CIMA Publishes New Auditor Approval Policy

The Cayman Islands Monetary Authority (CIMA) has published a new Regulatory Policy on the Approval of an Auditor for a Regulated Entity (Auditor Policy). The Auditor Policy will come into effect on 1 January 2027. CIMA's regulatory measures confirm the new effective date across regulated sectors.

Scope of the Auditor Policy

The Auditor Policy applies where a regulated entity is required under the applicable Regulatory Acts to appoint an auditor approved by CIMA. It sets out the criteria and approach that CIMA will apply when considering whether to approve an auditor.

The Auditor Policy addresses matters including:

(i) physical presence in the Cayman Islands;
(ii) registration and licensing;
(iii) independence and objectivity;
(iv) competence and capability;
(v) resources and capacity;
(vi) quality management and assurance;
(vii) ethical standards and conduct; and
(viii) professional indemnity insurance.

CIMA will, at its discretion, approve only firms with a physical presence in the Cayman Islands.

The Auditor Policy does not require all audit work to be conducted in the Cayman Islands or solely by the approved auditor. However, the audit report must be issued or signed off by the approved auditor after it has satisfied itself as to compliance with the applicable accounting standards and auditing requirements.

Transitional arrangements

The Auditor Policy includes transitional provisions for regulated entities and firms that are already recognised as approved auditors.

Regulated entities that are required to appoint an auditor under the Auditor Policy must comply from the first accounting period beginning after the Auditor Policy comes into effect.

Firms already recognised by CIMA as approved auditors before the effective date will retain that status without re-evaluation, provided that they continue to satisfy the ongoing requirements of the Auditor Policy.

Practical considerations before 1 January 2027

Regulated entities subject to an auditor approval requirement should consider the application of the Auditor Policy to their existing and proposed audit arrangements in advance of its effective date.

Relevant matters for review include:

(i) whether the entity's auditor satisfies the applicable CIMA approval requirements;
(ii) the auditor's physical presence, registration and licensing in the Cayman Islands;
(iii) the auditor's independence, competence, capability, resources and capacity;
(iv) applicable quality management, ethical and professional indemnity insurance requirements; and
(v) the application of the transitional provisions to existing audit arrangements.

Regulated entities should also consider the timing of their accounting periods when determining when compliance with the Auditor Policy will first be required.

Next steps

Cayman Islands regulated entities that are required to appoint a CIMA-approved auditor should review the Auditor Policy in advance of 1 January 2027 and consider whether any changes to their existing audit arrangements are required.

For further information or advice on the application of the Auditor Policy, please contact a member of our Regulatory Team at jon.mclean@stuartslaw.com.