The Registration Authority of ADGM has imposed fines totalling $100,000 on an audit firm at Abu Dhabi's financial centre over regulatory failings.
The action was taken against PKF Accountants and Business Advisers, an ADGM-registered audit firm, and its registered audit principal, Saranga Lalwani, the authority said in a statement on Friday. It has imposed a fine of $65,000 on PKF and $35,000 on Ms Lalwani.
The decision was taken after an on-site inspection conducted by the authority to assess PKF’s compliance with ADGM's auditor rules and the quality of its audit work, the statement added.
During the inspection, the authority said it identified "significant deficiencies" in an audit conducted for an ADGM-registered entity by PKF and Ms Lalwani. The deficiencies included "failures to conduct the audit and prepare the audit report in accordance with International Standards on Auditing (ISA) as required by the Companies Regulations (Auditors) Rules 2023 and failure to exercise due skill, care and diligence in carrying out the audit", the authority said.
The inspection identified that PKF "rebutted the risk of fraud in management override of controls, which is a mandatory fraud risk and cannot be rebutted under ISAs".
The firm was also accused of failing to assess fraud risks, failing to obtain sufficient and appropriate audit evidence, inadequate audit documentation, and insufficient evidence demonstrating the audit principal's involvement in the audit process.
"Registered auditors and registered audit principals are expected to conduct audits in accordance with applicable professional standards and exercise appropriate skill, care and diligence," the authority said in the statement.
"This action reinforces the importance of robust audit practices and demonstrates that failures to meet regulatory requirements will result in appropriate enforcement action."
Authorities in the UAE have cracked down on entities that breach regulations as part of efforts to maintain the financial system's integrity and reliability.
The Dubai Financial Services Authority this month imposed a Dh401,000 ($109,200) fine on wealth management firm Vault Wealth for conducting transactions without authorisation.
