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Public consultation on ADGM’s proposed enhanced Auditors’ framework

ADGM RA 17/12/2020
Public consultation on ADGM’s proposed enhanced Auditors’ framework
  • Single registration framework with tiered requirements
  • Audit quality requirements
  • Transition period for existing auditors

The Registration Authority (RA) of Abu Dhabi Global Market (ADGM), the award-winning international financial centre located in the capital of the United Arab Emirates, has issued a consultation paper to invite public feedback and comments on a number of proposed enhancements to its auditor’s framework.

A strong and innovative auditor framework with effective oversight promotes high standards of financial auditing within a jurisdiction. High quality financial audits underpin business confidence, investor protection and contribute to market and financial system integrity. This needs to be coupled with strong auditor oversight to enhance the integrity and reputation of ADGM and its participants.

The current ADGM legal framework governing auditors was based on the UK Companies Act 2006. However, since the framework was initially implemented, international standards have progressed, including the enactment of EU legislation covering audit regulation, which has also been incorporated and reflected in the UK’s auditor framework.

Given these international developments and ADGM’s growth, together with its objective of ensuring its legislative framework is based on the most recent international standards, ADGM proposes to enhance its auditor framework to, include: a single registration framework with tiered requirements for all auditors, additional requirements for auditors of public companies and investment funds and further requirements for auditors of all financial institutions licensed by the ADGM Financial Services Regulatory Authority.

Furthermore, ADGM proposes to introduce requirements to ensure that auditors comply with international auditing standards, such as audit quality requirements, as well as ethical and independence considerations. The amendments will also grant the RA comprehensive monitoring and enforcement powers, with investigation and sanctioning powers, which align with international standards.

To promote orderly integration of and compliance with these enhancements, the proposed framework provides for transitional arrangements for audit firms currently registered in ADGM. A 12-month transition period for presently registered auditors is proposed from the commencement of the amendments or auditor’s re-registration. This period will ensure the continuity of audit services following the introduction of the new requirements.

Dhaher bin Dhaher Al Mheiri, the CEO of RA says:

“ADGM is committed to delivering a world-class business and regulatory environment that promotes trust and confidence. These proposed enhancements to ADGM’s auditors’ framework are an example of ADGM’s continuous efforts to deliver on this commitment. Through these proposals we aim to ensure that ADGM maintains an internationally aligned, and effective audit regime and monitoring framework, while accommodating audit firms of differing sizes and resources. We encourage feedback from the audit industry and interested stakeholders on these proposals and look forward to your feedback.”

ADGM invites public feedback and comments on the proposed Auditors framework, which can be addressed to: consultation@adgm.com