On 7 February 2020, the Cayman Islands introduced new legislation for collective investment vehicles.
This legislation included the introduction of a new Private Funds Act (PFA) for closed-ended funds. Furthermore, on 7 July 2020, the Private Funds (Amendment) Act, 2020 was enacted in order to clarify the intended scope of the PFA.
The Act aims to bolster investor confidence in Cayman Islands investment fund vehicles and ensure that the Cayman Islands maintain its position as a leading jurisdiction for investment fund formation. The Act also seeks to address EU suggestions for investment fund oversight as set forth in a report dated 27 May, 2019, from the EU Code of Conduct Group (Business Taxation).
Summary of audit requirements for Cayman Fund
When registering a fund with CIMA, it is necessary to specify the initial financial period. An annual audit is also required. The financial statements have been audited by a CIMA-approved auditor within six months of the fund's year-end, and the Fund Annual Return form has also been submitted. The Fund's annual return and audited financial statements are submitted to CIMA via the REEFS electronic filing system by the CIMA-approved auditor of the fund.
Extension of Initial Audit Period
CIMA may approve extending the fund's first audit period for a maximum of 18 months from the date of launch. For instance, in the case of a fund with a 31 December year-end:
- If the fund launches on 30 June 2020 or earlier, the fund will need to submit financial statements covering the period from launch until 31 December 2020.
- If the fund launches on 1 July 2020 or later, the fund may apply for an extension of the first audit period to cover the period from launch to 31 December 2021, if approved by CIMA.
Audit waivers
In certain circumstances, fund operators may apply to CIMA for a waiver of the filing requirement or for an extension of the filing deadline. CIMA will assess each fund's request on a case-by-case basis. The most common reasons for CIMA to consider an application for a waiver are as follows:
- A fund has not yet launched (i.e. has not accepted subscriptions from investors);
- A fund has not launched and is being liquidated or wishes to be deregistered;
- A fund is unable to obtain audited accounts due to events such as bankruptcy proceedings, legal or regulatory enforcement actions; or
- A fund has been placed in compulsory liquidation and CIMA is satisfied with the appointment of the liquidator and the scope of the liquidator’s review.
Liquidation audits
When a regulated fund is being liquidated, unless it qualifies for an audit waiver, it must provide final audited accounts:
- the date of commencement of the winding up in cases where a third-party liquidator has been appointed; or
- the date of the final distribution if no third-party liquidator has been appointed.
Why CityLinkers for the Cayman Fund Audit?
It is standard practice for the financial records of the investment fund to be located at the office of the fund manager or administrator. This can make it difficult for CIMA-approved auditors to perform audits on the financial statements. In light of this, CityLinkers Group has entered into a partnership with CIMA-approved auditors to conduct the requisite audit procedures and issue financial statements that are recognised by CIMA.
Our Audit Service for Cayman Funds
- One-stop audit service in Hong Kong
- Time and cost saving Cayman Islands Investment Funds Audit services
- Partnered with CIMA approved auditors.
- One-stop audit –only with our office.
- Performing audit for Cayman Island investment funds since 2017, with a client base totalling to 250+ Cayman Island investment funds to date
- Clients’ portfolios include listed instruments, private equities, fund of funds, digital assets, crypto currencies platforms, debt instrument etc.
- Investment fund size of our clients totals to USD3+ billion.
- Management team with 10+ years of experience in Big4 accounting firms.
- An alternative to traditional international accounting firms.
