UAE Accounting & Auditing Law: Decree-Law No. 41/2023
Federal Decree-Law No. 41/2023 has replaced Federal Law No. 12/2014, introducing new regulations for the accounting and auditing profession in the UAE. It defines Chartered Accountants, outlines licensing and ethical obligations, and applies to onshore practitioners and financial-free zones. The law enforces fines up to AED 1,000,000 and allows practitioners to appeal sanctions. Emphasizing confidentiality, transparency, and AML compliance, it aims to enhance professional integrity, investor confidence, and promote Emiratisation. For more information, contact a financial crime lawyer in Dubai today.
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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.