00:00New Federal Decree Law for Regulation of the Accounting and Auditing Profession
00:07In a remarkable development aimed at stimulating auditing standards and introducing greater confidence in business practices,
00:13the UAE has introduced the new Federal Decree Law No. 41-2023 on the regulation of the accounting and auditing profession.
00:21Replacing the previous Federal Law No. 12-2014,
00:24this new Federal Decree signifies a pivotal moment in refining corporate governance standards and anti-money laundering, AML compliance.
00:33Overview of the Federal Decree Law Regulating the Accounting and Auditing Profession
00:37Federal Decree Law No. 41-2023 establishes a robust framework for the accounting and auditing profession in the UAE.
00:45It defines a chartered accountant as an authorized and licensed individual permitted to practice the accounting profession,
00:51including activities such as auditing, reviewing financial statements, and providing other confirmation services.
00:58Accounting offices and licensed entities practicing following the law must adhere to the standards set by the Ministry.
01:05The legislation emphasizes preventing individuals from assuming the role of chartered accountants outside the profession's defined scope.
01:13Application of the law
01:14Chartered accountants and accounting firms located onshore in the UAE are licensed by the Ministry to practice and provide auditing and related professional services.
01:23Similarly, chartered accountants and accounting firms situated in financial free zones like DIFC and ADGM that aim to offer auditing
01:32and related professional services onshore also fall under the regulations of the new Federal Decree Law.
01:38The new Federal Decree Law provides clarity on professional services licensure,
01:42including internal audit services, consultancy and financial monitoring, approval of electronic information systems,
01:49assessment of financial risks, and services within the scope of professional standards approved by the Ministry.
01:56The law aims to regulate and improve the efficiency of the accounting and audit profession,
02:01encouraging confidence within the business community and among investors.
02:05It also establishes rules for holding accounting and audit professionals accountable if they engage in practices harmful to the business community.
02:12Professional obligations and responsibility
02:15The new decree law outlines the obligations and prohibitions for professional practitioners,
02:20ensuring ethical and professional conduct in the accounting and auditing field.
02:24Articles 6 to 15 of the law stipulate that no individual or entity may engage in professional activities
02:30without obtaining the requisite licenses as detailed in the implementing regulation.
02:35Chartered accountants are authorized to practice either independently through their offices
02:39or by working for licensed accounting offices.
02:42Accounting offices are obliged to implement internal audit systems,
02:46maintain professional standards, and provide insurance for professional liability.
02:51The law also lists prohibitions for professional practitioners,
02:55such as engaging in unreliable trade activities, violating professional conduct codes,
03:00and having conflicting interests with clients.
03:03Furthermore, Article 18 emphasizes the confidentiality of information,
03:07restricting disclosure except under specific circumstances,
03:11and mandates the maintenance of data documents and papers related to contracted activities for a specified period,
03:17reinforcing accountability and record-keeping practices.
03:21The implementing regulation supplements these provisions by detailing controls and procedures for record maintenance.
03:27Disciplinary measures and penalties
03:29The Federal Decree Law No. 41-2023 includes a system of disciplinary measures and penalties
03:35to maintain the integrity and professionalism of the accounting and auditing profession.
03:40Article 20 permits the Professional Compliance Committee to address violations,
03:44imposing sanctions such as written warnings,
03:47administrative fines ranging from 10,000 to 1,000,000 dirhams,
03:51suspension of the professional license from one month to three years,
03:55and, in severe cases, cancellation of the professional license.
03:59These disciplinary measures can be applied individually or in combination,
04:03depending on the nature and severity of the offense.
04:06Additionally, Article 21 outlines the procedures for responsibility,
04:10enabling the Ministry to refer cases to the Professional Compliance Committee.
04:14The Committee has the authority to recommend criminal proceedings
04:17in situations where the violation involves a criminal offense.
04:20Article 23 provides practitioners with the right to file grievances against disciplinary sanctions.
04:25A specialized committee, including a judge and experienced individuals,
04:29is tasked with reviewing such grievances.
04:32The decisions of this committee can be further appealed to the competent Court of Appeal.
04:36Furthermore, the law emphasizes the publication of results,
04:40committee decisions, and court judgments enhancing transparency
04:44and serving as a preventive against professional misconduct.
04:47Practitioners found guilty of offenses may face not only legal consequences,
04:52but also reputational damage through public disclosure of disciplinary actions.
04:56Committee for the Development of the Profession
04:59Articles 31 to 38 outline the establishment of a Committee for the Development of the Profession.
05:04The Council of Ministers, based on the Minister's recommendation,
05:07will form this Committee, determining its members, competencies and functioning system.
05:12This Committee addresses grievances, sets professional standards,
05:16promotes emeritization, determines fees and oversees the issuance of important regulations.
05:21Conclusion
05:23The enactment of the new Federal Decree Law represents a significant step
05:26towards a more regulated and responsible accounting and auditing profession in the UAE
05:31by emphasizing professional standards and licensing requirements
05:34and implementing disciplinary measures.
05:36This decree underscores the commitment to encouraging confidence
05:39within the business community and among investors.
Comments