Cayman Island’s entities operate, and may be regulated in, many countries of the world.
The AOA appreciates the increasingly cross-border nature of auditor oversight and is committed to participation in relevant international organisations and to engaging with relevant, equivalent authorities in other jurisdictions.
Establishing relationships with independent audit regulators in other jurisdictions will reduce the risk of Cayman audit firms being subject to multiple levels of regulatory oversight.
The AOA is a member of IFIAR. Since its creation in 2006, IFIAR’s membership has grown in light of the establishment of new independent audit regulators in different jurisdictions around the globe, bringing together independent audit regulators from over 50 jurisdictions.
We believe that active participation in IFIAR will assist the AOA in establishing and maintaining a sound regulatory regime that meets internationally recognized standards and enhances the reputation of the Cayman Islands financial services industry.
On 4 April 2017 the AOA was one of twenty two signatories to the IFIAR Multilateral Memorandum of Understanding (MMOU). AOA was approved as a signatory to the MMOU after a review by IFIAR and approval by IFIAR membership. The MMOU allows for co-operation in the exchange of information between audit regulators around the world; the initial 22 signatories comprised audit regulators from the UK, US, Canada, France, Netherlands, Australia and fifteen other countries.
Link to IFIAR website: [IFIAR]
Link to the MMOU & list of signatories: [MMOU]
Engaging with independent audit regulators in other jurisdictions may take several forms, including sharing information and entering into agreements under which the AOA carries out oversight activities on behalf of those other regulators. Other regulators may require the AOA to under-go an “equivalency” assessment before they are prepared to accept that AOA’s system of oversight as a substitute for their own quality assurance systems.
All arrangements with other regulators will be subject to reciprocal sharing agreements or memoranda of understanding, all of which will be made public on this website when completed.
IFIAR MMOU: see detail above.
Others: None have been finalized to date.
European Commission (EC): The AOA has had extensive communication with the EC and formally submitted to a technical assessment of its equivalency under EU Directive 2006/43/EC (commonly known as the 8th Directive or the Statutory Audit Directive) in November 2015. The EC undertakes the equivalency assessment to determine whether it will recognize the Cayman Islands as a "third country" having an equivalent public oversight system for auditors and audit entities.
By decision dated 25 July 2016, the EC extended the existing transitional period for audit activities in the Cayman Islands to cover audits of financial statements for financial years starting during the period 1 August 2016 to 31 July 2018.
In July 2018, the EC (through the Committee of European Auditing Oversight Bodies and its sub-group on international equivalence and adequacy) requested that the AOA provide information to allow it to perform an equivalence assessment under its "Equivalence Assessment Framework". The AOA complied with this request. In June 2019, the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) advised the AOA that equivalency status would not be granted and that there would be no extension of the transitional period. The reasons given included
· Low economic relevance and impact of such a decision on Member States;
· The absence of bilateral agreements already signed by Member States with the Cayman Islands;
· The possibility that Member States could assess equivalence at a national level.
The AOA remains committed to co-operating with independent audit regulators in EU member states in accordance with its remit as set out in the Auditors Oversight Law.
Financial Services Agency of Japan (JFSA)/Certified Public Accountants and Auditing Oversight Board (CPAAOB): We expect that an operational agreement between the Japanese and the AOA will be finalized sometime in the future under the IFIAR MMOU framework (see above).
You can download international agreements and MOU’s here: [downloads]
