Dubai To Tighten Rules For DIFC Auditors

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

04 August 2006

Auditors in the Dubai International Financial Centre (DIFC) will soon be subject to greater scrutiny, according to the financial regulator.

Under proposals announced by the Dubai Financial Services Authority (DFSA), new rules designed to enhance the quality of audit services in the DIFC will apply to auditors who audit Authorised Firms, Authorised Market Institutions and Collective Investment Funds domiciled in the DIFC.

The DFSA considers that the current requirements applicable to auditors need to be enhanced to reflect both the DFSA’s risk based approach to regulation and international standards applicable to the registration and supervision of Auditors.

Historically the monitoring of audit performance has largely relied upon a system of peer group review. This regime of self-regulation came under intense scrutiny following a series of major corporate failures in the early part of this decade.

“The new rules are an important component in enhancing the standard of audit and auditor supervision in the DIFC and prescribe a regime that is the equivalent of that in the world’s major capital markets," commented David Knott, DFSA CEO.

"The DFSA will embrace international best practice where it improves transparency and investor confidence," he added.

The key features of the proposals establish international benchmarks against which auditors will be assessed upon registration and on an ongoing basis. The assessment will include a review of the auditor’s systems, policies, procedures and controls to ensure compliance with:

• International Standards on Auditing and Quality Control issued by the International Auditing and Assurance Standards Board (IAASB) of IFAC;
• The Code of Ethics for Professional Accountants issued by the International Ethics Standard Board for Accountants (IESBA) of IFAC;
• Islamic Accounting and Auditing Standards issued by the Accounting and Auditing Organisation of Islamic Financial Institutions (AAOIFI); and
• The Code of Ethics for Accountants and Audit Firms of Islamic Financial Institutions issued by the Accounting and Auditing Organisation of Islamic Financial Institutions from time to time (AAOIFI).

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