CIMA has issued a new regulatory rule titled ‘Rule on Regulatory Reporting Standards [pdf, 8 pages, 0.1Mb]’ (the ’Rule’) which impacts financial reporting for regulated mutual funds and other CIMA registered entities.
Regulated mutual funds are required to submit their annual audited financial statements and FAR form within 6 months of the conclusion of the annual financial period. Currently, regulated mutual funds often request a month’s extension to the 6 month period if the audit is not able to be completed by the deadline. The CIMA application fee for an extension is currently US$244.
Effective on 1 August 2011, the Rule will only apply to audited annual accounts due from 1 August 2011 onwards. It will not impact a 31 December 2010 audit due for submission with CIMA on 30 June 2011. However, the Rule will apply where a report was due before 1 August 2011 but the Fund has received an extension resulting in its submission after 1 August 2011.
Major Elements of the 'Rule' are as follows:
- Time for requesting an extension to a reporting period: A CIMA registered fund must apply for an extension to a reporting period at least 30 calendar days prior to the due date.
- Consideration for grant of extension to a reporting period: In applying for an extension, CIMA will consider the applicant's record of good standing and whether the applicant is or appears unlikely to meet any other statutory obligation, has experienced a significant disruption in its operations (such as the devastation from a hurricane or fire) or has provided any other compelling reason that CIMA deems to be acceptable. Pursuant to the Rule, it is now required that the auditor's written confirmation that the audit is incomplete and a reason for the delay be also submitted.
- Administrative Penalty for late or erroneous reporting: CIMA will impose an administrative penalty for late or erroneous reporting as set out below:
- Within 10 business days following the due date, US$500;
- Within 11-20 business days following the due date, US$1,000;
- Within 21-30 business days following the due date, US$2,000;
- More than 30 business days following the due date, US$5,000.
- Definition of late or erroneous reporting: The Rule provides that the audited financial statements is late if it is not received by CIMA , in the form and manner specified, on or before the due date or extension granted by CIMA. The audited financial statements are erroneous if it is incomplete, inaccurate or not error-free.
- Opportunity to correct an erroneous report: Whilst CIMA will endeavour to provide an opportunity to correct an erroneous or incomplete audited financial statements, CIMA will retain the discretion to automatically impose an administrative penalty where errors or incompleteness are persistent or considerable or material.
- Administrative penalty evidenced in CIMA's regulatory record: The fact that a CIMA registered fund has incurred an administrative penalty shall form part of the Fund's regulatory record with CIMA .