All Cayman funds are required to have their financial accounts audited on an annual basis by an auditor approved by the Cayman Islands Monetary Authority (“CIMA”). Cayman Funds are also required to submit audited accounts, along with the Fund Annual Return (“FAR”) within 6 months after the financial year end to CIMA.
CIMA’s Regulatory Policy for Exemption from Audit Requirements for a Regulated Mutual Fund and the Regulatory Policy for Exemption from Audit Requirements for a Private Fund (collectively the “Audit Waiver Policies”) provide that relief may be available in certain circumstances.
Extending a Fund’s first audit period
The Audit Waiver Policies outline that CIMA may consider extending the fund’s first audit period for a maximum of 18 months from the date of registration or licensing.
For example, for a fund with a 31 December year end:
If the fund launches on 30 June 20201 or earlier, the fund will need to submit financial statements covering the period from launch until 31 December 2021.
If the fund launches on 1 July 2021 or later, the fund may apply for an extension of the first audit period to cover the period from launch to 31 December 2022, if approved by CIMA.
To obtain approval for an extended first audit period, a written request must be submitted to CIMA. The request may be submitted by the operators (i.e., directors) or authorised service providers (e.g. Auditor, Registered Office, Legal Counsel, etc.) of the Cayman Fund. This may be done either at the time of registration/licensing of the Cayman Fund with CIMA, or at a later stage but typically before the audited financial statements are due. CIMA will use its supervisory discretion and may request additional information to support the request such as a confirmation from the fund administrator to confirm when subscriptions/capital commitments were received from investors and trading commenced if the request is done typically after registration/licensing with CIMA.
A Fund has not launched
Where a Cayman Fund has not launched and does not wish to be de-registered with CIMA, a written request may be submitted to CIMA to request an exemption from the annual audit requirement. Pursuant to the Audit Waiver Policies, “launched” for a mutual fund means where a mutual fund has accepted subscriptions from investors, admitted the investors and commenced trading with subscription monies. Additionally, “launched” for a private fund means where a fund has accepted capital commitments from investors for the purpose of investments.
The requester is required to submit an affidavit from an operator of the mutual or private fund:
Explaining the reason for the fund not being launched;
Explaining the reason for the fund not wishing to be de-registered; and
Confirming that the fund has not received subscriptions from investors. Further the payment of the required application fee of CI$500 (US$609.76) must accompany the request.
CIMA will assess each mutual/private fund’s request on a case by case basis and use its supervisory discretion to request additional information as necessary to support the request. If approved by CIMA, then no audit will be required for the requested financial period but the audits for the subsequent financial periods will be required until the Cayman Fund cancels its registration/licensing with CIMA.
How can Bell Rock help?
As a licensed and regulated professional services firm based in the Cayman Islands, we routinely act as a conduit for communications with CIMA on audit extensions as well as fund formations & structuring, registrations and other support services such as professional independent directors to all types of funds, compliance and regulatory services, registered office, corporate services and advisory services. For further information, please contact us: info@bellrockgroup.com
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