saudi Arabian Generally Accepted
Accounting Principles. International Accounting Standard 38 Intangible Assets offers the
following definitions:
Research is original and planned investigation undertaken with the prospect of gaining
new scientific or technical knowledge and understanding.
Development is the application of research findings or other knowledge to a plan or
design for the production of new or substantially improved materials, devices,
products, processes, systems or services before the start of commercial production or
use.
The table will automatically calculate the R&D bonus factor (up to 5 percentage points of iktva
credit). The totals from Section 13.0 will automatically populate Section 6.0 on Page 2 of the
survey.
Unless approved by Saudi Aramco’s iktva Certification Unit in advance of filing the survey, any
donations-in-kind attributed to Research & Development must be preapproved by Saudi Aramco.
The adjustment made on Supplier Development and Research & Development will impact the
2019 iktva score and future scores only.
35
Female Employment
Page 8
36
Page 8: Female Employment (Section 14) In this section, the company provides both headcount and cost information related to its female
employees. Costs and headcounts related to Saudi females will be a subset of the information
provided for total Saudis. Use the same guidance given in Section 9.0 Labor and Section 4.0
Training & Development of Saudis to determine what to include and what to exclude from this
section.
The company will also name the main roles of female employees, policies or initiatives in place
to attract female participation, and the bottlenecks it faces for employing and retaining female
employees. The information in this page will not impact the iktva ratio but is provided for
informational purposes only.
37
Reconciliation Table
Page 9
38
Page 9: Reconciliation Table (Section 15) The final page of the iktva survey is Section 15. Reconciliation Table. The main function of the
reconciliation table is to show the reconciliation of the company’s costs from its audited
financial statements to the costs included in the iktva survey.
Please note that there might be some limited circumstances where costs that are not incurred
directly on your local company’s books can be added to the local company’s audited costs. For
example, if your parent company hires Saudis who work in OOK operations and their
compensation costs are not captured in the local company’s audited financial statements, their
compensation costs and headcounts can be included in your iktva survey. These costs and
headcounts would be reported in Section 9.0 Labor under Saudi compensation. In addition, if
your company has OOK related entities or affiliates that source local goods and services to
service OOK customers, these costs can also be added to the local company’s costs and reported
in Section 8.0 Top In-Kingdom Suppliers.
Costs that are not part of your company’s audited financial statements need to be clearly
delineated in the Reconciliation Table (see highlighted section in the table below) and will
undergo the same audit scrutiny as the company’s own costs. Proper supporting documentation
needs to be provided to the auditors in order to be includable in your iktva survey.
The format of the Reconciliation Table can be modified to meet the company’s specific
situation. Rows can be added/deleted and descriptions can be changed. However, those rows
that are blue in color must be included. These cannot be overridden or changed since they are
numbers which should agree with other sections of the iktva survey. If the totals do not agree,
an error message will appear.
39
Note that the eliminations should be listed as deductions, or negative numbers. Otherwise,
error indicators will be displayed.
iktva related
costs from
your
company’s
OOK related
entities
might
qualify for
iktva
Costs
should be
listed in
the table
as
deductions
or negative
numbers
40
Possible Inquiries and
Auditor Reminders
41
Possible Inquiries As part of Saudi Aramco’s quality review process for iktva surveys, many times we will revert
to the company with inquiries about your survey and results and wait for responses before
finalizing and issuing the company’s iktva score. To expedite that process, we have added a
Possible Inquiries tab to the survey listing some of the potential questions that we might ask.
If a question is listed, we would recommend that you respond. Your responses will help us to
better understand why we are seeing certain trends or anomalies in your results. The questions
and answers are not subject to audit, nor are there any auditing procedures tied to validating
those answers. They are designed to facilitate Saudi Aramco’s quality review process and
accelerate the survey finalization process. Even if you respond to all of the questions asked, it
is possible that we will still reach out to you with additional questions if we discover other
potential issues during the QA review process or we need further clarification on your responses.
Auditor Reminders A new tab has been added to the survey to facilitate the auditing process. The information
contained on this tab is directed toward the auditing firm selected to audit your company’s
survey. The reminders will flag items on the survey that require auditing steps to be performed
because they meet the criteria outlined in the procedures.
42
Final Steps: Survey
Submission
43
Submitting the Company’s Survey Once the company has completed the survey and received the report from its auditor, the
company will submit its survey through the website (https://www.iktva.sa/survey-
submissions/). The submission should include the following:
A PDF of the full auditor’s report.
A copy of the Management Representation Letter provided to the auditor. The
Management Representation Letter should be signed by the company’s top operational
and financial officers and must include the company’s stamp. No submissions will be
accepted without the signatures or stamp. This letter should be included in the PDF
report received from the auditors.
A copy of the survey tool/Excel file.
IMPORTANT: The Excel survey tool has been password protected to maintain the integrity of
the formulas used to calculate and analyze your company’s iktva data. All data input cells
necessary to complete the survey are unlocked. This password protection feature should not
be tampered with. Any Excel surveys submitted without the password protection in place will
be rejected and the company will need to refile its survey using the approved Excel file.
No hard copies of the reports will be accepted. Only soft copies of the report and the Excel
survey will be accepted.
Even though your company’s survey has been “audited”, your company’s final iktva score will
be provided by Saudi Aramco in the form of an iktva Executive Summary. Saudi Aramco’s iktva
Certification Unit will perform a thorough review of your survey and could possibly make
changes which may increase or decrease the final iktva score. We do not expect the financial
auditors to be supplier chain experts so we will heavily scrutinize the Top IK Supplier Table to
ensure consistent iktva ratios are being used across all of the iktva submissions. We will also
look for exceptions noted in the audit reports or other anomalies and make appropriate
adjustments if necessary.
We require that our suppliers submit the survey on an annual basis. The surveys are not
designed to skip a year. For those companies submitting their iktva results for the first time,
the certified iktva survey is due within eight months after the company’s fiscal year end.
All others will be due within six months after the company’s fiscal year end. If you will be
unable to submit your survey by the deadline, you will need to request an extension from Saudi
Aramco. In requesting the extension, you will need to provide us with a commitment of the
expected date your company’s survey will be filed.
44
Health, Safety, and
Environment
45
Health, Safety, and Environment
Saudi Aramco has always considered safety as one of its top priorities. Having and maintaining a safe working environment is essential to conducting business in a socially responsible way. As part of our safety-first culture, the Company promotes practicing safe habits to its employees and all other personnel dealing with Saudi Aramco within and even outside the walls of the work environment through proactive training, policies and practices.
Safety is not only for people, but also for the environment itself. We understand the importance of managing precious natural resources and continue to promote environmental awareness within and outside the Company. We have long been a pioneer in water conservation, energy efficiency, management of emissions, waste, leaks, and spills as well as the conservation of the natural environment. Since one of the primary goals of iktva is to broaden the supply chain within the Kingdom of Saudi Arabia, Saudi Aramco is interested in discovering efforts local companies are engaging in related to environment, health, safety, and sustainability. In order to do so, we are requesting that companies describe the efforts they are employing to measure, monitor, and report their activities or efforts done for protecting lives, having a very safe work culture, and saving the environment. So please provide us, to the best of your ability, the following information:
Describe the company’s efforts in ensuring compliance with Health, Safety and Environment
regulations and any associated costs (licenses, certifications, machinery, consultation, manpower, etc.).
Has the company developed its own set of HSE requirements? Are these documented in formal procedures or standards? If so, please provide copies of such procedures and standards.
What measurements or KPIs does the company utilize to track its performance in the area of HSE?
What organization structure (personnel) does the company have in place to support its HSE initiatives? How many employees have certifications related to HSE? What is the company’s ratio of full-time equivalent (FTE) HSE personnel versus total FTE personnel?
Does the company conduct background checks on its key employees including drivers?
Does the company track lost time injuries and frequency? Does the company launch investigations into lost-time injuries to determine root causes and prevent such incidents from occurring in the future?
Does the company maintain in good working order suitable firefighting equipment and provide trained and qualified fire watch personnel for its work activities?
Does the company have a formal Environmental Management Plan that addresses waste reuse, recycling, resource recovery and waste minimization measures?
46
Please describe the company’s policies regarding its handling, collecting, tracking and
disposing of hazardous materials.
Describe the company’s efforts covering air pollution mitigation and air quality standards compliance.
We would like to gather and begin reviewing this information as quickly as possible. As a result,
we are requesting that you visit www.iktva.sa/HSE to reply to this section as soon as possible
and not as part of your survey submission. On the website, you will be able to provide answers
to the above questions and include any other additional related information you feel would be
helpful.
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Final Thoughts We realize that it is nearly impossible to capture and provide details for every situation that
the company may face in preparing its iktva survey. Our hope is that this guide will answer
most of the questions a company may have. If your company has further questions or needs
additional clarification, please feel free to: 1) view the comprehensive iktva information,
including frequently asked questions and answers, residing on the iktva website (www.iktva.sa);
and/or 2) contact Saudi Aramco’s iktva Certification Unit at [email protected].
We appreciate your help and support of our iktva strategic initiative and look forward to
achieving the iktva vision.
Sincerely,
The iktva Team
