Audit & Reporting Requirements

Transcription

1 Business BARBADOS Barbados Premier Business & Investment Resource Audit & Reporting Requirements

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3 Audit, Accounting & Reporting Requirements Content Sponsor KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 150 countries and have 138,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International" ), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such. businessbarbadosqueries@kpmg.bb This publication is an initiative of Business Barbados. Credits Publisher & Editor - Keith Miller, Peter Boos Project Management - Natasha Vlahakis, Nia Vlahakis Design - Neil Barnard at 809 Design Associates Inc. Business Barbados is published annually by Caribbean Business Publications Inc. an initiative of: Miller Publishing Company Limited, Edgehill, St. Thomas, Barbados, West Indies. Tel: (246) , Fax: (246) keith@millerpublishing.net Introduction The high profile corporate collapses in recent memory and subsequent enhanced regulatory scrutiny have, as expected, placed greater focus and emphasis on the whole area of Audit, Accounting and Financial Reporting. The professionals in this area are charged with being the ones who ensure that a Company reports its results and financial position in accordance with a recognized accounting framework and that they are recorded truly and fairly. Audit professionals are further charged with verifying the reasonableness of management's representations and reporting to the shareholders. Professionals in this area are under intense pressure to "get it right". There is thus a need to stay at the forefront of current knowledge. In the island of Barbados, the relevant professionals strive to provide the highest level of service and apply an appropriate level of scrutiny. This section on Audit, Accounting and Financial Reporting gives some insight into the requirements in Barbados with respect to these. It specifically covers the following: Auditors - who can be an auditor of companies along with other pertinent information with regards to auditors Audit & Reporting Requirements - requirements to have an audit performed and other regulatory filing requirements Audit Reports - various forms of reports produced by auditors Financial Reporting Standards - the various reporting standards which can be applied by companies. All information in this publication has been carefully collected and prepared, but it still remains subject to change and correction. Use these contents for general guidance only and seek extra assistance from a professional adviser with regard to any specific matters. Copyright reserved. None of the contents in this publication can be reproduced or copied in any form without permission in writing from the publisher. businessbarbados.com 3

4 Audit, Accounting & Reporting Requirements: Audit & Reporting Requirements Audit & Reporting Requirements Audit Requirements For a Company registered in the island of Barbados, there is an automatic requirement for an audit once the Total Assets or Revenues exceed BB$1,000,000**. In such a case, the financial statements are required to be filed with the relevant regulatory body along with a copy of an audit report. All such audit reports should be signed by a professional member in good standing with the Institute of Chartered Accountants of Barbados, who holds a practicing certificate. ** In the presentation of the 2010 Budgetary Proposals in November 2010, the Minister of Finance and Economic Affairs indicated that the above threshold would be increased for companies with financial year ends subsequent to December 31, 2010 to an amount of BB$2,000,000 and again for year ends subsequent to December 31, 2013 to an amount of BB$4,000,000. Other Reporting Requirements The exact full reporting requirements are dictated by the particular incorporation details of each specific entity. The various Acts and corresponding reporting requirements are as follows. (Note that the particular Act should be read in detail for additional guidance) Societies with Restricted Liability Act of Barbados, CAP 318B 1995 Companies registering under this Act are organized as Exempt Societies with Restricted Liability. The annual financial statements of a Society whose gross revenues or whose assets exceed BB$1,000,000 shall be audited at least once in every financial year by an auditor appointed by the Society. A copy of the audited financial statements should be filed with the Registrar on an annual basis. An annual tax return is also required to be filed with the Commissioner of Inland Revenue where taxes are paid on profits and gains of each income year at specified rates based on a sliding scale. See Tax section for further guidance. Companies organized as Exempt Societies with Restricted Liability are required to pay an initial licencing fee of BB$850 and an annual renewal fee of the same amount. Renewal of the licence is required on or before the 31st of December to avoid related penalties. Exempt Insurance Act, 1983 Companies registering under this Act, register as an Exempt Insurance Company. This means that it is a Company in the business of insuring risks located outside of Barbados in respect of which premiums originate outside Barbados. On an annual basis, audited financial statements are required to be filed with the Supervisor of Insurance. At this point in time, the documents to be presented are the audited financial statements and a solvency certificate. The solvency certificate indicates whether the Company has met the minimum solvency requirements of the Act. At any point in time, the minimum solvency is US$125,000. Under the Act, the financial statements and solvency certificate are required to be certified by a suitably qualified auditor. On an annual basis, financial statements are also required to be filed with the Commissioner of Inland Revenue. Exempt Insurance Companies are given certain income tax exemptions. These and all other benefits under the Act can be extended for a period of thirty (30) years. Companies registered under the Exempt Insurance Act are required to pay an initial licencing fee of BBD$500 and an annual renewal fee of BB$20,000. Renewal of the licence is required on or before the 1st of January of the year to avoid related penalties. Insurance Act, 1996 Companies are allowed to register as Qualifying Insurance Companies under the Insurance Act, A QIC is a registered insurer under the Insurance Act, in respect of which a) at least 90% of gross revenues from insurance premiums originate outside the Caribbean Common Market. b) at least 90% of all risks insured originate outside the Caribbean Common Market. c) the Supervisor has issued a Certificate of Qualification Companies registered under either this Act or the Exempt Insurance Act, are allowed to apply for registration under the other. However, at this point in time they need to satisfy the Supervisor of Insurance that they meet the requirements of the other Act and would have to cancel their original registration under the first Act. Qualifying Insurance Companies are required to maintain a businessbarbados.com 4

5 Audit, Accounting & Reporting Requirements: Audit & Reporting Requirements minimum level of solvency based on the level of business written and there are certain qualifying assets and liabilities which are specified in the Act. On an annual basis, audited financial statements are required to be filed with the Supervisor of Insurance. At this point in time, the documents to be presented are the audited financial statements and a solvency certificate. The solvency certificate indicates whether the Company has met the minimum solvency requirements of the Act. In addition, where a QIC carries on insurance business other than international insurance business, then it must publish its audited annual financial statements in the Gazette and in one daily newspaper within four months of year end. Under the Act, the financial statements and solvency certificate are required to be certified by a suitably qualified auditor. On an annual basis, financial statements are also required to be filed with the Commissioner of Inland Revenue. Qualifying Insurance Companies are given certain income tax credits and exemptions. Companies registered under the Insurance Act are required to pay an initial licencing fee of BB$500 and an annual renewal fee of BB$20,000. Renewal of the licence is required on or before the 1st of January of the year to avoid related penalties. Segregated Cell Companies On November 1, 2010, the Supervisor of Insurance released new guidance as it relates to the solvency requirements and the audited financial statements for Segregated Cell Companies (SCC s). The solvency requirements are as follows: The solvency ratio for the core is required to be a minimum of US$125,000. If it conducts general or long-term insurance business, the solvency ratio is determined in accordance with the guidance. The solvency ratio for each cell is required to be a minimum of US$12,500. This is amended based on the level of business written in any given period. As it relates to the financial statements, with effect for periods commencing on or after January 1, 2010, the core and each cell are required to file separate audited financial statements along with a separate audit report on each. A full set of financial statements (i.e. balance sheet, statement of income and retained earnings, statement of cash flows and notes to the financial statements) is required to be included in the submission for the core and each cell. These audited financial statements are required to be submitted no later than six (6) months after the year end. International Business Companies Act, 2001 Companies can be registered to carry on the business of an international business company if it intends to carry on from within Barbados the business of international manufacturing or international trade and commerce. On an annual basis, the licence should be renewed to ensure that the Company can continue engaging in such business. Such companies are required to pay taxes on an annual basis at rates as specified under the Act and are required to file a tax return at that point in time with the Commissioner of Inland Revenue. On an annual basis, provided that the gross assets or revenues exceed BB$1,000,000 audited financial statements should be forwarded to the Minister of Industry and International Business. The benefits under this Act are available to a licencee for a period of fifteen years from the date of registration. Companies registered under the International Business Companies Act are required to pay an initial licencing fee of BB$850 and an annual renewal fee of the same amount. Renewal of the licence is required on or before the 31st of December to avoid related penalties. Offshore Banking Act Companies can be registered under this Act, if they intend to receive foreign funds for loans, investments or other such purposes as approved. On a quarterly basis, licensees are required to submit to the Central Bank of Barbados in a prescribed form, a quarterly statement of its assets and liabilities. This should be submitted within 21 days after the end of the quarter. On an annual basis, audited financial statements are required to be submitted to the Central Bank of Barbados. This should be done no later than four (4) months after year end and should contain an auditor s report and director s report. A copy of the audited financial statements should also be published in the Official Gazette. Such companies are required to pay taxes on an annual basis at rates as specified under the Act and are required to file a tax return at that point in time with the Commissioner of Inland Revenue. Companies registered under the Offshore Banking Act, which accept third party deposits or conducts third party business are required to pay an initial licencing fee of BB$100,000 and an annual renewal fee of the same amount. Companies registered under the Act which fall outside of the above mentioned category (i.e. they do not accept third-party business) are required to pay an initial licencing fee of BB$50,000 and an annual renewal fee of the same amount. The licence for companies registered under this Act is required to be renewed annually by the 1st of January. Penalties are not imposed on such entities for late filings. 5 businessbarbados.com

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