The registration authority of ADGM has fined KPMG Lower Gulf $30,000 for violating its regulations. Abu Dhabi Global Market announced the imposition of the fine due to inadequate systems and controls that led to non-compliance with audit requirements stipulated by ADGM’s legislation.
The regulatory framework in Abu Dhabi’s financial centre mandates that audit reports must be issued and signed by audit principals registered with ADGM, acting on behalf of an ADGM-registered auditor.
However, the authority found that KPMG failed to ensure that only their ADGM-registered audit principals signed audit reports for companies in the financial free zone.
ADGM, a rapidly growing global financial hub, communicated with KPMG for several months about their concerns before issuing the fine, according to The National News.
KPMG acknowledged that they had strengthened their systems and controls to prevent rule violations, but these issues persisted, leading the regulator to take action.
The registration authority (RA) expects its registered auditors to establish governance structures and implement systems and controls to ensure compliance.
ADGM, established in 2015, hosts international banks, insurance companies, global asset managers, FinTech firms, and cryptocurrency exchanges. In April, the RA fined businessman Mohammed Wasim Nazir and his ADGM-registered companies, HSQ Holdings and PL1 Holdings, a total of $144,000 for violating the financial centre’s regulations.
The violations included exceeding their special purpose vehicle license scope, breaching ADGM’s company regulations overseen by the registration authority, and providing false information.
“The RA will take a robust and proportionate stance where registered auditors or registered audit principals breach their obligations,” the authority said.
“ADGM audit firms must implement effective audit systems, controls and procedures that meet the requirements of ADGM’s internationally aligned audit regulatory framework, which in turn contribute to high-quality audits and reinforce trust in corporate financial reporting.”