ADGM Registration Authority Fines Audit Firm and Principal Combined Dh323,180 Over Deficiencies

The Registration Authority (RA) under the Abu Dhabi Global Market (ADGM) has imposed financial penalties totalling $88,000 (Dh323,180) on MCA Auditors and Advisors LLP and its Audit Principal, Gulf News reported. The penalties, announced on October 23, include a $52,000 (Dh190,970) fine for MCA Auditors and a $36,000 (Dh132,210) penalty for the Audit Principal.

The enforcement action followed an on-site regulatory inspection by RA officials to assess MCA Auditors' compliance with ADGM's Auditors Rules and review audit quality. The RA identified deficiencies in an audit conducted by the firm for an ADGM-registered company.

According to the RA, problems spanned multiple parts of the engagement. Deficiencies included weak risk assessment procedures, poor handling of fraud risk, gaps in group audit requirements, and flaws in communications with governance bodies. The firm was also found to have gathered insufficient evidence to support conclusions on material areas.

The regulator separately cited limited evidence of the Audit Principal's participation throughout the audit engagement. However, the RA noted that the final penalty took into account the firm's cooperation, acknowledgment of findings, root-cause analysis, and implementation of a remediation plan.

The RA stated that registered auditors and audit principals perform a critical role in supporting confidence in financial reporting across ADGM and remain accountable for audit quality across all accepted engagements.