Company audit in the Cayman Islands. Financial reporting, accounting, consulting in the Cayman Islands

Filing financial statements is not required. All companies incorporated in accordance with the Companies Act must make financial statements reflecting the company’s financial position, but they are not required to publish or file financial statements since they are not subject to supervision of the Cayman Islands Monetary Authority (CIMA) or any other state agency.

All accounting records (books of accounts) must reliably reflect the state of the company’s affairs and explain its transactions. Such records must be kept for at least 5 years.

In the Cayman Islands only companies regulated by the CIMA must make, publish and file financial statements. Companies regulated by the CIMA are companies incorporated in accordance with the Banks and Trust Companies Act, Insurance Act, Mutual Funds Act, Securities Investment Business Act and Companies Management Act.

Accounts are not available to the public.

Offshore companies in the islands are exempt from taxation: entities have the right to receive a guarantee in writing from the government of the islands of keeping their non-taxable status for 20 years (the period can be extended up to 30 years). This guarantee is necessary to not pay new taxes introduced in the future. Such companies are called exempted companies.

In January of every year all exempted companies must file with the Register an annual return that confirms that: - the Memorandum and Articles of Association of the company have not been changed, - the company has not conducted business in the Cayman Islands (the grounds for its exemption from taxes), - provisions of the Companies Act have been complied with.

An annual fee must also be paid; its amount depends on the amount of the authorized capital of the company and equals the registration fee:

• 700 KYD if the authorized capital does not exceed 42 000 KYD;
• 1 000 KYD if the authorized capital is 42 000 KYD to 820 000 KYD;
• 1 984 KYD if the authorized capital is 820,000 KYD to 1 640 000 KYD;
• 2 568 KYD if the authorized capital exceeds 1 640 000 KYD.

Financial statements shall be filed with the CIMA within 3-6 months after the end of the financial year / period, depending on the circumstances and type of the entity. The first and last reporting periods can be extended up to 18 months.

The deadline for filing audited financial statements can be extended at the discretion of the CIMA. The first one-month extension is usually provided, no questions asked, but in the case of a request for an extension of the deadline for filing financial statements of more than one month, the CIMA will have to be provided with the auditor’s letter explaining the reason for the delay. In special circumstances the CIMA can approve a 3-month extension at most. A registration fee is charged for filing an application for extension of the deadline for filing financial statements. In the case of violation of requirements regarding audit and filing financial statements with the CIMA, the company and its directors are imposed with a penalty the amount of which depends on the type of the entity and the delay.

An annual return must be filed and annual fees must be paid for all companies and partnerships incorporated or registered in the Cayman Islands (including foreign partnerships and companies) by 31 January. If an annual return and fees are not paid by 31 March, late payment penalties start to accrue quarterly.

In the case of late filing of an annual return and payment of fees, the following penalties are charged:

• by 31 March - 0;
• from 1 April to 30 June – 33,33% of the amount of annual fee;
• from 1 July to 30 September – 66,67% of the amount of annual fee;
• from 1 October to 31 December – 100% of the amount of annual fee.

If a company does not file an annual report and does not pay the fee within one year after the set date, it is automatically struck off the Register, and all assets of the company become property of the Government of the Cayman Islands.