ADGM’s Registration Authority Fines KPMG Lower Gulf Limited for Audit Failings

The Registration Authority (RA) of Abu Dhabi Global Market (ADGM) has taken enforcement action against ADGM-registered audit firm, KPMG Lower Gulf Limited (KPMG).

The RA imposed a financial penalty in the amount of USD 30,000 against KPMG for ineffective systems and controls leading to non-compliance with audit requirements under RA-administered legislation.

ADGM audit regulatory framework requires audit reports to be issued and signed by ADGM Registered Audit Principals on behalf of an ADGM Registered Auditor.

The RA found that KPMG demonstrated a systemic failure to ensure that only its ADGM Registered Audit Principals sign audit reports for ADGM entities in compliance with the RA’s requirements.

Prior to imposing the penalty, the RA had engaged in ongoing communication with KPMG over a period of several months regarding concerns over non-ADGM Registered Audit Principals signing audit reports for ADGM entities. Further, the RA made directions to KPMG to prevent further occurrences by enhancing its systems and controls. 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.

Promoting high standards of audit quality is a key regulatory objective of the RA. The RA expects its Registered Auditors to have governance structures as well as systems and controls in place which promote compliance with the RA rules and regulations, and which promptly identify instances of non-compliance.

The Registration Authority, Monitoring & Enforcement Division notes, “The RA will take a robust and proportionate stance where Registered Auditors or Registered Audit Principals breach their obligations. 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. 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”.

To access a copy of the Decision Notice describing KPMG’s contravention, click this link. 

About Abu Dhabi Global Market (ADGM)

Abu Dhabi Global Market (ADGM) is the international financial centre (IFC) of the capital city of the United Arab Emirates, which opened for business on 21st October 2015. ADGM augments Abu Dhabi’s position as a leading financial centre and a business hub serving as a strategic link between the growing economies of the Middle East, Africa and South Asia and the rest of the world.

Operating within an international regulatory framework based on direct application of The English Common Law, ADGM governs the entire Al Maryah Island and Al Reem Island which is designated as the financial free zone of Abu Dhabi. 

ADGM is ranked as one of the most preferred top IFCs in the Middle East and Africa region and named MENA’s largest Fintech hub. Its progressive and inclusive business ecosystem gravitates toward global financial and non-financial institutions while leveraging synergies between ADGM and multiple jurisdictions positioned as one of the world’s most advanced, diverse and progressively governed financial hubs.

For more details on ADGM, please visit www.adgm.com or follow us on Twitter and Instagram: @adglobalmarket and LinkedIn: @Abu Dhabi Global Market (ADGM)