Friday, Feb 23, 2007
Dubai: Dubai is expected to introduce a corporate governance law within two years in response to the city-state's emergence as a financial centre, according to the UAE chapter of the Institute of Internal Auditors (IIA).
Listed companies in Dubai now have no legal obligation to meet certain standards in internal auditing and corporate governance, but this would change if regulation similar to United States' Sarbanes-Oxley Act is introduced.
Signed in the fallout of the Enron collapse, the Sarbanes-Oxley Act requires companies to report more information to the public, maintain stronger independence from their auditors and have their financial internal control procedures audited.
"Many listed companies in the UAE adhere to very high standards of corporate governance, but this policy comes from within. As yet, there is no external pressure forcing them to meet certain standards," said T. Raza Abdullah, vice-president, internal audit, Dubai-based Emirates airline.
Adnan Zaidi, group director, audit, Dubai Holding, said the IIA's UAE chapter hoped to play a prominent role in shaping the law. "We hope that by raising our awareness and credibility, we will be the first body to be consulted when a draft discussion paper is introduced."
Limited supply of qualified auditors could hold back the UAE's drive to improve standards. The IIA estimates that there are 500 certified auditors practising in the UAE, well below demand.
"Demand outstrips supply because businesses have realised the value internal auditing can add," said Abdul Rahman Al Hareb, chief of group audit and risk management, Dubai Holding.
The IIA is responding by offering courses and embarking on a recruitment drive in UAE universities. It also aims to change the perception of an auditor's role in a company.
Gulf News 2007. All rights reserved.
