New Federal Decree Law For Regulation Of The Accounting And Auditing Profession

• Published date: 19 March 2024
• Subject Matter: Accounting and Audit, Corporate/Commercial Law, Compliance, Audit, Accounting Standards, Corporate Governance
• Law Firm: Awatif Mohammad Shoqi Advocates & Legal Consultancy
• Author: Dr. Hassan Elhais

Introduction

In a remarkable development aimed at stimulating auditing standards and introducing greater confidence in business practices, the UAE has introduced the New Federal Decree-Law No. 41/2023 on the Regulation of the Accounting and Auditing Profession.

Replacing the previous Federal Law No. 12/2014, this new Federal Decree signifies a pivotal moment in refining corporate governance standards and Anti-Money Laundering (AML) compliance.

Overview of the Federal Decree-Law Regulating the Accounting and Auditing Profession

Federal Decree-Law No. 41/2023 establishes a robust framework for the accounting and auditing profession in the UAE. It defines a Chartered Accountant as an authorized and licensed individual permitted to practice the accounting profession, including activities such as auditing, reviewing financial statements, and providing Other Confirmation Services.

Accounting Offices, and licensed entities practising following the law, must adhere to the standards set by the Ministry. The legislation emphasizes preventing individuals from assuming the role of Chartered Accountants outside the profession's defined scope.

Application of the Law

Chartered Accountants and accounting firms located onshore in the UAE are licensed by the Ministry to practice and provide auditing and related professional services. Similarly, Chartered accountants and accounting firms situated in financial-free zones like DIFC and ADGM that aim to offer auditing and related professional services onshore also fall under the regulations of the New Federal Decree-Law.

The New Federal Decree-Law provides clarity on professional services licensure, including internal audit services, consultancy in financial monitoring, approval of electronic information systems, assessment of financial risks, and services within the scope of professional standards approved by the Ministry.

The Law aims to regulate and improve the efficiency of the Accounting and Audit Profession, encouraging confidence within the business community and among investors. It also establishes rules for holding Accounting and Audit Professionals accountable if they engage in practices harmful to the business community.

Professional Obligations and Responsibility

The new decree Law outlines the obligations and prohibitions for professional practitioners, ensuring ethical and professional conduct in the accounting and auditing field. Articles 6 to 15, of the law stipulate that no individual or entity may engage in...