ADGM fines PKF audit firm and principal $100,000 over audit failings

Centre · 2The Registration Authority (RA) of Abu Dhabi Global Market (ADGM) imposed financial penalties totalling $100,000 on audit firm PKF Accountants and Business Advisers and its registered audit principal. 1 2 Centre · 2The National reported that the fine was $65,000 on PKF and $35,000 on the audit principal, whom it named as Saranga Lalwani, according to an authority statement issued on Friday. 1 2 Centre · 2The action followed an on-site inspection by the RA to assess PKF's compliance with ADGM's auditor rules and the quality of its audit work. 2 1

Centre · 2The RA said it found significant deficiencies in an audit of an ADGM-registered entity, including failure to conduct the audit and prepare the report in line with International Standards on Auditing as required by the Companies Regulations (Auditors) Rules 2023, and failure to exercise due skill, care and diligence. 1 2 Centre · 1According to The National, the inspection found PKF had rebutted the risk of fraud in management override of controls, which the authority said is a mandatory fraud risk that cannot be rebutted under the standards. 1 Centre · 2Other findings were failures to assess fraud risks properly, to obtain sufficient and appropriate audit evidence, inadequate audit documentation, and insufficient evidence of the audit principal's involvement in the audit. 2 1

Centre · 2The RA said the action reinforces the importance of robust audit practices and shows that failures to meet regulatory requirements will result in appropriate enforcement action. 1 2 Centre · 1The National placed the case in a wider UAE regulatory crackdown, noting that the Dubai Financial Services Authority this month fined wealth manager Vault Wealth Dh401,000 ($109,200) for conducting transactions without authorisation. 1