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ADGM’s Registration Authority Imposes Financial Penalties of USD 12,000 against Moore Stephens and its Registered Audit PrincipalADGM RA 21/07/2023
The Registration Authority (RA) of Abu Dhabi Global Market (ADGM) has taken enforcement actions against Moore Stephens, an ADGM-registered audit firm, and its registered audit principal by imposing financial penalties amounting to USD 12,000 for exceeding the scope of its ADGM audit licence.
The RA found that Moore Stephens and its registered audit principal, Farad Kersi Lakdawala, conducted an audit for an ADGM financial institution for the financial year ending 31 December 2021 without holding the required additional Financial Institution Audit Permit.
Accordingly, the RA imposed the following financial penalties:
- USD 8,000 on Moore Stephens; and
- USD 4,000 on Farad Kersi Lakdawala.
‘Due skill, care and diligence’ is one of the key principles expected from ADGM-registered auditors and registered audit principals under the Auditors Rules 2023. Accordingly, the RA expects its registered auditors to act diligently, and exercise due care when accepting audit engagements and providing professional services to audit clients. Furthermore, audit services shall be conducted in accordance with relevant international standards appropriate for the audit permit including the ethical principles by the International Ethics Standards Board for Accountants ‘Code of Ethics for Professional Accountants’ (IESBA Code) and auditing standards pursuant to the International Standards on Auditing (ISA).
Hamad Sayah Al Mazrouei, Chief Executive Officer of the Registration Authority said, “Conducting an audit of a financial institution without holding the required permit is a serious contravention and raises concerns about the quality of the audit conducted. Promoting high standards of audit quality is a key regulatory objective of the RA. During the registration stage, the RA assesses whether audit permit applicants satisfy the relevant criteria of audit permit including the adequacy of resources, fitness, systems and controls and compliance with relevant international standards. The RA takes failure to act within the scope of licence seriously and will hold to account all those who fail to comply.”