Companies owned by the Abu Dhabi Government need to issue more timely financial statements, use better data for calculating their valuations and improve the quality of audits, an oversight agency says.
The Abu Dhabi Accountability Authority (ADAA), an agency set up in December 2008 to audit the Government, investigate corruption and set up anti-fraud programmes, said in its annual report yesterday it had to issue 700 recommendations to companies to improve the quality of their audits and data.
Of the comments, 142 were marked "significant improvement required" and needed immediate rectification by the companies or entities involved, an more than double the number from last year.
ADAA said it had found incomplete documentation, weakness in the quality of evidence audits were based on, and other deficiencies in the financial disclosures of companies. The authority has oversight of local departments, councils and companies in which the Government owns a half stake or more.
Simon Charlton, the Middle East managing director for forensic and dispute services at Deloitte, said the ADAA had moved past its planning phase and was aggressively testing safeguards across Abu Dhabi and setting up preventative measures to avoid fraud.
"Prevention is better than the cure," Mr Charlton said. "They are trying to educate people across the emirate to put in place the proper programmes and controls. It mitigates risk, so you may actually avoid the programme. If you don't prevent it in time, then they are prepared to deal with it."
The ADAA was also involved in high-profile corruption cases last year, including an allegation that the head of insurance at Abu Dhabi Water and Electricity Authority had embezzled nearly Dh300 million (US$81.6m) in the form of bribes given by companies in exchange for contracts.
Court documents identified ADAA as the plaintiff. The defendant, a woman identified as MGH, has denied the charges.
The authority was increasing its investigations and receiving more complaints, the annual report showed. ADAA received 33 complaints last year, compared with 12 in 2009. But 16 of last year's cases were closed because of inaccuracy or insignificance of the complaint.
ADAA disclosed details of several of its cases in the report. In one, it said it had received a tip that a deputy chairman of a government entity had "issued financial decisions worth over Dh580m beyond his jurisdictions", which it verified in an investigation and turned over to law enforcement authorities.
In another, the agency was told of a general manager who had "awarded tenders illegitimately to vendors and had given orders violating provisions regulating procurement laws and regulations". The case was confirmed through an investigation, which found that the contracts were worth more than Dh700m. The case was taken over by the Public Prosecution.
Mr Charlton, who has worked with ADAA on projects, said the work being done by the authority showed signs of the Government's commitment to stemming losses to corruption and ensuring foreign investors of the protections in place in Abu Dhabi. "It's very ambitious and highly commendable," he said. "As Abu Dhabi is taking its position at the global table, it is being a standard setter in terms of governance, anti-corruption and anti fraud."
ADAA also disclosed its financial statements for last year, which showed it was primarily funded with a Dh100m injection from the Government.