Obligations of registered auditors

A recognized auditor must comply with the AOL, the Rules and any requirements, restrictions or sanctions imposed by the AOA under the law or the Rules.

Downloads of the AOL, the Regulations to the AOL, and the Rules can be found here: [downloads]

Certain obligations continue even though a recognized auditor has withdrawn from the Register.

Auditors should read the AOL and the Rules for a full understanding of their obligations.  This section provides only an overview of those obligations.

An auditor who audits the financial statements of a market traded or designated company must apply for registration unless the audit entity is an exempted entity.

See this web page for more information [about us/who we oversee]

The AOL prohibits a person describing themselves as engaged in the audit of market traded or designated companies or holding themselves out to be so qualified unless they are a recognized auditor.

Maintaining eligibility to be on the Register

A recognized auditor is only eligible to be on the Register if:

• all responsible individuals of the auditor are licensed under the Public Accountants Law;
• the auditor and all responsible individuals of the auditor are bound by and required to comply with the Rules when auditing the financial statements of market traded, designated or Authority specified companies or have undertaken to do so; and
• all responsible individuals of the auditor have been designated by the auditor as competent to audit the financial statements of a market traded, designated or Authority specified company.

If the auditor no longer meets the eligibility criteria, written notice must be given immediately to the AOA.

Accuracy of the information on the Register

Annual confirmation: An annual confirmation of the accuracy of the information on the Register is required at the time the annual fee is paid. Corrections to the information should be notified to the AOA at this time if the information is inaccurate. The annual confirmation form can be found here [annual confirmation form].

Intra-year changes: Immediate written notice must be given to the AOA by a recognized auditor of any the following:

• the recognized auditor becoming ineligible to be entered on the register;
• the termination of the appointment of a responsible individual or a responsible individual becoming ineligible to hold that role in respect of the recognized auditor;
• the taking of any disciplinary action under the Public Accountants Law against a firm or responsible individual that resulted in an adverse finding;
• any reasonable grounds the recognized auditor has for suspecting that the recognized auditor or a responsible individual has contravened the laws of the Cayman Islands; or
• a request for the addition of a responsible individual to the Register entry

The form to be used for notifying changes to the Register can be found here [Notice to Authority of changes to information on the register]

Notifying other changes in circumstances

A recognized auditor shall notify the AOA of any material changes to the information provided in its latest registration or annual filing.  Events constituting a material change are set out in the Rules and include:

• mergers and acquisitions by, and bankruptcy, insolvency or dissolution of the recognized auditor;
• the sale or other disposition by the recognized auditor of all or part of its audit practice involving 10% or more of its base of market traded company audit clients,  as measured by the number of such clients; or
• any other matters that the Authority determines and notifies recognized auditors constitute a material change.

Conditions on registration imposed by the Authority

A recognized auditor must comply with those specific conditions, if any, imposed by the Authority in respect of its entry on the Register.

If the AOA imposes conditions upon an entry on the register, the Rules provide that the auditor may petition for a review of the AOA’s decision.  The AOL also provides for an appeal to the Grand Court of the Cayman Islands in certain circumstances.

Requirements, restrictions and sanctions

A recognized auditor must comply with any disciplinary actions taken by the AOA under the Rules.  These may be in the form of requirements, restrictions or sanctions

The Rules provide that the auditor may petition for a review of the AOA’s decision to impose or vary disciplinary actions.

Responding to Authority requests

The Authority has broad powers to request information from a recognized auditor (or an auditor applying for registration).  The powers relate not only to Inspections or Investigations carried out by the AOA but more generally to the exercise of its functions. In some instances and subject to certain conditions, as specified in the AOL, the Authority may require the provision of information or the production of documents by a recognized auditor even though they are the subject of legal professional privilege.

A recognized auditor is required to respond to requests in the time frame and form which the AOA specifies.

The Rules require a recognized auditor to:

• establish as a condition of the employment, retention or partnership of each of its responsible individuals that such persons will cooperate with Inspections and Investigations, including by complying with Authority demands and requests;
• use its best efforts to cause its responsible individuals, and other partners and employees, to cooperate with the Authority; and
• obtain and make available to the AOA on demand certain agreements and consents from each of its responsible individuals agreeing that the AOA may collect, and in specific circumstances disclose, certain personal information in relation to exercising its functions.

Professional Standards and Conduct of Audit Work

The Rules require a recognized auditor to:

• comply with the auditing standards referred to in the relevant audit report, and any related quality control standards;
• always conduct audit work properly and with integrity;
• be satisfied that each designated professional involved in its audit work is, and continues to be, a fit and proper person;
• consider its independence and ability to perform the audit properly and record this before it accepts appointment or reappointment as auditor; and
• not accept an appointment or continue as an auditor if the firm has any interest likely to conflict with the proper conduct of the audit.

Only a responsible individual can be responsible for an audit and sign an audit report; a recognized auditor must ensure only persons meeting the criteria in the Rules are appointed as responsible individuals.

Any audit report issued by a recognized auditor must state the name of the recognized auditor as it appears in the Register.

Working papers

Working papers relating to the audit of the financial statements of a market traded, designated or Authority specified company shall be:

• maintained in English (in so far as practicable);
• made available to the Authority or to any person to whom the Authority has delegated any of its functions.

A recognized auditor is required to use their reasonable endeavours to obtain and make available those working papers which not under the auditor’s possession or control.

Fees and other costs of oversight

The non-refundable annual fee must be paid by 31 January in the year for which registration is to continue.  Other fees and costs of oversight charged to a firm by the AOA must be paid as specified in the Rules or by such time as the Authority indicates.  Failure to pay fees and costs in the specified time can result in disciplinary action and possible removal from the Register.

Information about and a copy of the Rules can be found here: [Rules]

Questions regarding the obligations of recognized auditors should be directed to the AOA’s Managing Director whose contact information can be found here [contact information]