Dubai: The local operations of the global audit firm KPMG has been penalized by the Registration Authority (RA) of Abu Dhabi Global Market.
A fine of $30,000 has been imposed for KPMG Lower Gulf having ‘ineffective systems and controls’, which led to non-compliance with audit requirements under the Registration Authority-administered legislation.
Last year, KPMG was also hit by a fine imposed by DFSA (Dubai Financial Services Authority).
“ADGM audit firms must implement effective audit systems, controls and procedures that meet the requirements of ADGM’s internationally aligned audit regulatory framework, which in turn contribute to high-quality audits and reinforce trust in corporate financial reporting,” said the Registration Authority in a statement.
The RA expects its registered auditors to take adequate steps to remedy any concerns communicated by the RA and any remediation work undertaken needs to be properly implemented and monitored to ensure its effectiveness.
The Abu Dhabi entity found KPMG ‘demonstrated systemic failure’ to ensure only its ADGM registered audit principals sign audit reports for ADGM entities in compliance with the RA’s requirements.
Prior to issuing the penalty, the ADGM authority ‘engaged in ongoing communication’ with KPMG over months. This related to the Authority’s concerns over non-ADGM registered audit firms signing reports for ADGM entities.
The Registration Authority made ‘directions to KPMG to prevent further occurrences by enhancing its systems and controls’, the statement said.
“However, after confirming to the RA that systems and controls had been strengthened the breach of non-ADGM Registered Audit Principal signing audit reports re-occurred.”
“The RA will take a robust and proportionate stance where Registered Auditors or Registered Audit Principals breach their obligations,” said the statement.