E-reporting for Cayman Islands monetary authority regulated funds
Over the last few months, the Cayman Islands Monetary Authority ("CIMA" or the "Authority") has released a significant amount of information regarding E-Reporting through its website, speeches, meetings, press releases, quarterly CIMA newsletters and other correspondence. The intention of such communications was to inform all parties managing a Cayman CIMA Regulated Funds of the advent of e-filing. In their
letter dated October 6, 2006 to all fund operators, they provide insight into "Why is CIMA implementing E-reporting?"
"Overview, scope, and background" - From CIMA's (draft) guidance notes
CIMA issued these Guidance Notes as explanatory material and directions to assist fund operators in completing the Annual Return.
"Operators of all funds regulated under the Mutual Funds Law (2003 Revision) (the “Law”), as amended, are responsible for the completion of the annual return. Funds that are not regulated under the Law (e.g., “exempt funds” that fall within s. 4(4)(a) of the Law) do not complete the annual return. In a master-feeder structure, only the fund(s) that are regulated under the Law complete the annual return" (which is usually the feeder).
"Operators may delegate completion of the annual return to a service provider, but operators remain legally responsible for the accuracy and completion of the annual return.
Completion of the annual return is a separate obligation from the requirement under the Mutual Funds Law that a fund must file its audited financial accounts annually with the Authority within six months of the fund’s financial year-end.
Once complete, the annual return should be delivered to the fund’s Cayman Islands audit firm in electronic format (e.g., emailed or on cd-rom) as the audit firm may require. The audit firm will then submit the annual return and the annual audited financial accounts to the authority.
The audit firm must submit both the fund’s annual return and its annual audited financial accounts to the authority at the same time, in the manner required by the authority. The authority will not permit the fund’s annual return and its annual audited financial accounts to be submitted at different times."
Fund annual return
'The Mutual Funds Law (2003 Revisions) - The Mutual Funds (Annual Returns) Regulations, 2006' (the "Regulations") introduced the requirement for an accurate and complete 'Fund Annual Return' (FAR), (this has previously been referred to as the 'Key Data Form') to be prepared for each financial year of a regulated mutual fund. The FAR is required to be submitted to CIMA within six months after the end of the financial year to which it relates. This Law requires that the FAR is submitted to CIMA through the Cayman Islands auditor, however it states that "...such auditor shall not be liable for the accuracy or completeness of any returns submitted by him...."
It is currently in draft; however, it is expected to be finalized in the next few weeks. The FAR is separated into standing data (e.g., name of fund, strategy, etc.) which will likely not change significantly year to year, and financial information (e.g., total assets, net income, etc.) which can be extracted from the fund's financial statements. CIMA has also produced guidance notes, as noted above, in order to assist in the completion of the FARs.
CIMA is also willing to answer any comments or questions concerning the completion or submission of the FAR by email to
efiling@ky.pwc.com or by calling the analyst responsible for the fund.
PDF of audited financial statements
CIMA continues to require a copy of the audited financial statement to be submitted within six months of the financial year end for all the funds that it regulates. These must now be submitted by the auditor simultaneously with the FAR; otherwise, the E-Reporting submission will not be accepted. The guidance notes state "The Authority requires a fund's annual audited financial accounts to be submitted as an Adobe PDF. The Authority requests and recommends that the PDF contents be in a textual format (i.e., generated from an electronic document) and not scanned."
PricewaterhouseCoopers' response to e-filing in the Cayman Islands
The PricewaterhouseCoopers firm in the Cayman Islands ("PwC-Cayman") has set up a dedicated e-mail address
(
efiling@ky.pwc.com) for fund operators (i.e., a director if the fund is a company, the trustee if a trust, or the general partner if a partnership), or whomever they delegate, to submit the FAR and the PDF copy of the financial statements directly to PwC-Cayman and not via other PricewaterhouseCoopers network firms. In this way, PwC-Cayman believes that it can provide the most efficient and cost-effective service to all our clients.
After PwC-Cayman has received by e-mail from the fund both the PDF copy of the audited financial statements and the Excel version of the FAR and can submit these to CIMA, PwC-Cayman will send an e-mail reply to the sender. Although PwC-Cayman's only responsibility under the Regulations is to submit the FAR to CIMA in a timely manner, in the course of carrying out this responsibility, if the firm becomes aware of a specific issue in relation to the FAR (e.g., the FAR is incomplete), PwC-Cayman will ask the sender of the FAR whether or not they wish to rectify and resubmit the FAR before PwC-Cayman submits it to CIMA.
Please note that PwC-Cayman is not liable for the accuracy or completeness of the FAR; that is the responsibility of the operator of the fund.
PwC-Cayman also plans to track the documents which are received and send out reminders, if necessary, a short time before the regulatory filing is due for submission; however this will be partly dependent on the information that PwC-Cayman can obtain from CIMA's system.
Deadlines
The e-filing is required to be filed within six months of the fund's financial year end. It is applicable for all funds with a year-end on or after December 27, 2006.
Distinction from the audit
Since PwC-Cayman will be acting to comply with a specific statutory requirement, the firm shall not obtain a separate engagement letter or include specific language in our audit engagement letters. PwC-Cayman will also not request any specific representations in the audit representation letter. This should assist all PwC-Cayman clients who will not have to expend resources or incur legal costs in approving such modifications.
Fees
Incremental fees for the services performed by PwC-Cayman are expected to be nominal and can be discussed with your local engagement teams.
What operators should be doing in response to e-filing?
- Review the draft FAR and guidance notes.
- Decide who will complete the FAR. Please note, however, that the operator of the fund has the overall responsibility for its accuracy and completeness.
- Decide who will PDF the audited financial statements.
- Decide who will simultaneously submit the FAR and PDF of the audited financial statements to PwC-Cayman by e-mail to efiling@ky.pwc.com.
Resources available if you require assistance:
- The CIMA website has a great deal of information about E-Reporting.
- CIMA is also willing to answer any comments or questions concerning the completion or submission of the FAR by email to ereporting@cimoney.com.ky or by calling the analyst responsible for the fund.
- PwC-Cayman is available to answer any questions concerning its submission process by email to efiling@ky.pwc.com.
