Accountability Report 2017
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ACCOUNTABILITY
REPORT
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ADAA Accountability
Report on the website
Since God, bestows His graces on us
providing us with wealth,
it is our role to use this wealth
for the benefit and prosperity of our country and
our people as an expression
of gratitude to our Lord.
The late Sheikh Zayed bin Sultan Al Nahyan
(may God have mercy upon him)
Al Ain Desert, UAE
His Highness Sheikh Khalifa bin Zayed Al Nahyan
The President of the UAE
His Highness Sheikh Mohamed bin Zayed Al Nahyan
The Crown Prince of Abu Dhabi and Deputy Supreme Commander
of the UAE Armed Forces
Part 02
Part 01
About ADAA
Page 2 - 15
1. ADAA History
2. Strategic Pillars
3. Overall Strategy
4. Objectives and Responsibilities
5. Outputs and Outcomes
6. Subject Entities
7. Governance Report
ADAA Outputs
Page 16 - 29
1. Introduction
2. ADAA Audit Methodology
3. Financial Audit and Examination
4. Performance and Risk Assurance
5. Supporting Accountability
Liwa Desert in the Al Dhafra Region of Abu Dhabi, UAE
Saadiyat Island in Abu Dhabi, UAE
Part 04
Part 03
2016 Report &
2017 Plan
1. 2016 Achievements Highlights
2. Financial Audit and Examination
3. Performance and Risk Assurance
4. Supporting Accountability
5. 2017 Work Plan
Financial
Statements
together with the
independent auditor’s report
For the year ended 31
December 2016
Page 58
Page 30 - 57
Saadiyat Island in Abu Dhabi, UAE
Desert in Abu Dhabi, UAE
Mist in a desert at sunrise, UAE
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 1
FOrEWOrD
It gives us great pleasure to bring you the “Accountability Report 2017”, the 9th issue of the annual
report of the Abu Dhabi Accountability Authority (ADAA), that affirms our commitment to the
highest standards of transparency and accountability as adopted by the UAE and the Emirate under
the leadership of our President His Highness Sheikh Khalifa bin Zayed Al Nahyan.
This issue of the annual report arrives at a time when the UAE has achieved a number of unique successes
accredited by key international reports and indicators. On 10 th of April 2016, the Country announced the
creation of new ministries that included the Ministry of Happiness as the first of its kind globally. In September
2016, Global Finance named 6 UAE banks, including the top spot, in the 10 Safest Banks in the Middle East and
Africa as ranked by Global agencies Moody’s, Standard and Poor’s and Fitch. The Country ranked 24th globally in
the Corruptions Perceptions Index issued by Transparency International in 2016 whereas it ranked 35th in 2008,
which reflects the great achievement in this respect. The UAE ranked 1 st in the region and 16 th globally in the
Global Competitiveness Report issued by the World Economic Forum (Davos). The UAE was also ranked the
happiest Arab Country and the 28 th globally in the World Happiness Report published by the United Nations.
Further, the Country was ranked 1st regionally in the “Ease of doing business” category according to a Report
issued by the World Bank.
We at ADAA, under the direction of His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu
Dhabi and Deputy Supreme Commander of the UAE Armed Forces and the support of His Highness Sheikh Hazza
bin Zayed Al Nahyan, Vice Chairman of the Abu Dhabi Executive Council, are proud that we have developed and
sponsored the “Auditors Development Program” designed with the objective of contributing to the training and
development of Emirati Auditors and assisting them to acquire the necessary skills and knowledge, to advance
and excel in their careers. Since the inception of the Program, more than fifty UAE Nationals have joined.
This Report illustrates a number of ADAA accomplishments during the past year, including:
• 113 reports issued as outputs of the Financial Audit and Examination group and the Performance and Risk
Assurance group.
• Organized the 10 th Inspection Workshop of the International Forum of Independent Audit Regulators (IFIAR)
in Abu Dhabi alongside 166 participants from 43 jurisdictions. These workshops are organised to enable
independent audit regulators to meet and discuss inspections processes, to learn and leverage from each
other, and to consider similarities and differences among practices and methodologies.
• Participated in the IFIAR plenary meeting in London, UK.
• Attended the Institute of Internal Auditors’ Global Conference held in New York, USA.
• ADAA Knowledge Centre continues to be accredited as an approved training provider by the UK Institute
of Leadership and Management.
In conclusion, I would like to thank everyone who has contributed to these achievements including public
entities and ADAA employees, praying to the Great and Almighty Allah to grant us success in serving our
generous country.
Hamad Al Suwaidi
ADAA Chairman
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Part 01
About ADAA
Page 2 - 15
1. ADAA History 04
2. Strategic Pillars 04
3. Overall Strategy 05
4. Objectives & Responsibilities 06
5. Outputs & Outcomes 06
6. Subject Entities 07
7. Governance Report 11
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 3
Saadiyat Island in Abu Dhabi, UAE
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1. aDaa HIStOry
Abu Dhabi Accountability Authority (ADAA) was
established under Law No.(1) for the year 1985 as
an independent body reporting to His Highness the
Crown Prince of Abu Dhabi and mandated to perform
financial oversight on funds disbursed by public
entities and ensure the accuracy and legitimacy of the
management of these funds, which were previously
under the responsibility of the Department of Finance.
ADAA began to exercise its powers since the issuance
of Decree No.8 of 1996 appointing His Excellency
Mohammed Al Marar as the first Chairman. In April
1997, the Law referred to above was amended
to make ADAA responsible for the post financial
control instead of the pre-audit to strengthen its
independence. In July 2004, Law No.6 of 2004 was
issued to give ADAA broader powers.
In December 2007, Decree No.32 of 2007 was issued
appointing His Excellency Riyad Al Mubarak as Acting
Chairman of ADAA as part of the restructuring of the
Government of Abu Dhabi.
In December 2008, Law No.14 of 2008 (the Law) was
issued to shift the role of ADAA from financial control
to government audit and added a new objective that
is to promote the principles of accountability and
transparency. The Law also changed the name of the
authority from ”Abu Dhabi Audit Authority” to “Abu
Dhabi Accountability Authority”. On 31 December
2008, Emiri Decree No.(10) was issued appointing His
Excellency Riyad Al Mubarak as Chairman of ADAA.
In February 2017, His Highness Sheikh Khalifa Bin
Zayed Al Nahyan, in his capacity as Ruler of Abu Dhabi,
issued an Emiri Decree appointing His Excellency
Hamad Mohammad Al Hurr Al Suwaidi as Chairman
of the ADAA.
2. StratEGIC PILLarS
Our Vision
Our Mission
“To be one of the top 5 accountability
authorities in the world”
“To help improve performance
and promote accountability and
transparency across Abu Dhabi
Government and Public Entities by
providing independent and objective
assurance and advisory services”
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3. OVEraLL StratEGy
To enhance performance and to promote accountability and transparency by:
• Becoming a trusted advisor.
• Leading by example and supporting adoption of better practices.
• Enhancing communication and collaboration between Subject Entities and support sharing of knowledge.
Lead by
example
Treating
others with
respect
Listening
to other points
of view
Being
independent,
objective and
neutral
Collaborative
and effective
teamwork
Earning the
trust of people
we interact with
Being
passionate
about the work
we do
Innovating
and going beyond
the current
standards
Integrity
Respect
Accountability
Transparency Professionalism
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4. OBJECtIVES & rESPONSIBILItIES
Objectives
1. Ensure public resources and funds are managed, collected and expended efficiently, effectively and
economically.
2. Ensure accuracy of the financial reports and compliance of Subject Entities with relevant laws, rules and
regulations and governance guidelines.
3. Promote accountability and transparency across all Subject Entities.
Responsibilities
1. Audit the Government consolidated financial reports and examine Subject Entities’ financial reports.
2. Review performance and risk by examining the efficiency, effectiveness and economy of the financial and
operational activities of Subject Entities and ensuring compliance with laws, regulations and rules and
governance guidelines.
3. Submit reports to HH the Crown Prince as well as carry out any other functions and duties requested by
HH the Crown Prince.
4. Provide advice and recommendations and perform other procedures and services to Subject Entities as the
ADAA Chairman deems reasonable and appropriate.
5. Investigate complaints referred to ADAA and other violations it may discover, as well as examine violations
investigated by Subject Entities.
6. Train and qualify UAE National graduates of universities and institutions.
7. Issue regulations, rules, guidelines and standards that enable ADAA to exercise its functions and duties.
Outputs
1. Financial Audit and Examination
2. Performance and Risk Assurance
3. Supporting Accountability
Outcomes
1. Enhanced accountability and transparency in the Government and Subject Entities.
2. The public and the world are better informed about accountability in Abu Dhabi Government.
3. Efficient and effective public sector.
4. Improved governance practices in all Subject Entities.
5. Increased number of UAE Nationals in the fields of accounting and audit.
6. Improved transparency and reliability of financial reporting.
7. Enhanced compliance with rules and regulations.
5. OUtPUtS & OUtCOMES
Law number 14 of 2008 defines ADAA’s objectives and responsibilities as follows:
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 7
6. SUBJECt ENtItIES
ADAA Subject Entities comprise local departments, councils, authorities and other similar entities, in addition to
institutions, companies and projects in which the Abu Dhabi Government’s interest is equal to or greater than
50% inclusive of their subsidiaries, companies and projects. Other entities may be subject to ADAA work based
on other criteria as defined in Law No.14 of 2008.
Subject Entities Classification by Type
ADAA classified Subject Entities into groups based on their types as shown in the following figure:
General
Secretariat of
Executive Council
Executive Office Executive Affairs
Authority
Vice Chairman
Office
AD Education
Council
Health
Authority - AD
AD Urban
Planning Council
Department
of Economic
Development
Department of
Municipal Affairs
and Transport
AD Housing
Authority
AD Centre for
Technical
Vocational &
Education
AD Food Control
Authority
AD Tourism &
Culture Authority
AD Human
Resources
Authority
AD Police
Musanada
Media Zone
Authority – AD
AD Sports
Council
Environment
Agency – AD
Ruler Court
ADNOC
ADFD
ADIA
ADWEA
ADX
Mubadala Investment
Company
Etihad Aviation Group
Senaat
TDIC
ADSSC
ADNEC
ADAC
ADPC
ADIC
SEHA
ADMC
EPCO
ENEC
Daman
Etihad Rail
SOEs Subsidiaries
Crown Prince
Court
Courts
)Diwans( Central Government State-Owned
Enterprises )SOE(
Executive Council
Judicial
Department
National
Consultative
Council
Ruler
Representatives
Courts
Other Government Entities / Subsidiaries
DOF
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Subject Entities Classification by Sector
ADAA has also classified Subject Entities by sector as shown in the list below (excluding subsidiaries
of State Owned Enterprises and Government Entities):
Sector Policy Area Entity Name
Economic
Development
Planning and
Economy
1. Department of Economic Development
2. Khalifa Fund for Enterprise Development
3. Abu Dhabi Quality and Conformity Council
4. Abu Dhabi Council for Economic Development
5. Higher Corporation for Specialized Economic Zones
6. Media Zone Authority - Abu Dhabi
7. Global Marketplace Abu Dhabi
Energy 8. Supreme Petroleum Council
9. Energy Authority
10. Regulation and Supervision Bureau
Tourism
and Culture
11. Abu Dhabi Tourism and Culture Authority
12. Emirates Heritage Club
13. Zayed House for Islamic Culture
14. Public Institution Zoo and Aquarium in Al Ain
Social
Development
Justice 15. Judicial Department - Abu Dhabi
Security 16. General Directorate of Abu Dhabi Police
17. Monitoring and Control Centre
Health 18. Health Authority - Abu Dhabi
19. The National Rehabilitation Centre
Food and
Agriculture
20. Abu Dhabi Food Control Authority
21. Abu Dhabi Farmers Services Centre
Social Inclusion 22. Family Development Foundation
23. Zayed Higher Organization For Humanitarian Care
and Special Needs
24. Social Care and Minors Affairs Foundation
25. Zayed bin Sultan Al Nahyan Charitable and
Humanitarian Foundation
26. Khalifa Bin Zayed Al Nahyan Foundation
27. Emirates Foundation
28. Zayed House for Family Care
Housing 29. Abu Dhabi Housing Authority
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 9
Subject Entities Classification by Sector
Sector Policy Area Entity Name
Human Capital
Development Education 30. Abu Dhabi Education Council
31. Khalifa University for Science, Technology and
Research
32. Emirates College for Advanced Education
33. Paris-Sorbonne University - Abu Dhabi
34. Mohammed V University - Abu Dhabi
35. Abu Dhabi Centre for Technical and Vocational
Education and Training
36. Abu Dhabi Vocational Education and Training
Institute
37. Institute of Applied Technology
38. Petroleum Institute
39. Rabdan Academy
Labour 40. Abu Dhabi Human Resources Authority
41. Civil Service Council
42. Abu Dhabi Retirement Pensions and Benefits Fund
Sports 43. Abu Dhabi Sports Council
Infrastructure
and Environment
Urban Planning and
Municipal Affairs
44. Abu Dhabi Urban Planning Council
45. Department of Municipal Affairs and Transport
46. Municipality of Abu Dhabi City
47. Municipality of Al Ain City
48. Western Region Municipality
49. The Center of Waste Management - Abu Dhabi
50. Abu Dhabi General Services Company - Musanada
Transport 51. Integrated Transport Centre
52. Compensation Fund for Owners of Taxi Licenses
Environment 53. Environment Agency - Abu Dhabi
54. International Fund for Houbara Conservation
55. Mohamed bin Zayed Species Conservation Fund
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Subject Entities Classification by Sector
Sector Policy Area Entity Name
Government
Administration
Government
Administration
56. Ruler Court
57. Crown Prince Court
58. Ruler Representative in Al Ain Region Court
59. Ruler Representative in Al Dhafra Region Court
60. National Consultative Council
61. Executive Affairs Authority
62. Vice Chairman of the Executive Council Office
63. General Secretariat of the Executive Council
64. Executive Committee Office
65. Department of Finance
66. Statistics Centre - Abu Dhabi
67. Presidential Flight Authority
68. Abu Dhabi systems and information Centre
Public
Investments
Public
Investments
69. Abu Dhabi National Oil Company – ADNOC
70. Abu Dhabi Fund for Development – ADFD
71. Abu Dhabi Investment Authority – ADIA
72. Abu Dhabi Water & Electricity Authority – ADWEA
73. Abu Dhabi Securities Exchange – ADX
74. Mubadala Investment Company
75. Etihad Aviation Group
76. General Holding Corporation – Senaat
77. Tourism Development & Investment Company – TDIC
78. Abu Dhabi Sewerage Services Company – ADSSC
79. Abu Dhabi National Exhibitions Company – ADNEC
80. Abu Dhabi Airports Company – ADAC
81. Abu Dhabi Ports Company – ADPC
82. Abu Dhabi Investment Council – ADIC
83. Abu Dhabi Health Services Company – SEHA
84. Abu Dhabi Media Company – ADMC
85. Emirates Palace Company – EPCO
86. Emirates Nuclear Energy Corporation – ENEC
87. National Health Insurance Company – Daman
88. Etihad Rail Company
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7. GOVErNaNCE rEPOrt
ADAA aims to earn the trust of its
stakeholders and sustain it through
adopting and implementing the
highest standards of accountability and
transparency and issues its Governance
Report accordingly.
In this report, ADAA follows a set of
guiding principles, regulations, ideal
fundamentals and processes that are
integrated under the following main
components of governance:
ADAA ensures that all its processes and operations adhere to
the utmost principles of transparency whereby its Chairman has
welcomed and adopted various channels of communication with
the employees providing adequate communication relating to the
overall strategy, ADAA’s yearly plan and its performance through
events such as the Annual Meeting held at the beginning of every
year as well as the periodic management meetings that cover
different topics of importance and impact on ADAA’s work and
verifies that the operational activities are in line with the annual
plan and are consistent with the vision and overall strategy of the
Abu Dhabi Government.
ADAA developed a strategic planning framework based on its
strategic priorities. ADAA also developed work methodologies
for every output and service it provides in accordance with
international best practices and is considered a guideline for
ADAA’s actions and the provision of its services. The framework
and methodologies are constantly revisited and reviewed to
ensure their validity and relevance to the current needs of Abu
Dhabi and relative stakeholders.
Leadership
Institutionalization
Leadership External Reports
Institutionalization
Performance
Management
Control
ADAA
Mandate
Objectives
Responsibilities
Outputs
Outcomes
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ADAA
views its people as its
primary asset as it includes
top-tier professionals from
multicultural backgrounds, unified by the ADAA vision,
mission and values.
ADAA
is committed to developing
and attracting Emiratis to
the Accounting and Audit
profession. The Authority has equally defined career paths
and growth plans for all employees and promotes the
success of ADAA as one team.
ADAA Chairman
Internal Audit
Financial Audit and
Examination Group
Performance and Risk
Assurance Group
Support Services
Group
Legal Affairs and
Investigations Department
Deputy Chairman
ADAA has also designed its organizational structure based on its operating model to fulfill its
responsibilities and achieve its objectives as shown in the figure below:
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 13
Performance Management
ADAA’s performance is measured based on a set of
internationally recognized performance metrics to
ensure the objectivity of these measurements. ADAA
has developed three types of performance measures
as shown below:
• Outcome Performance Indicators: to measure
the impact of ADAA’s work on the state or condition
of the society, the economy, or the environment and
any change in that state or condition.
• Output Performance Indicators: to measure the
cost, quantity, quality and timeliness of our services
(outputs such as: the cost of the reports, the number
of reports, the quality of the recommendations,
issuing reports on time).
• Internal Performance Indicators: to measure
the performance of ADAA’s internal departments
and units.
ADAA implements a remuneration policy and procedure
for its employees as well as a performance management
system that ensures fair evaluations of individual
performance and identifies a clear career path and
progression plan for each one. ADAA employees are
exposed to training programs and workshops that aim
primarily at enhancing their capabilities, skills, knowledge
and competence to grow within their careers.
ADAA considers communication a crucial and
indispensable approach to measure its performance
and achieve transparency with its stakeholders;
be it Subject Entities or the general public. ADAA
launched many initiatives to enhance awareness of
its role and responsibilities that included launching
its new identity and its official website www.adaa.
abudhabi.ae along with other initiatives to improve
the accounting and audit professions and has created
communication channels with its Subject Entities to
encourage knowledge sharing such as the monthly
e-newsletter “ADAA IFRS Digest”, the e-maarifa
web portal, Abu Dhabi Audit Management portal in
addition to networking seminars, workshops, and
panel discussions on new services and policies.
ADAA seeks feedback from its Subject Entities on the
review process executed after the issuance of each
audit and assurance report. The feedback received
constitutes an important guide to the effectiveness of
existing practices and further developments that may
be required.
Internal
Performance
Indicators
Output
Performance
Indicators
Outcome
Performance
Indicators
Performance
Standards Sets
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All ADAA employees take the oath below before the ADAA Chairman upon
joining the Authority as per Article (9) of Law (14) of 2008 establishing ADAA:
I swear by almighty God
to be loyal to the ruler and the country,
to honor the constitution and law,
to work to safeguard public funds,
to perform my duties honestly and sincerely
and to maintain the confidentiality
of all businesses.
View of the Lulu island in Abu Dhabi whose unspoiled nature stays
in contrast with the rapidly developed city, UAE.
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 15
Internal Control:
ADAA
annually reviews its internal
controls, including financial,
operational, compliance controls
and risk management to ensure that its processes are in line
with best practice, laws, rules and regulations.
ADAA also implemented a rigorous Code of Conduct
safeguarding business and professional ethics and ensuring
that all ADAA employees understand and abide by this code
of conduct, additionally ADAA has established a “Compliance
Officer” role whose responsibility is to handle the receipt of
complaints related to employees and to ADAA’s activities,
examine complaints and prepare a memo of the outcomes
of the examination and make recommendations with the
necessary action.
External Audit:
ADAA
’s financial statements are
reviewed and audited by an
external auditor. For the year
2016, KPMG was reappointed in accordance with Statutory
Auditors Appointment Rules issued by ADAA to review and
audit the interim and annual financial statements of ADAA.
KPMG was reappointed for a fee of AED 95,000.
ADAA
prepares an annual plan that
comprises its operational
intentions, objectives and
performance targets for the coming year. The plan also
includes ADAA’s strategy, priorities, outputs, outcomes and
performance measures. In addition, ADAA prepares an annual
report “Accountability Report” to provide information about
the following:
• Comparison of actual performance against set target, as well
as other information necessary to assess ADAA’s performance
during the financial year.
• Governance Report.
• ADAA’s annual financial statements accompanied with the
Statutory Auditor’s report.
External
Reports
Control
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Part 02
ADAA outputs
PAGE 2 - 15
1. Introduction 18
2. ADAA Audit Methodology 19
3. Financial Audit and Examination 20
4. Performance and Risk Assurance 22
5. Supporting Accountability 25
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Dramatic sunrise view of Liwa Desert in Al Dhafra Region of Abu Dhabi
18 | aBU DHaBI aCCOUNT aBILITY aUTHORITY | AccountAbility RepoRt 2017
ADAA Law
1. Financial Audit
Financial
Audit and
Examination
Performance
and Risk
Assurance
Supporting
Accountability
Audit the Government
consolidated Financial Reports
and Subject Entities’ Financial
Reports.
2. Financial Examination
3. Financial Management
Assessment
4. Internal Audit Function
Assessment
5. Procurement Review
6. Service & Output Review
7. Accountability Reports
8. Advisory
9. Special Examination
10. ADAA Knowledge
Centre
ADAA RESPONSIBILITIES ADAA OUTPUTS
Review performance and risk by
examining the efficiency, effectiveness
and economy of the financial and
operational activities of Subject Entities
and ensuring compliance with laws,
regulations and rules and governance
guidelines.
Submit reports to HH the Crown
Prince as well as carry out any
other functions and duties
requested by HH the Crown Prince.
Provide advice and recommendations
and perform other procedures and
services to Subject Entities as the
ADAA Chairman deems reasonable
and appropriate.
Investigate complaints referred to
ADAA and other violations it may
discover as well as examine violations
investigated by Subject Entities.
Train and qualify UAE National
graduates of universities
and institutions.
1. INtrODUCtION
ADAA
established a number of outputs enabling the execution of its mandate as
outlined in its Establishment Law. The following table demonstrates ADAA’s
outputs in relation to the mandate item it fulfills:
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2. aDaa aUDIt MEtHODOLOGy
ADAA
performs its audit assignments in accordance with a standardized audit
methodology to ensure the quality of audit work performed which is then
reflected in its reports and outputs. ADAA’s audit methodology involves three
main phases where each phase includes a number of steps as shown in the following figure:
Abu Dhabi Accountability Authority audit methodology was developed in accordance with the standards and
guidelines issued by the International Federation of Accountants (IFAC), The International Organisation of
Supreme Audit Institutions (INTOSAI) and other internationally accepted standards.
4
5
12
16
3
6
11
15
2
7
10
1
8
9
13
17
14
Prepare and send
engagement letter
Hold “opening
meeting” with
management
Hold “closing“ meeting
with management
Prepare draft report
Collect data
Coordinate with the
Entity's management
and set time schedule
Present findings
to the Entity
Review report
Define audit scope
criteria and prepare
audit program
Analyse data
Draft findings
Present report to
ADAA Chairman
Understand
the business
Identify findings
Collect and document
evidence and link
them with findings
Prepare and issue
final report
Communicate with those charged with
governance and follow up
In addition, ADAA developed specific “audit criteria” for every output of the Financial Audit and Examination
and Performance and Risk Assurance groups. The high quality of reports detailing the encompassed findings
and recommendations are directly dependent on the presence of auditing standards developed based on
internationally recognized best practices.
Abu Dhabi Accountability Authority performs its audit assignments based on previously defined ”audit criteria”
prepared in accordance with generally accepted standards and best practices applied on the subject of the audit.
Planning Phase
Execution Phase
Reporting Phase
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Auditor Appointment Audit Execution Audit Conclusion and Reporting
1. Auditor Independence
2. Expertise in the business of
the entity
3. Technical resources and quality
4. Technical and financial
proposals evaluation
Audit Planning
5. Audit planning memorandum
6. Understand the entity business
and environment
7. Assess risk of significant
misstatement due to fraud or
error
8. Test of controls
9. Perform analytical procedures
10. Significant balances and
transactions
11. Applied accounting framework
12. Accounting estimates
13. Related parties transactions
14. Subsequent events
15. Going concern
16. Management representations
17. Use of expert work
18. Litigations and claims
19. Conclude the assignment and
evaluate result
20. Form the opinion and prepare
the report
Legal, Regulatory and Other
Requirements
21. Compliance with relevant laws
and regulations
ADAA
developed 3 types of outputs under this group with the objective of enabling
it to provide assurance on the accuracy of the Government’s Consolidated
Financial Statements and the Financial Statements issued by Subject Entities:
• Financial Audit
• Financial Examination
• Financial Management Assessment
3. FINaNCIaL aUDIt aND ExaMINatION
3.1 Financial Audit
Audit the Consolidated Financial Statements of the Government of Abu Dhabi to express an opinion whether
the financial statements present fairly, in all material respects, the financial performance of the Government of
Abu Dhabi.
ADAA audits the Consolidated Financial Statements of the Government of Abu Dhabi in accordance with
International Standards on Auditing (ISA), the purpose of which is to express an opinion on whether the financial
statements present fairly, in all material respects, the financial performance of the Government of Abu Dhabi,
according to International Public Sector Accounting Standards (IPSAS).
3.2 Financial Examination
Ensure that Subject Entities implement the Statutory Auditors Appointment Rules (SAAR) issued by ADAA when
appointing a Statutory Auditor, perform financial examination of the Subject Entity’s financial statements and
examine the work undertaken by the Statutory Auditor to provide assurance on the accuracy of the financial
statements of Subject Entities.
ADAA developed 390 audit criteria spread over 21 standards within 5 elements as illustrated in the following
figure:
Audit Elements and Standards for Financial Examination
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 21
Audit criteria for Financial Examination were developed based on the following:
• Statutory Auditors Appointment Rules issued in accordance with Law Number 14 of 2008.
• International Standards on Auditing (ISA) issued by the International Federation of Accountants (IFAC).
• Accounting standards used for preparing the financial statements: i.e. IPSAS or IFRS.
ADAA’s Financial Examination report findings are classified as follows:
• Significant improvement required: Significant finding that requires immediate action.
• Needs improvement: Finding indicates issues on audit quality that require action to improve the audit.
• Needs improvement - specific exception noted: Had this exception been noted during the audit
process, it might have resulted in an adjustment.
3.3 Financial Management Assessment
Assess the financial management at a Subject
Entity and its conformity with best practices to
ensure efficiency of the preparation of its financial
statements and reports.
Audit criteria for Financial Management Assessment
were developed based on good practice statements
issued by the Chartered Institute of Public Finance
and Accountancy (CIPFA). CIPFA is a member of the
International Federation of Accountants (IFAC).
The good practice statements developed by the
institute are structured around three progressive
styles:
• Securing stewardship
• Supporting performance
• Enabling transformation
The CIPFA good practice statements are structured around four management dimensions:
• Leadership
• People
• Processes
• Stakeholders
The financial management is assessed against 38 Good Practice Statements based on how far each Statement is
met. The financial management is rated, for each Statement, on a scale from 1-4 with 1 being “not-applied” and
4 being “leading” based on 442 criteria distributed over the dimensions of the financial management.
Underdeveloped
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22 | aBU DHaBI aCCOUNT aBILITY aUTHORITY | AccountAbility RepoRt 2017
4. PErFOrMaNCE aND rISK aSSUraNCE
The “Internal Audit Assessment Methodology” was developed based on best practices and in accordance with
the standards issued by the Institute of Internal Auditors (IIA).
ADAA
developed 3 types of outputs under this group with the objective of ensuring
Subject Entities’ resources and funds are managed, collected and expended
efficiently, effectively and economically and in compliance with the relevant laws
and regulations and governance rules:
• Internal Audit Function Assessment
• Procurement Review
• Service and Output Review
4.1 Internal Audit Function Assessment
Assess the Internal Audit function at Subject Entities to ensure effectiveness of risk management activities,
control and governance at Subject Entities. ADAA has developed 92 audit criteria to assess the internal audit
activity spread over 18 standards within four main elements.
The following figure shows the elements and evaluation standards:
Independence and Objectivity
1. Independence and Objectivity of the
Internal Audit Function
2. Aspects of Organizational Independence
3. Direct Interaction with the Board
Organization and Emiratization
4. Developing the Internal Audit Strategic Plan
5. Internal Audit Function Charter
6. Compliance Officer Role
7. Organizational Structure and Resource Capabilities
8. Training & Development
9. Emiratization Plans
Methodology and Technology
16. Internal Audit Methodologies and Manual
17. Use of Technology
18. Security, Maintenance and Upgrade
Risks and other Internal Audit Reports
10. Risk Assurance Report
11. Audit Planning & Risk Assessment
12. Internal Audit Reviews
13. Follow-up Process
14. Quality Assurance and Improvement Program
15. Management of 3rd Party Service Providers, if any
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 23
Each of the 4 elements are assessed; the outcome of assessing all elements allows the Internal Audit Activity to
achieve an overall “Fully compliant” or “Partially Compliant” or “Non-Compliant” score. Due to the dissimilarity
of the significance of those elements, each element was assigned a specific weight according to its criticality.
Internal Audit Activity is classified within the following 3 categories:
Category Description
Fully Compliant More than 85% of the total assessment criteria have been met
Partially Compliant 50% to 85% of the total assessment criteria have been met
Non-Compliant Less than 50% of the total assessment criteria have been met
Audit Elements and Standards for Procurement Review
Procurement Regulatory
Framework
1. Procurement Policy
2. Authorities and
Delegations
3. Conflicts of Interest
4. Procurement Manual
Record Keeping and
Reporting
12. Documentation
13. Procurement Activity
Procurement
Practices
5. Procurement Planning
6. Registration and Classification
7. Purchase Requisition
8. Prequalification
9. Request for and Receipt of
Proposals
10. Proposals Evaluation
11. Award
4.2 Procurement Review
Review procurement processes at Subject Entities to verify their efficiency, effectiveness and economy and
ensure their compliance with applicable regulations and procedures.
ADAA has developed 74 audit criteria to review the Procurement spread over 13 standards within three main
elements: Procurement Regulatory Framework, Procurement Practices and Record Keeping and Reporting.
The following figure shows the elements and evaluation standards:
Procurement Review Methodology was
developed based on the pronouncements
made by the Chartered Institute of Purchasing
and Supply (CIPS) and in line with the
prevailing Laws and Regulation relating to the
Procurement applied in the Emirate of Abu
Dhabi.
Observations resulted from the Procurement
Review are classified according to their
significance impact as follows:
Observation with medium risk exposure
Observation that refers to a weakness in the
procurement process that requires corrective action(s).
Observation with significant risk exposure
Observation of a significant effect on the procurement
process that requires immediate action to ensure non-
recurrence.
24 | aBU DHaBI aCCOUNT aBILITY aUTHORITY | AccountAbility RepoRt 2017
4.3 Service and Output Review
Review operations and processes used by Subject Entities to provide services or outputs for the purpose of
ensuring the effective, efficient and economic use of public funds, as well as conformance with applicable laws
and leading practices. It also includes Capital Projects Review addressing the review of infrastructure assets and
critical projects under development by Subject Entities for which these projects represent one of their outputs.
ADAA develops set of criteria and standards within three main elements for each review as illustrated in the
following chart:
*Audit standards of applied practice differ from one audit to another based on the audit subject
ADAA has also developed a number of criteria distributed into 17 audit standards to review the projects within
three main elements based on Project Management Standards issued by the Project Management Institute (PMI)
as shown below:
Program Management
1. Program Governance
2. Program Planning and Standardization
3. Program Monitoring and Reporting
Project Management
Planning Execution and Monitoring Closeout
1. Project Funding
2. Project Planning
3. Design Management
4. Procurement Management
1. Scope and Contract Management
2. Cost Management
3. Schedule Management
4. Quality Management
5. Risk Management
6. Health, Safety, and Environmental
Management
7. Communications and Stakeholder
Management
8. HR Management
1. Facility Closeout
2. Financial Closeout
Audit Elements and Standards for Service and Output Review
Governance
Framework Practices* Performance Metrics
and Reports
AD Emirate Laws
and Policies
Public Benefits
of Service
Outside of
ADAA’s Scope
Outside of
ADAA’s Scope
1. Regulatory Framework
2. Strategy
3. Service Operational
Model
4. Annual Plan
5. Work Manuals
6. IT, Archival
and Continuity
Management
7. Conflict of Interest
Management
1. Issuance of
licenses
2. Renewal of
licenses
3. Revoking of
licenses
4. Inspection and
Quality Control
5. Sanctioning of
violators
1. Performance
Metrics
2. Data Integrity
3. Performance
Reports
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 25
ADAA developed 4 types of outputs under this group to support holding Subject Entities accountable for
their roles and responsibilities, in addition to training and developing UAE Nationals and supporting sharing
knowledge and leading practices:
• Accountability Reports
• Advisory
• Special Examination
• ADAA Knowledge Centre
5.1 Accountability Reports
ADAA prepares and submits reports to His Highness the Crown Prince of Abu Dhabi about its work and carries
out other functions, duties and responsibilities requested by His Highness.
5.2 Advisory
ADAA provides advice to Subject Entities based on the Subject Entities request and upon approval of ADAA
Chairman. ADAA provides its advice in accordance with its “Advisory Provision Methodology” and in light of
the information provided by the Subject Entity.
5.3 Special Examination
ADAA investigates complaints referred to ADAA and violations discovered when carrying out its work at Subject
Entities and examines violations investigated by Subject Entities.
The “Special Examination Methodology” was developed based on best practices and in accordance with
applicable laws and regulations in the Emirate of Abu Dhabi.
Financial Violation Investigation
ADAA investigates complaints forwarded to it from His Highness the Crown Prince of Abu Dhabi and the
violations discovered in the course of its work with the objective of identifying the nature of these violations
and the individuals responsible in order to hold them accountable.
ADAA may investigate these violations directly or assign the responsible officer (Compliance Officer) at the
Subject Entity if he/she has not investigated the same violation before.
Financial Violation Examination
ADAA’s Establishment Law requires Subject Entities to immediately notify ADAA upon discovering any
violation or the occurrence of any incident that resulted in a violation. It also obliges these Subject Entities
to send a copy of the investigation documents once completed supported by the investigation records and
actions taken within a maximum period of ten days from the date of its issuance.
ADAA examines the investigation documents sent by the Subject Entity to ensure the objectivity of the
investigation and to determine the cause of the violation with the corrective actions taken by the Subject
Entity to ensure eliminating future recurrence of the same violations.
5. SUPPOrtING aCCOUNtaBILIty
26 | aBU DHaBI aCCOUNT aBILITY aUTHORITY | AccountAbility RepoRt 2017
UNESCO World Heritage Site, Al Ain, UAE
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 27
5.4 ADAA Knowledge Centre
ADAA developed 4 types of secondary outputs under this output
with the objective of training and developing UAE Nationals and
supporting sharing knowledge and leading practices:
1. Qualifying Emirati Auditors
2. Research and Knowledge Sharing
3. National and International Representation
4. Seminars and Workshops
Qualifying Emirati Auditors
Develop specialized training programs with the objective of
contributing to the training and development of Emirati Auditors
and assisting them to acquire the necessary skills and knowledge to
advance and excel in their careers. ADAA developed the “Auditors
Development Program” which was designed as a fast track, all
encompassing opportunity that takes young Emirati applicants
from entry level Assistant Auditor to a Chief Auditor over a
period of 7 years. Professional training programs were developed
specifically for Emiratis in the Accounting and Audit profession such
as the Certified Public Accountant (CPA) examination preparation
course and the Certified Internal Auditor (CIA) examination
preparation course. ADAA also offers internships on an annual
basis to undergraduates studying to attain a Bachelor’s Degree in
Accountancy, Business Administration, Economics, or Finance who
may be seeking employment experience and helping them gain a
thorough understanding of the audit profession and what to expect
as a Financial or Risk Auditor.
Research and Knowledge Sharing
ADAA set up this output with the objective of creating awareness
of best practices implemented in the public sector and on an
international level as well as developing a local knowledge base and
resources hub that contributes to the development of government
performance.
ADAA launched many research and knowledge sharing initiatives
such as:
Research and Knowledge Management )RKM( Function:
ADAA established this function in 2009 with the objective
of developing, codifying and disseminating knowledge more
effectively across all areas of ADAA’s operations as well as
contributing towards supporting the research and knowledge
needs and capabilities of Subject Entities.
Research and
Knowledge
Sharing
Qualifying
Emirati
Auditors
28 | aBU DHaBI aCCOUNT aBILITY aUTHORITY | AccountAbility RepoRt 2017
Grass in a mist in a desert at sunrise, UAE
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 29
National and
International
Representation
Seminars and
Workshops
Accounting and Auditing Standards Desk )AASD(: ADAA
established the AASD to supervise issuing technical papers in
accounting and auditing and issues a monthly e-newsletter about
the International Financial Reporting Standards (IFRS) titled “ADAA
IFRS Digest”, a quarterly bulletin on the International Public Sector
Accounting Standards (IPSAS) and Illustrative IFRS and IPSAS entity
and consolidated and whole of Government Financial Statements.
AASD publications focus primarily on accounting matters related
to preparation of Subject Entities’ financial statements, and assist
in eliminating inconsistencies in the interpretations of current
accounting standards.
E-maarifa: In 2010, the e-maarifa web portal was launched
with the objective of creating a knowledge platform across the
Government and Subject Entities that enables participants to
share experience and transmit knowledge more effectively across
common operational functions.
Practice Guides: ADAA identifies best practices that are
internationally recognized and implemented and issues practice
guides for use throughout the public sector.
National and International Representation
Participate actively in the regulation and supervision of the accounting
and audit profession through acquiring memberships of various
national and international organizations that promote and support
accountability and transparency and contribute to the enhancement
of laws and regulations in this area.
ADAA was the first organization in the Middle East to become a
member of the International Forum of Independent Audit Regulators
(IFIAR) and to be elected to sit on its Advisory Council.
Seminars and Workshops
Organize seminars and workshops for Subject Entities on matters
that complement ADAA’s primary role and fall within its area of
expertise such as:
Abu Dhabi Technical Forum )ADTF(: This Forum brings together
the UAE based accounting and audit technical professionals of
the international audit firms. Discussions focus on current and
expected problematic accounting treatments.
The aim of the forum is to eliminate the local inconsistency in
application of accounting standards by building consensus on the
interpretation of accounting standards and the acceptability (or
not) of accounting treatments, thereby improving the comparability
and quality of financial reporting in Abu Dhabi.
Internal Audit Seminar: This event brings together the heads of
the Internal Audit functions at Subject Entities to discuss processes,
internal controls, policies, issues and challenges as well as share
knowledge of best practices and developments.
30 | aBU DHaBI aCCOUNT aBILITY aUTHORITY | AccountAbility RepoRt 2017
Part 03
2016 Report
& 2017 Plan
PAGE 30 - 56
1. 2016 Achievements Highlights 32
2. Output Group 1: Financial Audit
and Examination 35
3. Output Group 2: Performance and
Risk Assurance 40
4. Output Group 3: Supporting
Accountability 50
5. 2017 Work Plan 57
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 31
Saadiyat Island in Abu Dhabi, UAE
32 | aBU DHaBI aCCOUNT aBILITY aUTHORITY | AccountAbility RepoRt 2017
1. 2016 aCHIEVEMENtS HIGHLIGHtS
The following is a summary of highlights of ADAA’s
Achievements during 2016:
• Audited the financial statements of the
Government of Abu Dhabi in accordance
with international standards and issued the
independent audit report with an “unqualified”
opinion.
• Performed 52 Financial Examinations and ensured
Subject Entities compliance with their budgets
and the requirements of international standards
regarding the issuance of the financial statements
and continued monitoring the compliance
of Subject Entities with Statutory Auditor
Appointment Rules (SAAR).
• Assessed the Internal Audit function of 55 Subject
Entities to ensure the efficiency and effectiveness
of Internal Audit activities.
• Reviewed services and outputs related to the
Farmers Services Center, The Center of Waste
Management, Schools Operations, and Zayed
Higher Organization for Humanitarian Care and
Specialized Needs.
• Conducted a Cost Optimization Review covering
the Basic Program of medical insurance.
• Organized the 10th Inspection Workshop of the
IFIAR in Abu Dhabi alongside 166 participants
from 43 jurisdictions. These workshops are
organised to enable independent audit regulators
to meet and discuss inspections processes, to
learn and leverage from each other, and to
consider similarities and differences among their
practices and methodologies.
• Participated in the IFIAR plenary meeting in
London.
• Submitted a number of accountability reports
on important issues, examined and investigated
complaints received or violations discovered and
issued Special Examination reports.
• Attended the Institute of Internal Auditors’ Global
Conference held in New York, USA.
• ADAA achieved ISO 14001:2015 certification in
Environmental Management systems issued by
the British Standards Institute.
• Continued monitoring the outputs of “Auditor
Development Program” related to the training
and development of Emirati Auditors and
continued the secondment of Emirati employees
joining the “Auditors Development Program” to
the big audit firms.
• ADAA continued to chair the Abu Dhabi Technical
Forum (ADTF) unifying accounting interpretations
of International Financial Reporting Standard and
International Standards on Auditing between
ADAA, audit firms and accounting and auditing
professionals in the UAE.
• Issued technical papers that addressed complex
accounting matters and helped in unifying
accounting interpretations.
• Received a delegation from the Securities and
Commodities Authority, at their request, where
the members of this delegation were briefed on
the practices and tools used by ADAA in executing
its reviews and examinations.
• Continued providing advisory and support to
Subject Entities upon their request and assisted
Subject Entities to build their capabilities in
internal audit.
• Maintained the support related to the
“e-Governance Portal” at the 80+ entities that
have opted to implement it.
• Completed research papers, several international
benchmarking studies, surveys, in addition to
continuing the issuance of the monthly Global
Accountability & Transparency Newsletter.
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 33
• Enhanced the value of the e-maarifa portal for
sharing knowledge and best practices which
includes 550+ members from 95 Abu Dhabi
Government Entities.
• ADAA attended the Association of Certified Fraud
Examiners (ACFE) first middle east conference
attended by over 300 global anti-fraud specialists.
• ADAA Knowledge Centre has maintained its
status as an approved training provider by the UK
Institute of Leadership and Management.
The following table provides an overview of the number of reports issued by ADAA through the Financial
Audit and Examination Group and the Performance and Risk Assurance Group:
Description
Target Actual
2016 2016
Financial Audit and Examination Group 53 53
Performance and Risk Assurance Group 60 60
Supporting Accountability 30 31
Draft Legalization and Regulation 9 9
Total Number of Reports 152 153
34 | aBU DHaBI aCCOUNT aBILITY aUTHORITY | AccountAbility RepoRt 2017
The following chart provides the total number of reports by output since 2008:
Number of reports by output since 2008
Further, the following chart provides the total number of reports for each sector since 2008:
Total number of reports by sector since 2008
FE
IAFA
PR
SOR
FA
FMA
SOE Sub.
SOE
Infra. & Env.
Public Admin.
Social Devt.
Human Capital
Econo. Devt.
1,243
Total Reports
1,243
Total Reports
565
420
118
69
42
29
428
310
135
105
87
98
80
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 35
The Financial Audit and Examination Group comprise the following outputs:
• Financial Audit
• Financial Examination
• Financial Management Assessment
2.1 Financial Audit
ADAA completed its audit of the financial statements of the Abu Dhabi Government for the year ended 31
December 2015 and issued an unqualified opinion. The financial statements were prepared on a cash basis
in accordance with International Public Sector Accounting Standards (IPSAS). ADAA conducted its audit in
accordance with International Standards on Auditing (ISA).
2. OUtPUt GrOUP 1
FINANCIAL AUDIT AND ExAMINATION
This output group focused on the audit of the financial statements of the Government of Abu Dhabi, and
examination of the financial statements of Subject Entities in accordance with ADAA methodologies.
This group continues to advise Subject Entities how to improve the quality of their financial reporting and
specifically in relation to their financial statements basis of preparation varying according to the Subject Entity’s
operations, with a focus on having all Subject Entities prepare their financial statements using IPSAS accrual basis
of accounting or IFRS based on the nature of their activities. As a result, major changes have occurred as to the
basis of preparation of the financial statements of the Subject Entities since 2009.
The following charts demonstrate the change in Subject Entities and State Owned Enterprises (Government
Companies) financial statements basis of preparation:
State Owned Enterprises “SOEs” Financial
Statements Basis of Preparation
Subject Entities )excluding SOEs(
Financial Statements Basis of
Preparation
International Standards
2016 2016
Other Standards
39
36 | aBU DHaBI aCCOUNT aBILITY aUTHORITY | AccountAbility RepoRt 2017
2.2. Financial Examination
During 2016, ADAA examined 52 independent audit reports and work of statutory auditors, appointed by
Subject Entities. The financial statements and audits were selected in accordance with the prioritization criteria
developed by ADAA.
ADAA’s Financial Examination Comments Summary
ADAA issues its report upon completion of the Financial Examinations and sends it to those charged with governance
at Subject Entities and to the statutory auditors for future improvements implementation and follow up.
The Financial Examinations continue to highlight a number of areas where improvements are required as follows:
• Financial statements issuance timeliness
in accordance with the relevant Circulars
and best practices.
• Issuance of financial statements in Arabic
language in accordance with the relevant
decrees.
• Payment of annual bonuses and
incentives for employees in accordance
with the relevant resolutions issued.
• Presentation of the comparison between
budget and actual spending in the
financial statements in accordance with
the relevant resolutions issued.
• Management’s reliance on statutory
auditors for financial reporting and
accounting matters.
• Applying the second edition of SAAR
issued in September 2014.
• Active participation of the UAE national
audit team member in all stages of the
audit engagement.
• Compliance with Article (20) of ADAA’s
Establishment Law which requires each
Subject Entity to inform ADAA as soon as
any violation is discovered.
• Execution of annual budget in
accordance with applicable laws and
regulations.
• The statutory auditor’s commitment to the
number of work hours provided in their
audit proposal.
• The extent of the statutory auditor’s
independence in mind and in appearance
from any of the parties that have an interest
in the financial statements in accordance
with the SAAR.
• Estimation of the fair value of investment
properties in accordance with the
requirements of IFRS and IPSAS.
• Consistency between cash generated from
operating activities with profits recognised
in the income statements taking into
consideration IFRS requirements.
• Recognition of foreign investments’ results
of operations in accordance with the
requirements of IFRS.
• Validity of amounts recorded as due from
the Government of Abu Dhabi in the
statement of financial position.
• Impairment testing of goodwill and
intangible assets in accordance with IFRS.
• Impairment testing of assets if indications of
impairment exist.
• Recognizing revenue in the financial periods
to which they relate and in accordance with
the requirements of IFRS and best practices
in the relevant sector.
Comments Related to the Entity
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 37
• Depreciating assets over the estimated
useful lives during which these assets
are expected to provide future economic
benefits.
• Preparation of consolidated financial
statements in accordance with the
requirements of IFRS and IPSAS.
• Recognition of all assets related to projects
and capital initiatives.
• Recognition of transactions with the
owners in their capacity as owners in the
owners’ equity statement in accordance
with guidance provided by IFRS.
• Presentation of government contributions
in the financial statements in accordance
with approved operational budgets and
received contributions.
• Recognition of all assets used by entities
to generate revenue in their financial
statements.
• Assessing the recoverability of financial
facilities and loans.
• Accounting treatment for finance and
operating lease arrangements.
• Communication with those charged with
governance throughout the audit phases
in accordance with the International
Standards on Auditing.
• Assess the ability to continue as a going
concern for some entities.
• Ensure the validity of assumptions, including
the discount rate used in the preparation
of the estimated cash flows in investments
valuation and calculating the fair value of
assets.
• Test the existence and completeness of
revenue and incorrect presentation of
government grants and funding.
• Involvement of independent quality review
partner.
• Sufficiency of work performed by IT audit
specialists.
• Fraud risk assessment procedures.
• Test and rely on the internal controls and
understand the work of internal auditors.
• Compliance with relevant laws and
regulations.
• Group Audits and related parties
transactions.
All examination comments are set out in detail in
the examination reports sent to Subject Entities
for implementation and improvement in the
future. These reports include the responses and
explanations provided by the Statutory Auditors
and ADAA’s final conclusions and views on each
examination comment.
Comments Related to the Entity
Comments Related
to the Statutory Auditor
38 | aBU DHaBI aCCOUNT aBILITY aUTHORITY | AccountAbility RepoRt 2017
comments
900 407 380 113
Analysis of Financial Examination Comments
ADAA’s comments in the Financial Examination report are classified into “Significant improvement required”,
“Needs improvement” and “Needs improvement - specific exception noted” based on their nature and
significance to the financial statements of Subject Entities and the Statutory Auditor’s audit process.
ADAA’s financial examination reports included 900 comments in 2016 classified as follows:
Significant improvement required
407 comments in 2016 were classified into this category. These comments require the immediate focus of the
Subject Entities’ management and their statutory auditors, since in our judgement they have a significant effect
on the financial statements of the Subject Entities.
Needs improvement
The majority of our 380 comments in this category focus on audit quality resulting from incomplete documentation
of audit procedures performed. If such procedures were performed, as entailed in the International Standards on
Auditing or other applicable standards, a potential adjustment to the Subject Entities’ financial statements might
have been noted.
Needs improvement – specific exception noted
113 comments in 2016 were raised highlighting specific exceptions to the financial statements audit process
and/or the management’s financial statements closing process. Had these exceptions been noted during the audit
process, they might have resulted in an adjustment to the nature and extent of audit procedures performed and/
or the financial statements of the Subject Entities.
Generally, these comments related to areas including, but not limited to, specific accounting treatments resulting
from incorrect application of IFRS or IPSAS, financial statements presentation and disclosures, and insufficient
audit procedures in areas affecting various captions of the financial statements such as inventories, related
parties, estimates and fair values and communication with those charged with governance.
Classification of Financial Examination Comments. )900 comments(
Significant improvement
required
Needs improvement Needs improvement -
specific exception noted
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 39
Below is an analysis of independent audit reports examined by ADAA in 2016, comments raised and their
respective classification (excluding 298 comments addressed only to Subject Entities):
The objectives of SAAR are to regulate the process of appointing
the Statutory Auditors across all Subject Entities, which includes
all Abu Dhabi Government public entities and state owned
enterprises, and to ensure that the Statutory Auditors fulfill their
professional duties in accordance with the highest standards
of quality and performance. The SAAR also aims at developing
the skills and expertise of the UAE Nationals in the audit and
accounting fields by requiring Statutory Auditors to include, as
a minimum, one UAE National in the audit team.
During 2016, ADAA continued monitoring the Subject Entities
implementation of SAAR. ADAA’s Financial Examination reports
included 109 comments related to the application of Statutory
Auditors’ appointment and re-appointment procedures.
The second edition of SAAR was issued in September 2014.
According to the SAAR, Subject Entities shall appoint Statutory
Auditors through circulating requests for audit services
proposals to at least four Statutory Auditors. Statutory Auditors
may be reappointed for additional periods, up to a maximum of
three consecutive years, subject to an annual evaluation by the
Subject Entity on the quality of audit services provided and the
competence of the audit team while taking into consideration
comments raised by ADAA.
Statutory Auditors cannot be retained for a period exceeding
four consecutive years, and Subject Entities can only appoint the
same Statutory Auditor or the audit engagement partner after
a cool off period of four years from the date of the last audit
services provided by either of them.
Implementation
of SAAR
Statutory Auditor
Number
of reports
examined
Comments classification
Total
comments Significant
improvement
required
Needs
improvement
Needs
improvement
- specific
exception
noted
Firm 1 18 75 93 39 207
Firm 2 13 34 79 34 147
Firm 3 10 44 59 17 120
Firm 4 8 34 46 10 90
Firm 5 2 14 10 8 32
Firm 6 1 2 2 2 6
Total 52 203 289 110 602
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3.1 Internal Audit Function Assessments
During 2016, ADAA issued 55 Internal Audit Function Assessment reports with the purpose of identifying gaps
in performance, in addition to areas for improvement to bring the internal audit role at Subject Entities to meet
benchmark practices. Another key objective from these assessments is to obtain assurance on the role of the
Internal Audit Functions in highlighting areas of risk exposure at Subject Entities.
Internal Audit Functions were assessed on a series of 4 elements: Independence and Objectivity, Organization
& Emiratization, Risk Assessment and Other Internal Audit Reports, and Technology.
Internal Audit Function Assessment Reports Summary
During 2016, ADAA issued 1,642 recommendations to improve the Subject Entities’ control environment and to
support the enhancement of the governance structure.
In line with ADAA methodology, the final results of those assessments of the Internal Audit Functions at
Subject Entities were presented, when requested, to the Audit Committees.
The figure below recaps the distribution of recommendations by each of the element:
Number of recommendations by element:
This output group provides assurance on the efficient, effective and economic utilization of resources by Subject
Entities and its compliance with the laws and regulations and governance guidelines.
ADAA since its establishment has aimed through this group to enhance governance practices at Subject Entities;
ADAA has thus urged and supported Subject Entities in establishing Audit Committees and Internal Audit
Functions.
The Performance and Risk Assurance Group comprise the following outputs:
• Internal Audit Function Assessments
• Service and Output Reviews
Independence and Objectivity
Organization and Emiratization
Risk Assurance and
other Internal Audit Reports
Technology
3. OUtPUt GrOUP 2
PERFORMANCE AND RISK ASSURANCE
0 100 200 300 400 500 600 700 800
277
493
718
154
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 41
Out of 55 Subject Entities, 34 were rated as “Partially Compliant” based on the criteria established by ADAA,
while 21 were rated as “Non Compliant”.
The following figure shows the results of the internal audit function assessment conducted in 2016:
Following is an analysis of certain outcomes of the assessments in 2016:
Independence and Objectivity of the Internal
Audit Activity
32% of the entities whose Internal Audit
Functions were assessed have implemented the
necessary protocols to safeguard and maintain
the independence and objectivity of the Internal
Audit activity by restricting all related aspects to the
Chairman or the Board of Directors or the Audit
Committee, depending on the corporate structure
of the concerned entity.
Emiratization in Internal Audit Functions
70% of the entities whose Internal Audit Functions
were assessed employed UAE Nationals, including
several heads of these functions.
Partially Compliant Non Compliant
Subject
Entities
55 34 21
No 17% No 22%
Yes 70% Yes 32%
Not applicable 11% Not applicable 31%
Partially addressed 2% Partially addressed 15%
Results of the Internal Audit Function Assessments
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3.3 Services and Output Review
The Service and Output Review deliverables during 2016 were related to various sectors and covered reviews
of activities, operations, business regulations, policies and procedures and best practices implemented upon
the provision of their services and outputs.
Below are summaries of the Service and Output Reviews that were conducted in 2016 with brief descriptions
of the scope of those reviews and of the recommendations made by ADAA:
Compliance Officer Role
The Compliance Officer role was not assigned to an
employee of the Internal Audit Function in 46% of the
assessed entities, where it was observed that the role
had been assigned to other parties (such as the Human
Resources Function or the Legal Affairs Division), or
had still not been activated at all.
Internal Audit Methodology and Manual
48% of the entities whose Internal Audit Functions were
assessed had implemented updated, comprehensive
and approved Internal Audit methodologies and
manuals, while 33% were in the process of developing,
updating or implementing such documents.
Strategy of the Internal Audit Activity
None of the assessed Internal Audit Functions had
developed and implemented a comprehensive,
updated, clear and approved strategy to plan its
activities and resources over the span of the next 3
to 5 years, noting that 67% of those Functions had
initiated the exercise to establish such strategies.
Implementation of Internal Audit software
39% of the entities whose Internal Audit Functions
were assessed have implemented Internal Audit
software which include modules for defining the audit
universe, conducting the risk assessment, establishing
the risk based audit plan, in addition to the execution
of assignments and the consequent follow-up reviews,
noting that 36 out of 55 entities visited in 2016 had
effectively opted for the e-Governance Portal provided
by ADAA, with various levels of use.
No 33% No 46%
Yes 0% Yes 12%
Not applicable 0% Not applicable 33%
Partially addressed 67% Partially addressed 9%
No 27%
Yes 39%
Not applicable 5%
Partially addressed 29%
No 15%
Yes 48%
Not applicable 4%
Partially addressed 33%
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 43
Abu Dhabi Farmers’ Services Review
ADAA conducted a review of the services and outputs of the Abu Dhabi Farmers’ Services Center (The Center)
in order to verify that:
• An approved governance system to provide services and outputs related to the Center is in place.
• Assess and review the extent of compliance with the implemented governance system, and the efficiency,
effectiveness and economic practices through which the services and outputs of the Center are provided,
and their alignment with related best practices.
ADAA’s recommendations included the following:
1. Coordinate with the concerned stakeholders in the Government of Abu Dhabi to define the full
scope of the different types of subsidies, support and services provided to farmers in the Emirate of
Abu Dhabi, and emphasize the operational mandate of the Center through the restriction of the
provision of all services to farmers by the Center, to avoid providing the same service by more than
one party within the Government of Abu Dhabi.
2. Develop policies and charters that will allow the Center to manage the existing and potential conflicts
of interest of its employees, which should provide an adequate level of assurance that the decision
making process within the Center is not affected in substance and form by any type of conflict of
interest and that it was performed in an unbiased manner. Transparency is considered one of the
most important principles to be adopted in this process, hence the need for the availability of a
comprehensive and complete mechanism to support the declaration of the Center’s employees of
their interests that may be subject to conflict in substance or in form upon taking decisions, which
would consequently assist in the management of such conflicts of interest.
3. Develop a comprehensive study and plan to identify the Center’s exact needs of carton boxes during
the agricultural season, then provide the resulting figures to the Procurement Department at the
Center ahead of the agricultural season on a timely basis to provide the Procurement Department
the required time to negotiate with potential suppliers to obtain the required quantities at the
best prices, and limit all procurement activities within the Center to the Procurement Department
exclusively, while complying with all the available and approved policies and charters, especially
the delegation of authority matrix with regard to emergency procurement needs, in addition to
prohibiting the splitting of orders.
4. Prepare a complete analysis of the root causes for the blight of agricultural produce received from
farmers, and consequently identify the challenges pertaining to the supply chain to address them.
Also, examine the causes for the differences between the quantities of agricultural produce received
from farmers and those sold, then identify those responsible for these issues and undertake the
necessary corrective actions.
5. Update the mechanism of the execution of the comprehensive scheme to combat palm pests to
ensure that all the farms in the Emirate of Abu Dhabi are encompassed in the scheme, thus allowing
the identification of all the infected palm trees and of the optimal approach to fight the palm pest.
Also, establish a protocol to follow-up promptly on the execution of the comprehensive scheme
to combat palm pests especially in the context of the significant delays in in the initiation of this
scheme.
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6. Establish coordination and interaction frameworks with concerned stakeholders with regard to the
management of agricultural waste, and impose monitoring mechanisms on the entities contracted
to manage agricultural waste to ensure the optimal benefit from such waste in compliance with the
terms of agreements between both parties, along with the identification of the shortcomings and of
the necessary actions to avoid their re-occurrence.
7. Develop and implement policies and procedures to organize the activities of providing well
maintenance services in coordination with pertinent stakeholders, and ensure their alignment with
best practices and with the statutes of Law no. (5) of 2016 concerning the underground water in the
Emirate of Abu Dhabi; also, impose control mechanisms to ensure the compliance with the general
terms listed in the “Well Servicing Form” to safeguard the Center’s resources by examining the
instances of provision of well maintenance services to farmers performed without alignment with
the allowed number of such provisions as identified in the form, then identify those responsible for
these issues and undertake the necessary corrective actions.
8. Initiate the execution of the project for the rehabilitation of abandoned farms, and develop the
required courses of action to complete the project within the set timeframes as identified in the
Center’s strategy, especially in the context of the importance of such action and its impact on the
achievement of the strategic objectives of the Center and of the Emirate of Abu Dhabi, especially the
strategic objective titled as “achieving food safety and a sustainable agricultural sector. The program
for the agricultural sector and for preservation of fish stocks”.
Waste Management Operations Review
ADAA conducted a review of the services and outputs related to the operations of the Center of Waste
Management (The Center) in order to ensure that:
• An approved governance system to provide services and outputs related to the Center is in place.
• Assess and review the extent of compliance with the implemented governance system, and the efficiency,
effectiveness and economic practices through which the services and outputs of the Center are provided,
and their alignment with related best practices.
ADAA’s recommendations included the following:
1. Establish strategic plans to address the challenges facing the Center in the execution of its strategic
objectives such as the availability of the necessary budgets, and the large quantities of waste from
previous periods, etc. through the identification of the required solutions and mechanisms for that
purpose, and consequently identify the needed projects and execute them through the establishment
of transitional and comprehensive plans to address those issues and their related risks. Also, achieve
an optimal interaction with key stakeholders such as the Department of Municipal Affairs and
Transport, along with the different municipalities, the Department of Economic Development, and
the Abu Dhabi Food Control Authority, among others through the conclusion of strategic agreements
with those parties, an consequently enhance the cooperation and the link with them which would
then assist in the achievement of the objective related to the improvement of the partnerships with
such stakeholders and their utilization to support the strategy of the Emirate of Abu Dhabi. Finally,
calculate the actual percentages of completion for all the KPI’s listed in the balanced scorecards in an
accurate manner based on factual calculations of each KPI, after the implementation of an adequate
mechanism to validate the figures and ratios generated by such calculations.
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 45
2. Identify and delineate the mandates and responsibilities of each concerned stakeholder with regard
to the issuance of commercial and industrial licenses, and consequently achieve the link between
the issuance of environmental and waste handling permits, and commercial and industrial licenses
while providing the required legal framework for that, after effecting the necessary changes on the
currently followed procedures with regard to the need to obtain waste handling and environmental
permits as prerequisites to obtaining the licenses, to avoid engaging in legal disputes that may affect
the Center’s reputation.
3. Implement the following to address the challenges related to the recycling of waste:
• Initiate the projects aimed at achieving the set target for recycling and for the daily waste generation
per capita, and instill mechanisms to commit the generators of waste across all sectors to sort
waste to set reasonable percentages, while inflicting contraventions on any party that impedes the
sorting process at the source whether it is the generator or the transporter, and that to prevent the
squandering of this valuable resource.
• Enforce the preparation of the shipping manifest for generated waste, and that regardless of the
volume of the generated waste, to control such waste from cradle to crave until fully disposed of.
• Engage a process for the reduction of waste generation from facilities, and establish a clear
mechanism to calculate those percentages, especially should those facilities expand their activities,
in a manner to achieve environmental sustainability.
• Explore the establishment of a sufficient number of sorting facilities as a key and necessary step to
achieving the sought comprehensive waste management initiative.
• Approve common tariffs for waste, that are set in the rules, regulations, policies and procedures,
and consequently list the necessary level of details in the manifest to align with the desired sorting
of waste to ensure the alignment between the contents of the manifest and the actual contents
of transported / shipped waste.
4. Review the reasons for the delay in the execution of the comprehensive waste management initiative
and derive lessons learned to prevent any additional costs or delays in achieving the desired progress
with regard to the treatment of non-hazardous waste, and proceed with the completion of this
initiative by using the available alternatives after engaging the necessary communication with the
Executive Council and obtaining the required approvals to achieve the objectives of the Emirate in
this regard.
5. Analyze the shortcomings related to the project of supplying and installing underground garbage
bin systems and identify lessons learned to avoid such occurrences in the future, and implement
best practices in the disciplines of contracting and contractor supervision to achieve the Center’s
initiatives; consequently, expedite the settlement procedures which encompass addressing the
current flaws and the activation of all the underground garbage bins and the completion of this
initiative upon obtaining the approval of the Executive Council to achieve the goals of the Emirate
in this regard.
6. Establish a framework for the coordination and interaction with key stakeholders with regard to
the management of agricultural waste, and instill controls on the companies contracted for this
purpose to ensure the optimal benefit from such waste in line with the contractual terms between
both parties.
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7. Undertake the necessary course of action to prevent unauthorized companies in the Emirate of Abu
Dhabi from exercising pest control activities, while classifying those licensed based on the category
of pest(s) that each specializes in and the type of control used, in addition to the nature and size
of the facility where the pest control activity is engaged. Also, conduct periodic inspections on all
the providers of such services and on the pesticides used in terms of expiration and relevance, in a
manner to ensure that this inspection is not limited to the initial phase of licensing, and that in line
with the directives of the Cabinet of the UAE’s ministers resolution no. (27) of 2012, along with the
development of the necessary mechanism to ensure the appointment of qualified and sufficiently
trained technicians within these companies.
8. Review the reasons for the regular rejection of agricultural waste and their ratio to received quantities
to work on reducing the percentages of rejection through the enhancement of the sorting system, and
utilize the resulting fertilizers in agricultural products to avoid a situation of accumulated quantities
of fertilizers requiring destruction or disposal, and that to achieve the objectives of sustainability in
the Emirate of Abu Dhabi and to reduce the negative impact on the environment. Also, coordinate
and contract with the municipalities directly and establish a formal mechanism to ensure that all
contractors appointed by the municipalities are mandated to utilize the fertilizers generated by the
Center, and revise the price of fertilizers sold to farmers to explore the possibility of aligning them
with those for the municipalities after calculating the direct and indirect related costs, and establish
a plan to deliver these products to the farmers, especially after the annulment of the related subsidy.
9. Implement a mechanism to assure the availability and accuracy of data regarding all types of waste
and sectors, including those that are managed within the Emirate or exported, and that to support
the sound control over this vital sector through the receipt of related information from all waste
generators regardless of quantities; thus, coordinate with the different concerned stakeholders,
especially “ZonesCorp” and the “Industrial Development Bureau” to obtain all the necessary data
related to generated waste and the means of disposing of them, in addition to the requirement
to develop a manifest for all the types of generated waste in the Emirate of Abu Dhabi, and that
to control the full cycle. Finally, conduct an exercise to identify the reasons behind the differences
between quantities generated, delivered, sold, and stored with regard to fertilizers among others.
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 47
Schools Operations Review
ADAA conducted a review of the services and outputs related to Schools Operations at the Abu Dhabi Education
Council to:
• Ensure that an approved governance system to provide services and outputs related to the Schools Operation is
in place.
• Assess and review the extent of compliance with the implemented governance system, and the efficiency,
effectiveness and economic practices through which the services and outputs of the Schools Operations
are provided, and their alignment with related best practices.
ADAA’s recommendations included the following:
1. Develop a clear strategy and plan for the education sector across the Emirate, including the
Emiratization of the teaching staff, and which takes into account the interaction between and
impact of each of the public and private sectors.
2. Adopt a code of conduct inclusive of a comprehensive definition of conflicts of interest, and develop
declaration forms for the employees of the Council to be used as the platform for declaration of
such instances. Consequently, gather the completed declaration forms from all the employees on
a regular basis, and implement the necessary administrative measures within available standard
operating procedures to ensure that these declarations are reviewed and acted upon, as applicable.
3. Implement clear and accurate plans to improve the occupancy rates of public schools through
mergers/closures to reduce the financial burden on the Government, based on scientific studies and
research that take into account the social and economical features of each region, and cooperate
closely with concerned stakeholders (such as the Abu Dhabi Urban Planning Council and the Abu
Dhabi General Services Company) to ensure the correct anticipation of school seats across the
Emirate in an accurate, comprehensive and timely manner.
4. Ensure the application of Policy no. (6210) related to the competency requirements in the English
language and conduct a comprehensive survey of the teaching staff to classify them into various
categories based on their readiness, and develop clear plans to train and prepare them for the
anticipated changes or to help them find alternative employment opportunities.
5. Coordinate with concerned stakeholders to establish criteria and assessments and policies to
classify the various types of special needs and to accordingly assign each to the competent party,
where the Abu Dhabi Education Council can enhance the assimilation process through a number
of partnerships, noting that there is space for improvement in that between the Council and
Zayed Higher Organization for Humanitarian Care and Specialized Needs to align the criteria and
assimilation policies and to ensure the adoption of the same process for the transfer of pupils.
6. Ensure the integration of the projects management activities with the procurement cycle to
ensure that proposed projects are presented to the Procurement Committee, and to establish the
requirements to identify the key related risks and the means to limit their impact for each contract,
along with setting criteria to govern single source procurement and the use of advisors.
7. Implement criteria to define the optimal contracting approach (purchase order, job order, agreement,
etc.), to prevent the supplier from initiating delivery of the services/material before the issuance of
the award letter, and to establish additional controls to ensure that suspended / black listed suppliers
or contractors are not awarded any contracts with the Council.
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ADAA’s recommendations included the following:
1. Revise the strategy and the responsibilities assigned to the Organization in light of the new mandates
to define its scope of work and its role in terms of the required organization and developing policies
and promoting those activities and their impact on the quality of provided services, and coordinate
with concerned stakeholders to develop an assessment of and criteria and a clear policy to identify
and diagnose the various types of special needs and accordingly assign each to the competent party.
2. Design and implement comprehensive electronic databases to manage the files related to beneficiaries
and employees.
3. Work with concerned parties to develop accurate statistics and figures regarding the numbers of
individuals with special needs in the Emirate of Abu Dhabi, and to increase the opportunity to
provide beneficiaries with the required services through exploring mobile units, and the support of
the private sector and other stakeholders to raise the awareness in the society.
4. Explore the potential reduction of secondary services such as sports activities, the Braille language
bling printing press, and the continuous care programs to allow the Organization to redirect its
resources to focus on key services.
5. Enhance the capabilities of employees, and the span of skills required for the Organization through
cooperation with concerned government entities and educational institutions.
6. Optimize the spending of the Organization by focusing it on beneficiaries related activities through
the revision of the compensation scheme, the automation of processes, and the implementation of
best practices with regard to the numbers and ratios of support staff.
7. Reduce the average spend per beneficiary across the Organization’s centers through the
implementation of best practices with regard to operations and their unification across those centers,
in addition to leveraging external capabilities such as those provided by the private sector.
8. Reevaluate the current capital expenditures and identify alternative solutions when possible based
on an analysis of the costs versus benefits of each solution.
Zayed Higher Organization for Humanitarian Care and Specialized Needs - Review
ADAA conducted a review of the services and outputs of the Zayed Higher Organization for Humanitarian Care and
Specialized Needs to:
• Ensure that an approved governance system to provide services and outputs is in place.
• Assess and review the extent of compliance with the implemented governance system, and the efficiency,
effectiveness and economic practices through which the services and outputs of the Zayed Higher Organization
for Humanitarian Care and Specialized Needs are provided, and their alignment with related best practices.
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 49
View of the UNESCO enlisted oasis in Al Ain, UAE
50 | aBU DHaBI aCCOUNT aBILITY aUTHORITY | AccountAbility RepoRt 2017
4.1 Accountability Reports
In 2016, a number of reports were issued under this output on matters related to ADAA’s work; among these
important reports are the reports submitted to His Highness the Crown Prince such as the Audit Report on the
Consolidated Financial Statements of the Government of Abu Dhabi and the Accountability Report.
4.2 Advisory
ADAA provides advice, in the areas that fall within its expertise and which do not conflict with its independ-
ence, upon receiving requests from Subject Entities and after the approval of the Chairman of ADAA. Below are
examples of such advisory work provided during 2016:
Accounting Technical Advice
ADAA publishes accounting technical papers to provide guidance to Subject Entities on particular topics. These
papers contributed to the improvement of both the quality and consistency of International Financial Reporting
Standards (IFRS) and International Public Sector Accounting Standards (IPSAS) reporting and understanding.
To date technical papers have been published covering: Leases, Fair Value Measurement, Investment Property,
IFRS Disclosures, Investment Entities, Related Party Disclosures and Depreciation.
Internal Audit Function Establishment support
ADAA provided guidance, tools, methodology and advice to support a smooth and effective establishment of
the Internal Audit role at a number of Subject Entities.
In 2016, ADAA completed 5 installations of the e-Governance Portal along with the necessary training and
the provision of the related methodology.
4.3 Special Examination
In 2016, ADAA received 8 anti-corruption complaints and 32 violations that were examined as per the “Special
Examination Methodology” outlined by ADAA.
Based upon the investigations conducted by ADAA in 2016, it was noted that some cases were referred to the
relevant public prosecutor office to take the necessary action as related violations indicated the existence of a
suspected punitive crime.
All examinations conducted by ADAA during the year were generally identified as violations related to the
following:
This output group provides the necessary support to hold Subject Entities accountable for their roles and
responsibilities and fulfilling them in addition to training and developing UAE Nationals and supporting sharing
knowledge and leading practices.
The Supporting Accountability Group comprises the following outputs:
• Accountability Reports
• Advisory
• Special Examination
• ADAA Knowledge Centre
4. OUtPUt GrOUP 3
SUPPORTING ACCOUNTABILITY
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 51
Case 1
The case could be summarized in what was
attributed to a Chairman and Managing director of
government entities who had created companies
outside the country that contractually engaged
with other entities which have business deals with
the government entities chaired and managed by
him. This led to a significant negative financial
impact on these government entities. This case
was referred to the Public Prosecution.
Case 3
The case could be summarized in what was
attributed to a project manager working in a
government entity who has benefited from his
job by approving subcontracting some works in
the concerned government entity to a private
company owned by his wife. This case was
referred to the relevant public prosecutor office.
Case 2
The case could be summarized in what has been
attributed to one of the maintenance managers in
a government entity who did not disclose conflict
of interest situation as he owns a private company
doing the same activity of this government entity
and has benefited from his position and allowed
his company to do subcontracting work with
a contractor contracted with the concerned
government entity. In addition, he tried to buy
assets that have been sold by the government
entity by way of a bid to a private company
after having participated in the bid preparation
procedures. This case was referred to the Public
Prosecution.
Case 4
The case could be summarized in what has been
attributed to the executives in a government entity
of breaches to the procedures of appointments
and promotions and non-compliance with
the approved procedures and the consequent
financial impact on the concerned government
entity. In addition, to the non-compliance with
the procurement policies by the cancelation of
approved submission in one of the tenders after
the approval of the tender committee and to be
retendered and resubmitted to other companies.
Moreover, these company executives benefited
from their positions in the government entity and
purchased cars at the expense of the entity to
be used in personal and family purposes, which
negatively impacted this government entity.
• Abuse of power and conflict of interest.
• Violation of procurement laws, regulations and procedures.
• Mismanagement and negligence in managing public money.
• Breaching code of conduct.
• Imprest embezzlement.
It is worth indicating that during 2016, ADAA continued to receive suspected financial violations and the
violations that were examined by the Subject Entities in light of the directives issued by His Highness the Crown
Prince of Abu Dhabi for the creation of an anti-corruption unit within ADAA with the role of investigating all
financial and administrative irregularities and instances of corruption. Under the directives, ADAA shall draft the
appropriate legislations to enable performing this critical role in accordance with the legal system of the Emirate
and to serve the public interest.
Below is a summary of some of ADAA’s examinations and investigations conducted during the year:
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4.4 ADAA Knowledge Centre
ADAA created an integrated approach to establishing this output group to fulfil its objective of training and
developing UAE nationals and supporting sharing knowledge and leading practices.
The outputs defined under this group are:
• Qualifying Emirati Auditors
• Research and Knowledge Sharing
• National and International Representation
• Seminars and Workshops
ADAA Further defined and enhanced our offerings under this output group and to further pursue its objective
of training and developing UAE Nationals in Accounting and Audit related activity.
4.4.1 Qualifying Emirati Auditors
ADAA further developed specialized training programs with the objective of contributing to the training and
development of Emirati Auditors and assisting them to acquire the necessary skills and knowledge in order to
advance and excel in their careers. ADAA is managing the “Auditors Development Program” (ADP) which is
designed as a fast track, all-encompassing opportunity that takes young Emirati applicants from entry level
Assistant Auditor to a Chief Auditor over a period of 7 years.
The below figure demonstrates the career path under the “Auditors Development Program’’:
Optimum progression within ADAA
At the end of 2016 ADAA had 46 UAE Nationals participating in the Auditor Development Program which
includes 14 that have successfully passed their professional certifications to date.
The ADP provides on-the-job training, secondments to the big 4 audit firms as well as simultaneously offering
professional certifications in the accounting and audit profession such as the Certified Public Accountant (CPA)
and the Certified Internal Auditor (CIA). To help facilitate this development, ADAA has a full time lecturer that
provides preparation courses in these subjects.
A number of UAE Nationals have now qualified as Chief Auditors under the program.
years in service
* Must at this stage hold a professional certification for advancement to Chief Auditor, e.g. CPA/CIA.
Position within ADAA
Assistant Auditor Auditor
Senior Auditor
Executive
Auditor
*Chief
Auditor
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 53
4.4.2 Research and Knowledge Sharing
The twenty first century is driven by knowledge economies. Developing, capturing and sharing knowledge
is going to be critical for the success of any organization. With this objective, ADAA has established a
range of capabilities that will help institutionalize creation and dissemination of knowledge not only to
professionals within ADAA but also to professionals across the Abu Dhabi Government.
Key initiatives that have been launched by ADAA with this objective are:
The Research and Knowledge Management function
ADAA’s outputs are informed by global trends, benchmarks and research across a range of topics. ADAA’s
Research and Knowledge Management function focuses on bringing insights across a wide variety of
industries, functions and topics to keep our professionals up to date on the latest developments and best
practices. The Research and Knowledge Management team has, this year, delivered multiple research
outputs on topics ranging from the structure and role of anti-corruption agencies, to benchmarking
public health insurance practices, licensing practices in the media free zones and education sectors,
learnings from mega construction projects such as airports and museums and reporting service
performance across entities.
Accounting and Auditing Standards Desk )AASD(
ADAA seeks to contribute to improve the quality of financial reporting for Abu Dhabi Government
Business Enterprises and the Public Sector through the issuing of publications and comment letters which
highlight best practice in accounting, financial reporting and governance matters.
ADAA issues an IFRS Digest, an IPSAS Bulletin and an Audit Committee Update. The publications feature
ADAA’s hot accounting and financial reporting topics, what is new from the IASB, the IPSASB and the
accounting profession.
ADAA publishes illustrative consolidated and entity financial statements for IFRS and IPSAS reporters
which includes guidance on Management Commentary and Reporting Service Performance.
The AASD provides comment letters to the IASB and IPSASB and on their exposure drafts of new
international public sector accounting standards and international financial reporting guidelines. The
comment letters are published on the IPSASB’s and IASB’s websites.
E-maarifa
In today’s knowledge driven economy, it is essential to bring together communities of interest and ensure
more effective and timely sharing of insights and information. E-maarifa is an online community of like-
minded professionals within the Abu Dhabi Government with a common interest and the desire to share
their knowledge, expertise and best practices with a broader group of colleagues. This platform allows
Abu Dhabi Government employees to share their knowledge and best practices across government
entities and benefit from the rich repository of expert views, insights and documents available elsewhere
within the Government. The Internal Audit Community on e-maarifa is one such community which now
connects 550+ Internal Audit professionals across 95 Abu Dhabi Government entities.
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4.4.3 National and International Representation
ADAA continued to put in efforts to explore new opportunities that contribute to enhancing accountability
and transparency across the Government and the implementation of best practices.
International Forum of Independent Audit Regulators
ADAA became the first organization in the Middle East and North Africa to acquire membership of
the International Forum of Independent Audit Regulators (IFIAR) in 2009 and to host the IFIAR Plenary
Meeting in Abu Dhabi in 2010.
During 2016, ADAA participated in the Plenary Meeting of the IFIAR, held in London, United Kingdom
(UK) over the period from 19 to 21 April 2016. The highlights of the meeting this year was around
establishing IFIAR’s permanent Secretariat in Tokyo, Japan. And the implementation of IFIAR’s new Board-
led governance structure as of April 2017 will significantly enhance IFIAR’s organizational capabilities and
accelerate its ability to take actions aimed at improving audit quality.
The meeting also covered many topics including the establishment of a global Advisory Group to the
Investor and Other Stakeholders Working Group. Discussion with the Chairs of the IAASB, the IESBA and
the PIOB on how standard setting can contribute to the enhancement of audit quality.
IFIAR 10th Inspection Workshop
During the year, ADAA also participated in the 10 th Inspection Workshop of IFIAR, held in Abu Dhabi,
United Arab Emirates alongside 166 audit inspectors from 43 international jurisdictions. It is worth
mentioning that this is the second time ADAA has organized this event in Abu Dhabi.
Inspection workshops were organised to enable independent audit regulators to meet and discuss
inspections processes, learn and leverage from each other, and consider similarities and differences
among their practices and methodologies. ADAA participation in the inspection workshops comes as
part of its activities as a member of the Inspection Workshops Working Group (IWWG) alongside other
IFIAR Members from France, Germany, Japan, Luxembourg, South Africa, Switzerland, UK and USA.
The Workshop sessions discussed a number of key issues and challenges faced by the world audit
regulators including the audit quality measures, key considerations in the design and development of
audit inspection regimes, fair value measurement and how to challenge audits of impairment tests.
In March 2016, IFIAR issued Report on 2015 Survey of Inspection Findings which summarized key
inspection results from audits of public companies, including systemically important financial institutions,
identified by IFIAR Members in their individual inspections of audit firms in their jurisdictions, including
in particular those affiliated with large, international audit firm networks. The Survey reflected continued
deficiencies in key areas of audit, and expressed concerns about the implications of the findings for audit
quality.
The survey resulted in 1,130 total findings in inspected audits of 872 listed public interest entities, or
public companies, and highlighted the following deficiencies:
1. 23% of the findings relates to internal control testing.
2. Auditing fair value measurements accounted for 18% of total findings.
3. Revenue recognition accounted for 15% of the findings.
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 55
4.4.4 International Certifications
ADAA continued pursuing international certificates in order to ensure continued application of best
practices and recognized professional standards.
Institute of Leadership and Management
During 2016, the UK Institute of Leadership and Management (ILM) maintained ADAA as an approved
ILM training provider. The ILM is Europe’s largest independent organisation that focuses on leadership
and management development and is responsible for developing the leadership skills of over 95,000
managers every year around the world.
This achievement was obtained as part of ADAA’s ongoing enhancements to its services and belief that
leadership development has positive impact on every aspect of a business, from improving performance
to increased innovation and efficiency. This also acts as a catalyst to attracting and retaining top talent
within ADAA.
ADAA is the first local Government entity to obtain this recognition in Abu Dhabi. With this prestigious
global recognition ADAA will be able to strengthen training programs and further enhance the
development of all staff in accordance with global standards.
ISO 20000:2011 Certification
ADAA has been awarded the International Standard Organization (ISO) 20000:2011 Certification from
the Lloyd’s Register Quality Assurance.
ISO 20000:2011 details requirements to plan, establish, implement, operate, monitor, review, maintain
and improve a Service Management System. The requirements include the design, transition, delivery
and improvement of services to fulfill agreed service requirements.
It is a great achievement to receive such a reputable certificate that recognises that ADAA has
comprehensive set of policies and procedures in order to manage its IT operations and services to
achieve highest level of ADAA employees’ satisfaction.
ISO 27001:2013 Certification
ADAA has been awarded the International Standard Organization (ISO) 27001:2013 Certification from
the Lloyd’s Register Quality Assurance. ISO 27001:2013 recognizes that ADAA has comprehensive
information security controls in order to protect its IT infrastructure.
This certification is awarded only to those organizations that demonstrate that they meet the highest
information security standards as judged by an independent and accredited team of auditors. ADAA
recognizes that establishing an information security program based on an international standard is of
utmost importance.
OHSAS 18001:2007 certification
OHSAS 18001:2007 is an internationally recognized occupational, health and safety management
system series standard which enables ADAA to promote a safe and healthy working environment by
providing a framework that helps us to:
• Identify and control health and safety risks.
• Reduce the potential for accidents.
• Aid legal compliance.
• Improve overall performance.
56 | aBU DHaBI aCCOUNT aBILITY aUTHORITY | AccountAbility RepoRt 2017
Investors in People
ADAA’s Human Resources and Communications Department, has been awarded the "Investors in
People Standard", demonstrating their commitment to realising the potential of their people. Investors
in People is the UK’s leading accreditation for business improvement through people management, and
demonstrates our commitment to providing best practices in people management.
Undergoing the evaluation process has enabled us to focus and improve on ten core areas, involving
people management namely: Business Strategy, Learning and Development Strategy, People
Management Strategy, leadership and Management strategy, Management Effectiveness, Recognition
and Reward, Involvement and Empowerment, Learning and Development, Performance Measurement
and continuous improvement.
ISO 14001:2015
ISO 14001:2015 helps an organization achieve the intended outcomes of its environmental management
system, which provide value for the environment, the organization itself and interested parties. Consistent
with the organization’s environmental policy, the intended outcomes of an environmental management
system include:
• enhancement of environmental performance;
• fulfilment of compliance obligations and
• achievement of environmental objectives.
ADAA has achieved the ISO 14001:2015 Certificate for Environmental Management according to best
international practices issued by British Standards Institute (BSI).
Attending the UAE National Student Forum in the United States of America.
For the fifth year in succession ADAA attended the UAE National Student Forum in Washington DC.
This is an event hosted by the UAE Embassy in the United States of America for UAE National students
resident there. It provides an opportunity for them to become familiar with potential employers. This
exposure enables us to explain not only the role of ADAA but also of the Auditor Development Program.
4.4.5 Seminars and Workshops
ADAA conducted workshops and seminars for Subject Entities and the public on matters that complement
its primary role and that fall within its area of expertise.
ADAA held workshops for the board of directors of the government entities and companies introducing
latest best practices in collaboration with UK Institute of Directors (IoD). In addition, ADAA’s Head of
Accounting and Auditing Standards Desk (AASD) chairs Abu Dhabi Technical Forum (ADTF), comprising
ADAA and the accounting and audit technical partners of the audit firms.
The ADTF issued accounting technical papers covering topics such as: impairment, fair value, goodwill,
service concession assets, asset recognition, depreciation, principal and agent, government contributions,
related parties identification and disclosure, selection and application of accounting policies, disclosure of
sources of estimation uncertainty, common control transactions, leases, provisions, investment property,
onerous contracts, and professional accountants’ code of ethics.
Abu DhAbi AccountAbility Authority | AccountAbility RepoRt 2017 | 57
• Audit the financial statements of the Government of Abu Dhabi in accordance with International Standards
and issue the audit report within the time frame specified in the Financial Management Law.
• Conduct examinations of the financial statements for a group of Subject Entities, and enhance and unify
Subject entities’ financial statements basis of preparation according to Subject entities’ operations and in
alignment with International Standards. Review Subject Entities’ compliance with budgets and Statutory
Auditors Appointment Rules (SAAR).
• Conduct Financial Management Assessments for a group of Subject Entities.
• Assess the Internal Audit Functions for a group of Subject Entities, and continue to provide support to
improve the role of internal audit.
• Conduct Procurement Reviews for a group of Subject Entities.
• Conduct a number of Service and Output Reviews for areas of high priority.
• Examine complaints referred to ADAA or discovered during its course of work at Subject Entities and issue
Special Examination reports accordingly.
• Explore the development of new outputs that add value, and which compliment other outputs to accompany
the current state of matters within the Government.
• Address complex accounting matters and unify the interpretations of financial reporting standards through
the “Abu Dhabi Technical Forum”.
• Prepare accountability reports and provide consultations in the preparation of draft governance systems
and regulations, and continue to provide advice to Subject Entities as and when requested.
• Enhance the role of the Research and Knowledge Management Function at ADAA and continue the
engagement of national and international auditing bodies through seeking memberships in appropriate
organizations.
• Participate in the IFIAR plenary meeting for 2017 & nominate ADAA for BOD membership.
• Monitor the outputs of the “Auditors Development Program”.
• Continue the secondment of Emirati employees in the Auditors Development Program to the Big Four audit
firms.
• Continue to provide the necessary support related to the implementation and use of the “e-Governance
Portal”.
5. 2017 WOrKPLaN
BELOW ARE SOME OF THE HIGHLIGHTS OF ADAA’S 2017 ANNUAL PLAN:
For the year ended
31 December 2016
Financial
statements
together with
the independent
auditor’s
report
Part 04
PAGE 60
Desert in Abu Dhabi, UAE
Abu Dhabi Accountability Authority
Green Mubazzarah Resort as seen from Jebal Hafeet, Al Ain, UAE
abu Dhabi accountability authority
FINANCIAL STATEMENTS
For the year ended 31 December 2016
Table of Contents Page
Independent auditor’s report addressed to The Chairman of
Abu Dhabi Accountability Authority 1
Statement of financial position 3
Statement of financial performance 4
Statement of changes in Government of Abu Dhabi account 5
Statement of cash flows 6
Statement of comparison of budget and actual amounts 7
Notes to the financial statements 9
Opinion
We have audited the financial statements of Abu Dhabi Accountability Authority (“the Authority”), which
comprise the statement of financial position as at 31 December 2016, and the statement of financial
performance, statement of changes in Government of Abu Dhabi account, statement of cash flows, and the
statement of comparison of budget and actual amounts for the year then ended, and notes comprising a
summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Authority as at 31 December 2016, and its financial performance and its cash flows for the year
then ended in accordance with International Public Sector Accounting Standards (IPSAS).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section
of our report. We are independent of the Authority in accordance with International Ethics Standards Board for
Accountants Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that
are relevant to our audit of the financial statements in the United Arab Emirates, and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with IPSAS, and for such internal control as management determines is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Authority’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the legislative authority either intends to liquidate the Authority or to cease operations, or
has no realistic alternative but to do so.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists.
Independent Auditors’ Report
H.E The Chairman
Abu Dhabi Accountability Authority
KPMG Lower Gulf Limited
Level 19, Nation Tower 2
Abu Dhabi Corniche, UAE
Tel. +971 (2) 4014 800, Fax +971 (2) 6327 612
KMPg Lower gulf Limited is a member firm of the KPMg network of independent member firms affiliated with KPMg International.
Cooperative (“KMPg International”), a Swiss entity all rights reserved.
KPMg Lower gulf Limited is registered and licensed as a foreign branch under the laws of the United arab emirates.
Page 01 of 17
Auditors’ Responsibilities for the Audit of the Financial Statements (Continued)
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Authority’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Authority’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However,
future events or conditions may cause the Authority to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
We communicate with the Chairman, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Report on Other Legal and Regulatory Requirements
We further confirm that we have obtained all information and explanations necessary for our audit; the financial
statements comply, in all material respects, with the applicable requirements of Law number (18) of 2006 on
issuing the financial system of the Government of Abu Dhabi. We are not aware of any violations of the above
mentioned Law having occurred during the year ended 31 December 2016, which may have a material effect
on the Authority’s financial statements.
KPMG Lower Gulf Limited
Fawzi AbuRass
Registration No.: 968
Abu Dhabi, United Arab Emirates
Date:
Page 02 of 17
KMPg Lower gulf Limited is a member firm of the KPMg network of independent member firms affiliated with KPMg International.
Cooperative (“KMPg International”), a Swiss entity all rights reserved.
KPMg Lower gulf Limited is registered and licensed as a foreign branch under the laws of the United arab emirates.
Abu Dhabi Accountability Authority
Independent auditor’s report
31 December 2016
Abu Dhabi Accountability Authority
STATEMENT OF FINANCIAL POSITION
As at 31 December 2016
The financial statements were authorised for issue in accordance with a resolution of the Authority’s
Chairman on 16 March 2017.
The attached notes 1 to 16 form part of these financial statements.
The independent auditor’s report is set out on pages 1 and 2.
Mohamed Al Mheiri
Director of Finance
Abdulaziz AlKhoori
Executive Director
Hamad Al Hurr Al Suwaidi
Chair
Unofficial text extracted from public documents; formatting and completeness are not guaranteed. Verify against the official source. In case of conflict, the Arabic text prevails. Not legal advice. Official source ↗