The Dubai Financial Services Authority (DFSA) is the independent regulator overseeing financial services conducted in or from the Dubai International Financial Centre (DIFC).
On 9 July 2026, the DFSA published its ninth Audit Monitoring Report. The report provides a clear picture of how audit quality, market activity, and fee levels have evolved across the Centre.
Titled “Setting the Standard in Audit Quality within Dubai International Financial Centre,” the report summarises findings from DFSA monitoring visits to Registered Auditors. These visits took place between 1 January 2024 and 31 December 2025.
Why the Report Matters
For audit firms operating within DIFC, the report provides an important view of the current state of the profession. It also highlights the areas that may receive greater regulatory attention in the future.
The report is equally relevant for companies and funds that rely on these audit firms. It serves as both a scorecard for the current audit environment and a preview of the DFSA’s future supervisory focus.
Audit Quality Improving, Fewer Unsatisfactory Ratings
The headline finding is a genuine improvement in audit quality. The report found a higher proportion of audit engagements rated as satisfactory and fewer rated as unsatisfactory compared with previous monitoring cycles.
This marks a meaningful shift from the concerns highlighted in the DFSA’s 2022–23 report.
DFSA Chief Executive Mark Steward said that high-quality audits are fundamental to resilient financial markets. He also noted that the report reflects the regulator’s commitment to raising standards and strengthening confidence in DIFC’s financial ecosystem.
Growing Audit Activity in DIFC
The scale of activity behind this assessment is also significant. During the monitoring period, DIFC-registered auditors signed 1,267 financial statement auditors’ reports and 1,968 regulatory reports.
These figures reflect continued growth in the size and complexity of the DIFC audit market. As of 2025, the Centre had 8,844 active registered firms.
Audit Fees Surge 74% to US$33.5 Million
Total audit fees charged by Registered Auditors across DIFC reached US$33.5 million during the monitoring period. This represents a 74% increase compared with the previous cycle.
The DFSA linked this sharp increase to the continued growth and rising complexity of the DIFC audit market. The regulator clarified that the increase was not caused by fee inflation alone.
Instead, the additional revenue gives audit firms more resources to invest in quality improvements, skilled staff and technology. These investments can help firms strengthen their audit processes and maintain higher standards.
Growth in Professional Development
Continuing Professional Development (CPD) activity also increased significantly during the monitoring period.
Total CPD hours reached 10,802, representing a 17.7% increase compared with the previous cycle. This growth broadly reflects the expanding number of professionals working within DIFC.
A New Transparency Requirement - A UAE First
One of the report’s most significant findings relates to transparency reporting. For the first time, auditors of publicly listed companies within the DIFC must publish transparency reports under DFSA Rules.
The DFSA is the first audit regulator in the UAE to require this level of public disclosure from audit firms. This requirement brings DIFC practices closer to established financial centres such as London and Singapore, where transparency reporting is already a common practice.
A New Compliance Requirement for Audit Firms
For audit firms serving DIFC-listed entities, this creates a new and recurring compliance obligation.
Firms must now meet additional disclosure requirements that did not apply during previous monitoring cycles. Therefore, audit firms should review their reporting processes and prepare for ongoing compliance with the DFSA Rules.
The Staffing Trend the DFSA Is Watching Closely
Despite the positive findings on audit quality, the report highlights one trend that the regulator will continue to monitor closely. Audit Principal involvement in engagements has decreased, while audit managers are taking on more day-to-day audit responsibilities.
The DFSA identified this shift as an area requiring continued attention. As the DIFC audit market expands, firms must maintain effective oversight throughout each engagement.
Audit Principals are expected to set the appropriate “tone at the top” and take a direct role in supervising higher-risk judgement areas. The regulator does not want these responsibilities to weaken simply because firms are managing more engagements with the same number of senior professionals.
A Continued Area of Regulatory Focus
This is not a new concern for the DFSA. Earlier monitoring reports had already tracked the level of Audit Principal involvement.
Therefore, the latest findings confirm that this issue remains a sustained area of regulatory focus. It is not simply a one-time observation from the latest monitoring cycle.
Five Thematic Areas for Continued Improvement
Beyond the staffing trend, the DFSA identified five key areas where the audit profession needs to continue improving.
First, audit teams should clearly support their key audit opinions and significant judgement decisions with appropriate rationale.
Second, auditors need to apply greater scrutiny to investment valuations. They should also carefully review the assumptions used in expert reports.
Third, the assessment of related-party transactions should go beyond basic accounting compliance checks.
Fourth, audit teams should tailor revenue recognition procedures to the specific characteristics of each client’s revenue streams. They should avoid relying on generic testing programmes.
Finally, audit teams must continue updating their procedures when new risks emerge during an engagement. They should not rely only on the risks identified during the planning stage.
Key Areas for Continued Improvement
These five areas show where the DFSA expects the audit profession to maintain its focus. As audit engagements become more complex, audit teams need to adapt their approach and respond to new risks throughout the audit process.
What the DFSA Will Inspect Next
Looking ahead, the DFSA confirmed that its 2026 inspection cycle will focus on three key areas.
The first area is Systems of Quality Management (SoQM). These are firm-wide frameworks that auditors use to manage, govern, and monitor audit quality.
The second area is the use of artificial intelligence (AI) within audit engagements. The third area is revenue recognition procedures.
In addition, the DFSA plans to conduct a separate thematic review of governance and culture within audit firms during 2026–27. This review will extend the regulator’s focus beyond individual audit quality. It will also examine the organisational structures and incentives that influence how audit firms operate.
AI Becomes a Key Inspection Priority
The inclusion of AI in the 2026 inspection priorities is particularly notable. It reflects the DFSA’s recognition that audit firms and other professional services businesses are increasingly using AI-assisted tools in their workflows.
These tools can support activities such as data analytics and documentation reviews. However, the DFSA also wants to understand how firms govern and validate their use.
Therefore, the regulator plans to examine these practices proactively rather than waiting for problems to emerge independently.
What This Means for DIFC-Based Businesses and Audit Firms
For DIFC-registered audit firms, the report’s findings highlight several clear priorities.
First, firms should strengthen Audit Principal involvement and supervision on active engagements. This is especially important for higher-risk clients.
Second, audit teams should improve the documentation supporting key audit opinions. The reasoning and professional judgement behind important decisions should be clearly recorded.
Third, firms auditing Public Listed Companies should prepare for the ongoing requirement to publish transparency reports. This should now be treated as a regular regulatory obligation rather than a one-time disclosure.
What Companies and Funds Should Consider
The report also has important implications for companies and funds operating within DIFC that rely on Registered Auditors.
The 74% increase in audit fees is an important financial factor to consider when planning future budgets. At the same time, the improved overall audit quality ratings provide reassurance about the standard of assurance delivered across the Centre.
Boards and audit committees can also use the DFSA’s five thematic focus areas as a practical guide when working with their auditors.
For example, they should ask how auditors are assessing investment valuations, related-party transactions and revenue recognition procedures. They should also confirm that audit procedures are tailored to the specific nature and risks of their business.
A standardised audit approach may not be sufficient for every organisation. Therefore, businesses should ensure that their audit approach reflects their individual operations, risks and financial activities.
Frequently Asked Questions
What period does the DFSA's 9th Audit Monitoring Report cover?
DFSA monitoring visits to Registered Auditors in DIFC conducted between 1 January 2024 and 31 December 2025.
By how much did DIFC audit fees rise?
Total audit fees reached US$33.5 million, a 74% increase on the previous monitoring cycle, which the DFSA attributes to the growth and increasing complexity of the DIFC audit market.
What staffing trend is the DFSA monitoring?
A reduction in Audit Principal involvement in engagements, alongside greater reliance on audit managers, is a trend the regulator will continue to monitor closely. The DFSA aims to ensure that effective oversight and audit quality are maintained as the market continues to grow.
What will the DFSA inspect in 2026?
Systems of Quality Management (SoQM), the use of artificial intelligence (AI) in audit engagements, and revenue recognition are key areas of focus. In addition, the DFSA plans a separate thematic review of governance and culture within audit firms for 2026–27.
DFSA is watching audit quality more closely than ever. Is your financial reporting ready?
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Author:
NR Doshi & Partners works with DIFC-registered entities and audit firms to support financial reporting, audit readiness, and regulatory compliance across the UAE’s financial free zones. Contact our team to discuss how the DFSA’s latest findings may affect your audit engagement or reporting obligations.
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