Firms are under increased regulatory scrutiny as concerns about book-keeping rise.
Auditors face closer watch after corporate scandals
Auditors will come under increased regulatory scrutiny after a series of corporate scandals that have raised concerns about book-keeping practices at local firms. Paul Koster, the chief executive of the Dubai Financial Services Authority (DFSA), said the UAE's regulatory bodies were paying closer attention to the quality of financial statements and working together to come up with stricter standards and auditing systems.
"We are clearly stepping up our relationship with ESCA [the Emirates Securities and Commodities Authority] and the Central Bank," Mr Koster said. "We want to bring a level playing field for companies in the UAE. We all feel audit oversight is critical." The DFSA has auditing oversight for licensed companies and is planning to expand the practice to all companies listed on NASDAQ. ESCA is charged with overseeing auditors for all listed companies.
Mr Koster said a major question in the financial world was who should pay for auditing of financial statements. Citing lapses in audit quality over the past few years, he said one option for making the process more independent could be the creation of a central trust that would collect money from companies and independently hire auditors. "It's a really contentious issue," he said. "Governments paying doesn't really work."
One particular problem is valuations, which can be manipulated by financial advisers to inaccurately reflect the worth of assets and mislead investors, Mr Koster said. "Valuations need to be looked at far closer," he said. "There needs to be testing of the prices." These issues will be discussed this week, when regulators from 33 countries convene in Abu Dhabi for the International Forum of Independent Audit Regulators plenary meeting.