Abu Dhabi's ADGM Regulator Fines PKF Accountants and Business Advisers $100,000 Over Audit Deficiencies

The Registration Authority of ADGM has penalized PKF Accountants and Business Advisers alongside its registered audit principal, Saranga Lalwani, with total fines amounting to $100,000 for regulatory shortcomings at Abu Dhabi's financial centre. According to an official statement released on Friday, PKF received a $65,000 fine, while Ms Lalwani was penalized $35,000.

The enforcement action followed an on-site inspection by the authority designed to evaluate PKF’s adherence to ADGM auditor regulations and the overall quality of its auditing services. The inspection uncovered "significant deficiencies" in an audit executed for an ADGM-registered entity by both PKF and Ms Lalwani.

Investigators found that the firm and the auditor failed to conduct the audit and formulate the report in alignment with International Standards on Auditing (ISA), breaching the Companies Regulations (Auditors) Rules 2023. Additionally, they were cited for failing to demonstrate due skill, care, and diligence during the audit process.

Among the specific violations, PKF improperly rebutted the mandatory fraud risk concerning management override of controls, which cannot be set aside under ISAs. The firm also neglected to assess fraud risks, failed to gather sufficient audit evidence, maintained inadequate documentation, and could not prove adequate involvement by the audit principal.

Emphasizing the necessity of high professional standards, the authority noted that the enforcement action underscores the critical need for rigorous audit practices and strict compliance. This move aligns with broader UAE regulatory efforts to safeguard the financial system's integrity, following a recent penalty of Dh401,000 ($109,200) imposed by the Dubai Financial Services Authority on Vault Wealth for unauthorized transactions.