Muscat: The Financial Services Authority (FSA) has intensified its regulatory oversight of the accounting and auditing profession as part of broader efforts to enhance compliance, improve audit quality and align practices with international standards.
The authority has undertaken more than 45 regulatory and developmental initiatives targeting licensed accounting and auditing firms. These included nine field visits, seven workshops and meetings, 11 stakeholder engagements and 10 collaborative initiatives with local and international entities, reflecting a comprehensive strategy to strengthen the sector.
Since assuming regulatory responsibility under Royal Decree No. 20/2024, the FSA has focused on two key pillars: assessing the operational landscape of firms and upgrading the legislative framework governing the profession.
As part of its operational review, the FSA conducted detailed assessments and field inspections to evaluate compliance with professional standards. The review led to regulatory action against several firms, including the deregistration of four firms, issuance of warnings to three firms and suspension of two others, reinforcing the authority’s commitment to maintaining high professional standards.
On the legislative side, the FSA highlighted the need to modernise the existing legal framework, describing it as outdated. A specialised consultancy firm has been appointed to review current laws, benchmark global best practices and align regulations with national priorities.
The authority identified several violations during its inspections, including unlicensed practice of the profession and unauthorised signing of audit reports. It also noted that some firms failed to retain audit documentation for the legally mandated ten-year period.
Further deficiencies were observed in compliance with International Standards on Auditing (ISA). These included the absence of engagement letters as required under ISA 210, inadequate documentation under ISA 230 and insufficient audit evidence in violation of ISA 500. Non-compliance with ISA 550 relating to related-party transactions and ISA 700 concerning audit report structure was also reported.
In addition, shortcomings were identified in applying ISA 320 on materiality, particularly in documenting thresholds for significant misstatements, which affects audit planning and execution quality.
The FSA reaffirmed that its ongoing initiatives aim to strengthen integrity, transparency and confidence in financial reporting, contributing to financial stability across the Sultanate’s economic sectors.
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