Audit firm fined $100,000 by Abu Dhabi's ADGM regulator

The Registration Authority of Abu Dhabi Global Market (ADGM) has imposed a combined fine of $100,000 on audit firm PKF Accountants and Business Advisers and its registered audit principal, Saranga Lalwani. This comes after an on-site inspection conducted to evaluate PKF's adherence to ADGM's auditor regulations and the quality of its audit work. The authority identified several significant deficiencies in an audit conducted by PKF and Ms Lalwani for an ADGM-registered entity.

The key deficiencies included failing to adhere to International Standards on Auditing (ISA), which requires audits to be conducted and reports prepared accordingly. PKF also allegedly failed to exercise due skill, care, and diligence during the audit process. Specifically, PKF disregarded the mandatory fraud risk of management overriding controls, which cannot be rebutted under the ISA.

Moreover, PKF was accused of insufficient fraud risk assessment, inadequate audit documentation, and insufficient audit evidence. The authority emphasized the importance of robust audit practices and the enforcement of regulatory requirements in maintaining the financial system's integrity and reliability. This action is part of the UAE's ongoing efforts to combat breaches of regulations and ensure the reliability of its financial system.