Ministry of Economy reviews updated implementing regulation of the UAE auditing profession law

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The regulation adopts the ‘financial reporting ecosystem’ model, which makes the UAE one of the first countries globally to adopt this advanced model

Abu Dhabi: The Ministry of Economy held a media briefing on the updated implementing regulation of Federal Law No (12) of 2014 regarding Reorganization of Accounts Auditors Profession, pursuant to Cabinet Decision No. (48) of 2022. During the briefing, H.E. Abdulaziz Al Nuaimi, Assistant Undersecretary for Commercial Affairs at the Ministry of Economy, confirmed that, thanks to the guidance of the wise leadership, the UAE has made great strides in strengthening its efforts to prepare and develop the business environment in the country in accordance with global best practices and standards. These efforts will help achieve the national sustainable development goals in various strategic sectors, in light of the goals of the Projects of the 50 and the UAE Centennial 2071.

H.E. Al Nuaimi said that the UAE attaches great importance to the accounting and auditing profession, given its pivotal role in regulating the country’s business sector and developing the corporate governance system in order to provide a safe and attractive business environment for investments. This contributes to the growth of the national GDP by enhancing investor confidence in the business environment by enabling safe business practices and strengthening the role of the UAE regulatory bodies in dealing with professional malpractices in various sectors.

H.E. Al Nuaimi further emphasized that the updated implementing regulation represents a new milestone in the completion of the UAE business environment’s legislative system and ensures its work flexibly under one umbrella. Consequently, it enhances the confidence of investors and the business community in the UAE’s financial and accounting sector and supports the country’s prestigious position as a leading global investment destination. It achieves this by establishing scientific bases to regulate and enhance the efficiency of the profession in the country through the adoption of the financial reporting ecosystem linking many of the profession’s core and sub-areas. It will also witness the development of the UAE Fellowship Program, which will become a requirement for practicing the profession in the country and will help drive Emiratization in various fields, in line with the UAE’s aspirations to enhance national competencies in all strategic sectors.

Moreover, he pointed out that, during the past period, the Ministry of Economy had been actively supporting and developing the profession as one of its strategic objectives, in collaboration with the relevant authorities. These efforts were aimed at developing a new regulation that aligns with the country’s ambitious vision of building an innovative knowledge economy led by national competencies, enhancing its global competitiveness and keeping pace with the best practices and standards applied globally in accounting and auditing.

Furthermore, H.E. reviewed the main updates in the new regulation, which reflect the Ministry of Economy’s desire to implement the best standards of integrity and transparency in the work of professionals in the UAE and enable them to create added value for the national economy, which are the following:

  • Allows citizens who wish to practice the profession of auditing but do not have a bachelor’s degree to practice it by specifying the conditions under which they can practice it. These include the requirement to complete 15 hours of accredited accounting courses and  fulfilling the requirements of the certificate, experience, fellowship program and meeting other conditions mandated  by the regulation.
  • Adoption of the ‘financial reporting ecosystem’ model, which makes the UAE one of the first countries in the world to adopt this advanced model, thus enhancing its leadership in this regard.
  • Expansion of the activities and areas of the financial reporting ecosystem besides auditing accounts to include financial and administrative accounting, tax accounting, internal auditing and judicial auditing, and paving the way for adding other accounting activities in the future.
  • Development of a framework for the UAE fellowship certificate program and the mechanisms for earning it according to the highest global standards, in cooperation with the relevant authorities, and making it a prerequisite for practicing the profession within the country. Applicants are required to take one or more tests, depending on the field he/she wishes to practice, as follows:

o   Accounting Standards Test: This test aims to gauge the candidate’s familiarity with International Financial Reporting Standards (IFRS), including all work guides issued by the International Financial Reporting Standards Foundation and the International Accounting Standards Board.

o   Auditing Standards Test: This test aims to measure candidate’s knowledge of International Standards on Auditing (ISA), including all work guides issued by the International Auditing and Assurance Standards Board.

o   Legislation and taxation test: This test aims to measure the candidate’s extent of knowledge of all issued legislation related to the practice of the accounting and auditing profession, including the rules of conduct and ethics of the profession, the corporate system, the tax system, and civil and criminal liability related to the practice of the profession.

  • Enabling of the complete digital transformation of auditor licensing, control, inspection, enforcement and periodic reporting procedures.
  • Cancellation of the lump sum of insurance coverage at a value of AED 1 million and replacing it with a percentage system, based on the total annual fees of the office or company practicing the profession, provided that a subsequent cabinet decision is issued to detail the specific segments and will be implemented when the regulation is applied.
  • Cancellation of the item related to the national participation rate, estimated at 25 per cent of the capital of accounting and auditing companies, in line with the recent amendments to the Commercial Companies Law, as well as to increase foreign investment opportunities in the country’s economy.
  • Determines the period of practical experience required to practice the profession as 5 years after obtaining the educational qualification in line with the international standards, knowing that work is currently underway to set the conditions for practicing other fields of the profession referred to in the regulation.
  • Non-emiratis who practice auditing should have a minimum number of years of experience within the country as follows:
    • One year if his/her experience outside the country exceeds 10 years.
    • Two years if his/her experience outside the country is between five to 10 years.
    • Three years if his/her experience outside the country is between two to five years.

H.E. concluded his speech by underlining that the regulation, which will be implemented starting from September 13, 2022, will serve as a qualitative addition in a number of tracks that support the UAE strategy to consolidate the strength of the national economy, making it more flexible and enhancing its global competitiveness. He pointed out that the regulation will ensure the provision of the best accounting and financial services in accordance with the best practices followed globally, and will help the country’s authorities in dealing with financial malpractices. This will in turn consolidate the UAE’s leading position on global competitiveness indicators, in addition to enhancing investor confidence in the country’s business environment, which follows the highest standards of integrity and transparency.