Cayman Islands

In the Cayman Islands only companies that are regulated by the Cayman Islands Monetary Authority (CIMA) are required to prepare, publish, and file financial statements. CIMA-regulated companies are those which are established under the Banks and Trust Companies Act, the Insurance Act, Mutual Funds Act, Securities Investment Business Act, and the Companies Management Act. These laws refer to generally accepted accounting principles without specifying accounting standards to be applied. In practice, however, the standards applied depends on the client due to the international nature of business in the Cayman Islands and the majority of financial statements are prepared under U.S. GAAP or IFRS.

In addition, listed companies are subject to the listing rules of the Cayman Islands Stock Exchange (CSX) which require financial statements to be prepared in accordance with IFRS or US, UK, or Canadian GAAP.

Other Cayman Island entities which have been established under the Companies Act are required to keep proper books of accounts but do not need to publish or file financial statements as they are not subject to oversight by CIMA or any other government body. Small- and medium-sized entities (SMEs) that may be required to prepare or choose to prepare general purpose financial statements may use IFRS for SMEs or another recognized GAAP framework.

Audit reports issued from or within the Cayman Islands must be by a licensed member of the Cayman Islands Institute of Professional Accountants (CIIPA). The governing Accountants Act of 2020 as amended and Accountants (Quality Assurance) Regulations prescribe that the audit must be conducted in accordance with ISA, US GAAS or a standard assessed as equivalent with those by the CIIPA or the IAASB and in practice, the overwhelming majority of audits are conducted using US GAAS or ISA. Additionally, listed companies are required to have their statements audited in accordance with ISA or another set of standards approved by the CSX.

Cayman Island entities which have been established under the Companies Act are not subject to annual audit although the Act states financial statements may be audited from time to time as determined by the company.

The accountancy profession in the Cayman Islands is regulated by the Cayman Islands Institute of Professional Accountants (CIIPA) and the Auditors Oversight Authority (AOA).

The Accountants Act 2020 as amended establishes the CIIPA and determines licensing and registration requirements for the profession. Under this Act and regulations known as the Accountants (Disciplinary) Regulations, the Accountants (Application for Membership) Regulations and the Accountants (Quality Assurance) Regulations, CIIPA is responsible for (i) licensing all practitioners engaged in public practice; (ii) maintaining a public register of its members; (iii) verifying initial professional development requirements of recognized foreign institutes; (iv) implementing continuing professional development requirements; (v) setting ethical requirements for members; (vi) establishing a quality assurance (QA) review system; and (vii) establishing an investigative and disciplinary system for its members.

In order to be licensed to engage in public practice in the Cayman Islands, individuals must be a member of good standing in one of the CIIPA-recognized Overseas Professional Accounting Institutes (OPAI) and be registered as a Regular Member of CIIPA, be a resident of the Cayman Islands, have at least seven years’ post qualification practical experience with five of those years as an assurance professional in an approved training firm a reasonable proportion of which in the most recent 2 years and in a supervisory or managerial role on assurance engagement teams and apply for license to engage in public practice. Public practitioners may also be subject to assessments as prescribed on competence, integrity, capability, accessibility and commitment.

Individuals who are not engaged in public practice requiring a license may voluntarily join CIIPA as Regular, Student or Associate Member and become subject to CIIPA’s regulations. For Regular membership CIIPA relies on the applicant’s membership of an OPAI (as proof of competence), but CIIPA will also consider applicants for membership from OPAIs that are not recognized by CIIPA and will assess the educational and practical experience of the candidate in order to determine if the competence requirement is met.

The AOA is responsible for supervising auditors of market traded, designated and Cayman Islands Monetary Authority (CIMA)-specified companies in accordance with the Auditors Oversight Act (2020 Revision). It is not authorized to set standards, regulate the accountancy profession, supervise financial reporting other than through its inspection activities, or to supervise securities regulation. AOA Recognized Auditors are subject to the AOA’s QA reviews and investigative and disciplinary procedures. Auditors that carry out audits for companies that are regulated by the CIMA are subject to approval and disqualification by CIMA.

Auditors in the Cayman Islands are largely regulated by the Cayman Islands Institute of Professional Accountants (CIIPA) in accordance with the Accountants Act. However, auditors of market traded companies are also subject to the supervision of the Auditors Oversight Authority (AOA).

Auditors of all companies are required to be a Practitioner Member of CIIPA and have a practicing license. Auditors are subject to the regulatory requirements set by CIIPA as described in the

The AOA was established by the Auditors Oversight Act as amended and is responsible for conducting QA reviews of audits of market traded, designated, and Cayman Islands Monetary Authority-specified companies and conducting investigations and issuing sanctions as it deems necessary. AOA is not authorized to set standards, regulate the accountancy profession, supervise financial reporting other than through its inspection activities, or to supervise securities regulation.

The AOA is a member of the International Forum of Independent Audit Regulators.

Cayman Islands Institute of Professional Accountants (CIIPA)

CIIPA is a membership organization comprised of Student, Associate, Regular, Retired and Practitioner Members from recognized foreign professional accountancy organizations and Registered Firms. To practice publicly in the Cayman Islands, membership of the institute as a Regular Member is mandatory. CIIPA is a Member of IFAC.

Under the Accountants Act and supplementary regulations known as the Accountants (Disciplinary) Regulations, the Accountants (Application for Membership) Regulations and the Accountants (Quality Assurance) Regulations, CIIPA is responsible for (i) licensing all practitioners engaged in public practice; (ii) maintaining a public register of its members; (iii) verifying initial professional development requirements of recognized foreign institutes; (iv) implementing continuing professional development requirements; (v) setting ethical requirements for members; (vi) establishing a quality assurance review system; and (vii) establishing an investigative and disciplinary system for its members.

In the Cayman Islands, both the Cayman Islands Institute of Professional Accountants (CIIPA) and the Auditors Oversight Authority (AOA) are authorized to conduct quality assurance (QA) reviews in accordance with each entity’s founding legislation and subsequent amendments.

The Accountants Act and the accompanying Accountants (Quality Assurance) Regulations empower the CIIPA to establish a mandatory QA review system for all audits while the AOA is responsible for conducting QA reviews for audits of market traded, designated and Cayman Islands Monetary Authority (CIMA)-specified companies in accordance with the Auditors Oversight Act.

Due to the overlap in responsibilities, in 2017, the AOA and CIIPA executed a Memorandum of Understanding to clarify the role of CIIPA and the AOA with respect to auditors and firms of listed companies. The MoU was executed in February 2017, and it was decided that CIIPA could continue carrying out QA reviews for all audits regardless of their inclusion in the scope of the Auditors Oversight Act. Cooperation between the two entities will inform the scheduling of visits and for firms that are AOA-registered. As of the date of the assessment, CIIPA reports that discussions are underway to review the two systems with a view to greater efficiency whilst meeting international standards.

CIIPA indicates that most registered firms are subject to its QA review system every three years, and the Regulations provide that firms be reviewed at least every six years. Through the Accountants (Quality Assurance) Regulations, ISQC 1 is the adopted quality control standard and ISA, and US GAAS are the prescribed auditing standards.

Both CIIPA and AOA have contracted the Institute of Chartered Accountants in England and Wales (ICAEW) to carry out its QA review visits on its behalf. The ICAEW operates QA review visits that fulfills SMO 1 requirements with long-standing policies to review its system and maintain compliance with SMO 1.

Current Status: Adopted

There is no law that defines initial professional development (IPD) requirements in the Cayman Islands and the Cayman Islands Institute of Professional Accountants (CIIPA) is only responsible for verifying the IPD requirements of recognized Overseas Professional Accounting Institute (OPAIs) as part of its membership registration process.

Through a due diligence process, CIIPA recognizes 20 OPAIs as having IPD requirements that comply with IES 1-6 and relies on their membership designations to indicate competence when admitting new members. CIIPA does set continuing professional development (CPD) requirements in its Application for Membership Regulations; however, these Regulations only apply to members if their OPAI does not stipulate its own CPD requirements. CIIPA’s CPD requirements are in line with IES 7 and it has issued a Helpsheet on competence and capability to reflect IES 8.

In 2015, CIIPA developed its own Cayman business environment training course for all new members. In 2021, the course was revised and renamed ‘Cayman Business Law’. Completion of this course will eventually become a condition of registration.

In 2022, CIIPA participated in an IES alignment project with IFAC & the International Panel on Accountancy Education (IPAE) which confirmed alignment with all 2019 revised IES at the jurisdiction level.

Current Status: Adopted

Accountants Act and Accountants (Quality Assurance) Regulations prescribe that audits must be conducted in accordance with ISA, US GAAS or a standard assessed as equivalent with those by the Cayman Islands Institute of Professional Accountants or the IAASB. CIIPA's Statement of Principle prescribes the other standards that it has assessed as equivalent. The Cayman Islands Stock Exchange (CSX) listing rules requires listed companies to have their statements audited in accordance with ISA or another set of standards approved by CSX.

Other pronouncements issued by the IAASB such as International Standards on Review Engagements (ISRE), International Standards on Assurance Engagements (ISAE), International Standards on Related Services (ISRS) have not been explicitly adopted but the International Standards on Quality Management (ISQC) is prescribed in the Accountants (Quality Assurance) Regulations. Proposals for a new definition of public practice currently under consideration will clarify that all standards of the IAASB are applicable.

Current Status: Partially Adopted

The Cayman Islands Institute of Professional Accountants (CIIPA) is responsible for setting ethical requirements for all public practitioners and other professionals voluntarily joining the institute, and its Accountants (Quality Assurance) Regulations prescribe adherence to the latest IESBA Code of Ethics. As of the date of the assessment, the 2022 Handbook of the International Code of Ethics for Professional Accountants is in effect.

All members are required to confirm compliance with the latest IESBA Code when first applying for CIIPA membership and during the annual renewal process.

Current Status: Adopted

The Portfolio of Finance and Economics within the Cayman Islands’ Government is responsible for setting public sector accounting standards that are consistent with generally accepted accounting practice (GAAP) as required by the Public Management and Finance Act . The Act defines GAAP as IPSAS or, where is no guidance provided by those standards, the IFRS as issued by the IASB.

All the government ministries in Cayman use accrual-basis IPSAS with no modifications (IFAC/CIPFA, 2020)

Current Status: Adopted

In the Cayman Islands, professional accountants may be subject to investigative and disciplinary (I&D) procedures from the Cayman Islands Institute of Professional Accountants (CIIPA) and/or the Auditors Oversight Authority (AOA).

The Accountants Act and the associated Accountants (Disciplinary Regulations) provide CIIPA with the legal authority to establish I&D processes.

CIIPA has established an Investigation Committee to investigate complaints. The Investigation Committee can then either dismiss the matter or refer it to the Disciplinary Tribunal and/or the relevant member’s Overseas Professional Accounting Institute. Matters can be appealed to the Grand Court of the Cayman Islands.

Additionally, the AOA may conduct investigations and issue sanctions as deemed necessary for auditors of market traded, designated and Cayman Islands Monetary Authority (CIMA)-specified companies in accordance with the Auditors Oversight Act. Some components of the SMO 6 best practices seem to have been incorporated into the AOA’s investigations; however, all auditors are also subject to the I&D system of CIIPA which, as mentioned above, is in line with SMO 6 requirements.

Current Status: Adopted

In the Cayman Islands only companies that are regulated by the Cayman Islands Monetary Authority (CIMA) are required to prepare and file financial statements. CIMA-regulated companies are those which are established under the Banks and Trust Companies Act, the Insurance Act, Mutual Funds Act, Securities Investment Business Act, and the Companies Management Act. These laws refer to generally accepted accounting principles without specifying accounting standards to be applied. In practice, however, the standards to be applied depend on the client due to the international nature of business in the Cayman Islands and most financial statements are prepared under U.S. GAAP or IFRS. The public sector departments (not Ministries) have also adopted IFRS.

In addition, listed companies are subject to the listing rules of the Cayman Islands Stock Exchange which require financial statements to be prepared in accordance with IFRS or the US, UK, or Canadian GAAP.

Other Cayman Island entities which have been established under the Companies Act are required to keep proper books of accounts but do not need to publish or file financial statements as they are not subject to oversight by CIMA or any other government body. Small- and medium-sized entities (SMEs) that may be required to prepare or choose to prepare general purpose financial statements may use IFRS for SMEs or another recognized GAAP framework.

Current Status: Partially Adopted

Relevant Organizations

• Audit Oversight Authority (AOA)
• Cayman Islands Institute of Professional Accountants (CIIPA)
• Cayman Islands Monetary Authority (CIMA)
• Cayman Islands Stock Exchange (CSX)
• Institute of Chartered Accountants in England and Wales (ICAEW)

Relevant Legislation

• Accountants Act 2020
• Accountants (Quality Assurance) Regulations
• Accountants (Disciplinary) Regulations
• Auditors Oversight Act
• Auditors Oversight (Amendment) Act
• Banks and Trust Companies Act
• Cayman Islands Stock Exchange Listing Rules
• Companies Act
• Companies Management Act
• Insurance Act
• Mutual Funds Act
• Public Management and Finance Act
• Securities Investment Business Act

Relevant Publications

• CIIPA, SMO Action Plan, 2021.
• International Forum of Independent Audit Regulators, IFIAR 2021 Member Profile – AOA, 2021.
• IFRS Foundation, IFRS Application Around the World?Jurisdictional Profile: Cayman Islands, May 2018.
• CJA Associates, Ltd. Financial Reporting Requirements in the Cayman Islands, 2007.