The UAE needs its own professional body for accountants to increase monitoring and lead a debate about unifying standards across the country, a top executive at PricewaterhouseCoopers (PwC) said yesterday. Warwick Hunt, the managing director for Middle East operations at PwC, said improved accounting would result in better financial statements and fewer inconsistencies between companies.
Accountancies in the UAE are predominantly from Britain, the US, Pakistan and India. Each has its own standards for accounting that can differ widely. "Intrinsic in the ability to do audits is the accountability of auditors to the public benefit," Mr Hunt said, adding that bodies such as the Institute of Chartered Accountants in England and Wales (ICAEW) provide guidance on issues and monitor the quality of audits.
"But with accountants here, there is an absence of an over-arching accounting body to play a role in these discussions." Such a body could not only provide a forum for accounting issues, but also play a role overseeing companies, he said. "The UAE deserves its own accounting professional body," Mr Hunt said. His comments come as the country's regulators conduct a broad review of financial reporting and corporate governance standards.
A global discussion is also under way about the role of auditors and ratings agencies after the financial crisis. Regulators across the world have cited the inability of these entities to assess the risk that culminated in the collapse of major banks and the loss of trillions of dollars. The Emirates Securities and Commodities Authority and the Dubai Financial Services Authority oversee accountants and financial advisers reporting for listed companies, but there is no oversight of private companies' accounts, said Binod Shankar, a chartered financial analyst and the managing director of the Genesis Institute.
"That leaves a lot of companies that are not monitored," Mr Shankar said. "What about large private groups who are not listed but would benefit from having accounting standards apply to them? In reality, most follow an international standard voluntarily but there is room for increased oversight." Investors should look closer at financial statements to increase the sophistication of the capital markets, Mr Shankar said. "It goes beyond having proper accounting standards or accountants or auditors or a stronger government framework. It's about more educated investors and having independent boards that auditors report to."
A UAE accounting body could also play an increased regulatory, licensing and standards monitoring role, said Amanda Line, the regional director of the ICAEW. "All that does is increase standards," she said. "There is a global interest in raising the quality of financial information and part of this rests with the accounting profession." The lack of unified standards across the UAE "can result in inconsistencies" that lower the quality of financial information, she said. This applied across the GCC, with the exception of Saudi Arabia, she said.
Meanwhile, the country was seeing signs of economic recovery, Mr Hunt said. His team of 140 business consultants were now fully occupied compared with a year ago when half were idle. PwC has hired 700 more staff, bringing its total in the region to 2,500. The largest growth has been in Saudi Arabia. "Clearly the last year in the UAE has been interesting," Mr Hunt said. "There are increasing transactions coming back into the market now. The acceptance of 99 per cent of the banks in the Dubai World arrangement demonstrates that the economy is now moving into normalisation."