Cayman Islands Institute of Professional Accountants
Member | Established: 1970 | Member since 2013; Associate since 2008
CIIPA, formerly CISPA, was formed in the Cayman Islands in 1970 and has evolved into one of the largest professional societies in the Cayman Islands with over 1,000 members. CIIPA strives to further the public interest through the regulation of the accounting profession and promotion of the highest standards of professional and ethical conduct in line with the values of transparency, proportionality, and accountability.
Statements of Membership Obligation (SMO)
The Statements of Membership Obligations form the basis of the IFAC Member Compliance Program. They serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members.
SMO 1: Quality Assurance
CIIPA is empowered by the Accountants Law of 2016 and Accountants (Quality Assurance) Regulations of 2016 to enforce its own quality assurance review system (QARS), established in line with SMO 1 requirements, for all audits. Throughout 2015–2016, CIIPA successfully promoted the legislative approval of its Accountants (Quality Assurance) Regulations to specify the powers of the QARS and the adoption of ISQC 1 as the applicable quality control standard in the Cayman Islands and ISA and US GAAS as the applicable auditing standards. Additionally, in 2016, CIIPA and the Auditors Oversight Authority (AOA)—the national authority responsible for supervising auditors and firms of listed companies—developed a Memorandum of Understanding (MoU) to clarify the role of CIIPA and the AOA in this area. The MoU stipulates that CIIPA can continue carrying out QA reviews for all audits provided that there is an information exchange in the scheduling of visits and for firms that are AOA-registered. The MoU was executed in February 2017 and is now effective with the goal of permitting for more cooperation. In the event of deficiencies, CIIPA would delay undertaking an investigation if the AOA is already or planning to investigate the case. The institute would subsequently determine its appropriate next steps.
Furthermore, CIIPA engaged in discussions throughout 2016 with the Cayman Islands Monetary Authority (CIMA) to draft an MoU to replace a previous protocol from 2007 that would provide for more cooperation regarding QA reviews and the licensing process to ensure that all public practice firms are licensed and subject to reviews. CIIPA also expected to execute the MoA by the mid-2017.
Aside from proactively engaging with the AOA and CIMA, CIIPA has also been enhancing its own QA review system. CIIPA’s first QA reviews commenced in July 2013 with the assistance of the Institute of Chartered Accountants in England and Wales (ICAEW). ICAEW carries out the QA review visits and then issues detailed reports to CIIPA in order to assist firms in identifying and correcting deficiencies in the quality of their audit work.
CIIPA will commence its next round of QA reviews in May 2017 and its Membership and Licensing Committee has both registered and approved firms, and selected firms to undergo reviews. In preparation of this, the institute organized workshops for its members in 2016 to review the Regulations, the Accountants Law, and CIIPA’s expectations for the second cycle (2017–2019) of QA reviews. CIIPA will continue to publish an annual public report summarizing results of QARS. Additionally, the institute finalized the update of its internal QA Handbook and published its updated Helpsheet-Guide to QAR Visits in December 2016. Moreover, on an annual basis, CIIPA indicates that it conducts trainings on ISQC 1 and regularly updates its website to disseminate materials and presentations on the purpose and scope of the QARS and quality control standards.
SMO 2: International Education Standards
As the majority of CIIPA’s members hold foreign qualifications, CIIPA itself does not set initial professional development requirements but rather is responsible for ensuring its members comply with IES through a due diligence process of verifying and thereby enforcing the initial professional development (IPD) requirements of recognized Overseas Professional Accountancy Institute (OPAIs) prior to admission in CIIPA and implementing an application process to obtain a license to engage in public practice. CIIPA states that it conducted an analysis of OPAI’s compliance with IES requirements in 2012–2014 and that it has policies in place to annually review its registration and licensing procedures.
In addition, continuing professional development (CPD) requirements are defined in its Accountants (Application for Membership) Regulations. These CPD requirements for Practitioner Members comply with IES7 and IES8. The CPD requirement for Regular Members complies with IES 7, and apply to members whose OPAI does not have CPD requirements in compliance with IES7 or which does not apply those requirements to its members. CIIPA notes that it monitors members’ fulfillment of the requirements in two ways: annual declaration of compliance on renewal and two percent of members are sampled annually. Practitioner Members are subject to CPD monitoring reviews every five years.
CIIPA indicates that it offers an array of CPD opportunities and has also specified other training providers that members may use to fulfill their CPD requirements. Its CPD offerings are publicly available for review on its website as well as materials from particular courses. CIIPA also obtained National Association of State Boards of Accountancy (NASBA)-approval as a training provider so that its US members may apply attendance at CIIPA trainings toward their CPD requirements. Preparations are underway for an international conference in partnership with AICPA and all sessions will be NASBA accredited in November 2017.
Throughout 2015–2016, CIIPA has taken additional steps to advance compliance with IES requirements. CIIPA issued a Helpsheet on competence and capability for Licensing to reflect the revised IES 8 and issued a Helpsheet-Applying for and Renewing a License to provide further guidance on the policy. The Institute also developed and offered in 2015, 2016, and 2017 its own course on the Cayman business environment for new members. Beginning in 2018, CIIPA intends to make the course mandatory as part of registering as a CIIPA member, and in the future, further develop the course to make it available online.
Additionally, CIIPA reports that it periodically reviews its operational arrangements to comply with IES 5, 6, and 7 and throughout 2017 and 2018 it intends to formalize its relations and communications with OPAIs through its new International Relations Committee (IRC) in order to readily share information regarding IPD requirements and compliance with IES. The IRC is comprised of CIIPA volunteers and representatives of the larger OPAIs. The institute has already held proactive meetings with AICPA, ICAS, ICAEW, and CPA Canada. CIIPA reports that one initiative the IRC plans to take forward in 2017 is to expand options for qualifying in the Cayman Islands by working with two OPAIs pursuant to an MoU in order to offer accounting qualifications in the Cayman Islands by December 2018. As of 2016, CIIPA indicates it is in discussions with the AICPA and the Virgin Islands Board of Certified Public Accountancy to offer their qualifications in the Cayman Islands.
CIIPA is encouraged to review the revised IES, effective as of July 2016, to ensure that its CPD requirements remain aligned with the revised requirements. Similarly, it should communicate with OPAIs to ensure that their IPD requirements are also in line with the revised requirements. If gaps in alignment exist following the review, CIIPA should then develop actions with defined timelines and include them in its SMO Action Plan to demonstrate how it is working to incorporate and promote the new standards. Additionally, if deemed feasible, CIIPA is encouraged to participate in the international-standard setting process by submitting comments to exposure drafts issued by the IAESB.
SMO 3: International Standards on Auditing
CIIPA states that it has been committed to promoting the adoption of ISA as the applicable standards in audits of financial statements since 2013 and supporting implementation when its members do apply the standards.
As part of promoting the adoption of ISA and engaging with relevant stakeholders, since 2012, CIIPA has organized quarterly meetings with the Cayman Islands Monetary Authority (CIMA) to discuss options to formalize the use of ISA.
In 2016, the Accountants (Quality Assurance) Regulations were approved due to CIIPA’s active involvement and engagement with government authorities. The new Regulations prescribe ISA and US GAAS as the auditing standards to be applied. There is an option to assess other standards as equivalent to ISA and GAAS and allow those to be used. CIIPA indicates that there is an assessment underway to ascertain which other standards firms may choose to use and those standards will be assessed and any considered equivalent will be published on July 1, 2017 for use from December 15, 2017. At the time of this assessment, CIIPA reports that no firms have formally indicated they seek to use other standards from December 15, 2017.
In regards to its members, CIIPA issued a Policy on the Use of ISA in 2013 which recommended the application of ISA and IAASB pronouncements by its members.
Additionally, to support its members, CIIPA states that it organizes annual trainings on the standards as well as IAASB and GAAS pronouncements and updates. The institute also continuously updates its website to provide links to IAASB training resources and pronouncements. In line with this, it has posted information on the new auditor reporting standards and encouraged members to review the IAASB’s toolkit and summary of changes.
Lastly, in 2010, CIIPA established its Policy on Responding to Legislative and Policy Consultations to provide for contributions to the IAASB exposure drafts and other public consultations. There are currently two sub committees who review pronouncements: the Public Practice and a new Consultative Committee. The institute provided commentary with regard to the IAASB Overview-Invitation to Comment-Enhancing Audit Quality.
As deemed relevant and viable, CIIPA is encouraged to continue promoting and supporting the full adoption of ISA for all mandatory audits in the jurisdiction and note in its SMO Action Plan the results of its meetings with CIMA.
SMO 4: Code of Ethics for Professional Accountants
CIIPA is responsible for setting ethical requirements for its members, which include Practitioner and Regular Members, and its new Accountants (Quality Assurance) Regulations of 2016 prescribe adherence to the most current version of the IESBA Code of Ethics. In March 2017, CIIPA’s Council approved the establishment of an Ethics Committee that will assume the responsibility for monitoring compliance with ethical requirements. All members are required to confirm their compliance with the latest IESBA Code when first applying for CIIPA membership and during the annual renewal process. The Committee will utilize the Confederation of Asian and Pacific Accountants’ (CAPA) Maturity Model in its development and identification of areas where the institute may require improvements in regard to its compliance with SMO 4.
To support its members with adherence to the IESBA Code, CIIPA has made the IAESB’s Ethics Education Toolkit, other training resources, and a link to the IESBA Code available to its members in combination with regular ethics trainings. Ethics training is continuously offered to members. For example, CIIPA held an ethics course in September 2016 on the “conceptual approach” to ethics as adopted in the IESBA Code and in May 2016, screened the ICAEW film “False Assurance” during which ICAEW representatives answered questions on the issues arising in the film. The institute indicates that the Public Practice Committee meeting discussed the NOCLAR standard and the AML and Fraud training in April 2017 will reference that in the context of financial crime reporting obligations.
Additionally, it will incorporate ethics into its Cayman business environment assessment which covers ethical codes of other professionals in the financial services sector and related legislation and regulatory requirements.
Moreover, the institute has had plans to draft a proposal to establish a confidential counseling service or contract a third-party provider that could provide members with advice when dealing with ethical issues. CIIPA has conducted tentative research on overseas services that would be the most efficient for the institute to utilize. It indicates it will pursue this initiative further in 2017.
Finally, CIIPA states that it participants in the international standard-setting process by submitting comments to exposure drafts issued by the IESBA.
CIIPA is encouraged to review the non-compliance with laws and regulations (NOCLAR) standard, an international ethics standard for auditors and other professional accountants, which will become effective as of July 2017 and consider means to incorporate the standard into its ethical requirements and support members’ understanding and implementation of the standard.
SMO 5: International Public Sector Accounting Standards
CIIPA does not have responsibility for setting public sector accounting standards, which are consistent with generally accepted accounting practice (GAAP) as required by the Public Management and Finance Law (2013 Revision). The Law defines GAAP as IPSAS or, where is no guidance provided by those standards, the IFRS as issued by the IASB. The institute does indicate that it supports the implementation of the standards by providing advice to the Cayman Islands Government (CIG) and technical support to members.
To further enhance support for IPSAS, CIIPA has established an internal Public Sector Committee that will advise and support the CIG and will review the effectiveness of its communications and relations with public sector accountants on a semi-annual basis.
As part of assisting its members with implementation, CIIPA states that since November 2013, CIIPA collaborates with the CIG to offer its annual Professional Development Week which consists of three days of training and professional development for persons in the public and private sectors. The program brings in leading international and Cayman experts to cover a range of topics from corporate and public sector accounting to ethics, and corporate governance.
Additionally, CIIPA notes that it includes sections in its member newsletter and website that cover public sector accounting issues.
If deemed relevant and feasible, CIIPA is encouraged to participate in the international standard-setting process by submitting comments to exposure draft issued by the IPSASB.
SMO 6: Investigation and Discipline
CIIPA is responsible for establishing an investigative and disciplinary (I&D) system for members that breach professional standards. In 2012, CIIPA adopted its I&D policies and in 2016, the Accountants (Disciplinary) Regulations of 2016 were successfully enacted by law. The institute had one case in 2014 and in 2015.
CIIPA has incorporated a majority of the SMO 6 requirements into its I&D system; however, it notes that improvements could be made in regards to public interest considerations. Accordingly, CIIPA reports that it is working to promote awareness of its complaints process and reviews and reconsiders its communication methods, such as its website and articles in local media, to relevant stakeholders regarding the I&D system on a quarterly basis. The institute indicates that its I&D information is included on its website which is updated. Additionally, CIIPA states that it is planning to update its website to include Helpsheets which provide information on submitting a complaint and the I&D process.
Lastly, CIIPA states that it had been reviewing whether “gross professional negligence” is a legally recognized term in jurisdiction. Amendments to the 2016 Accountants (Disciplinary) Regulations did not specify this; however, CIIPA has identified this as item where there is a need to form a consultative committee to consider the issue. This is likely to be pursued throughout 2017–2018.
Based upon the results of results of CIIPA’s self-assessment of its I&D system against the SMO 6 requirements, CIIPA is encouraged to specify steps in its SMO Action Plan that it may undertake to increase public awareness of its I&D system following the guidance provided by IFAC.
SMO 7: International Financial Reporting Standards
Applicable international accounting standards in the Cayman Islands are not stipulated in law and often depend on the parent company due to the international nature of business in the Cayman Islands. In practice, the majority of financial statements are prepared under U.S. GAAP or IFRS. Accordingly, CIIPA indicates that it is committed to promoting adoption of IFRS and supporting its members that do apply the standards.
As part of its commitment to promoting the IFRS, CIIPA reports that holds meetings with Cayman Islands Monetary Authority and it annually presents a Discussion Paper to its Council on the need to promote convergence with IFRS through meetings and other communications. However, no specific activities to this effect have been reported. In addition, CIIPA also raises the issue that there is a need to address gaps in legislation regarding accounting standards for small- and medium-sized entities.
To assist with implementation amongst its members, it holds a recurring one-day course throughout the year covering the major updates and differences between IFRS and US GAAP in order to assist members understanding the updated accounting requirements and their impact upon the financial statements presentation. The institute also notes that there is a section in its member newsletter and website dedicated to IFRS-related topics and raising awareness of IASB pronouncements. In addition, CIIPA is in the process of utilizing its Quality Assurance Review System to gather information on the accounting standards utilized with a future objective in 2019 to be more informed when promoting IFRS.
Lastly, CIIPA mentions that it submitted comments to an IASB survey in 2013 but it is not clear if it has participated in the international standard-setting process by submitting comments in the past few years.
As deemed relevant and viable, CIIPA is encouraged to continue promoting and supporting the full adoption of IFRS and IFRS for SMEs for application in the jurisdiction.
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