Requirements of the Financial Accounting Standards (2018-01-05)

Summary

This is a Cayman Islands Monetary Authority (CIMA) supervisory circular, dated 5 January 2018, that follows up on an October 2017 circular addressing the Financial Accounting Standards Board's accounting standard update ASU 2015-09. It sets out CIMA's position on how licensees that prepare their financial statements under US GAAP should treat this specific accounting standard update.

The circular states that licensees who have chosen to prepare financial statements under US GAAP should comply with ASU 2015-09 where it applies to them, because CIMA views the standard as improving the relevance, transparency and usefulness of financial statement information. However, CIMA acknowledges that some licensees may face complexities in implementing the standard and provides a route for non-compliance.

• Notification requirement: If a licensee's Board of Directors decides not to comply, it must notify the Authority in advance of that decision, together with the rationale.
• Prior discussion with auditor: The licensee should first discuss with its audit firm the likely impact of non-compliance on the audit opinion.

The document does not create new licensing or reporting categories but clarifies supervisory expectations for entities using US GAAP financial reporting.

Key obligations

• Licensees that prepare financial statements under US GAAP should comply with ASU 2015-09 where applicable.
• If a licensee's Board of Directors decides not to comply with ASU 2015-09, it must notify the Authority in advance of that decision, including the rationale for non-compliance.
• Prior to notifying the Authority of a decision not to comply, the Board should discuss with the licensee's appointed audit firm the likely impact of non-compliance on the audit opinion.

Applies to

licensees preparing financial statements under US GAAP

Deadlines

• in advance of the decision: Board of Directors must notify the Authority in advance of any decision not to comply with ASU 2015-09, along with the rationale.