Compliance Testing and Auditing in British Virgin Islands
In the British Virgin Islands, maintaining accurate and reliable accounting and auditing records is a requirement for all registered companies. The Financial Statements, Annual Reports, and other documents must reflect the company’s activities and financial status truthfully.
Exemptions from Filing Annual Returns
According to BVI laws, companies are exempt from filing annual returns with their Registered Agent if:
- They are listed on a stock exchange
- They are regulated under financial services legislation
- They file their annual tax return accompanied by their financial statement
- They are in liquidation, except those whose annual return becomes due before the commencement of liquidation
Audit Requirements
All private, professional, and public funds, along with licensed organizations, must appoint an auditor to conduct an audit of their financial statements as required by:
- Securities and Investment Business Act 2010
- Mutual Funds Act
There is no obligation to submit annual audited financial statements to government authorities. However, preparation of such statements is necessary for compliance with CFC legislation, opening a bank account or updating company data with your bank, business estimation, and internal purposes.
Record Keeping Requirements
Every registered company must keep reliable records and documents necessary to show and explain the company’s transactions and financial position. The required documents include:
- Official bank statements
- Relevant contracts
- Invoices
- Statutory documents related to subsidiaries and associated enterprises
- Share purchase contracts
- Financial statements of subsidiaries and associates
- Promissory notes
- Other financial obligations
The Directors determine where the accounting records will be kept, whether with the registered agent or any other place within or outside BVI. If the records are kept outside the registered agent’s office, they must be provided to the registered agent as and when desired without delay.
Consequences of Non-Compliance
Failure to maintain accurate accounting records is a violation of law and can lead to fines or prosecution. Companies are required to store their accounting records for at least five years from the date of completion of the transactions to which the records relate.
Frequently Asked Questions
Q: From when is it mandatory to file the Annual Financial Return?
A: From 1st January 2023 onwards, it is mandatory to file the Annual Financial Return to the registered agent of the company providing specific financial information.
Q: What is the time limit to file Annual Financial Return?
A: The time limit to file Annual Financial Return is nine months from the due date. If the company follows a financial year, the due date will be nine months from 1st January 2024; however, if the company follows a financial year expressly adopted by it, then the due date will be the date on which the financial year comes to an end.
Q: Is there an obligation to prepare and submit an Annual Audited Financial Statement?
A: There is no obligation unless your company falls under one of the exemptions. However, preparation of annual audited financial statements is required for compliance with CFC legislation, opening a bank account or updating company data with your bank, business estimation, and internal purposes.
Q: What is the role of a Registered Agent?
A: A registered agent is a person or company appointed to act as the official point of contact for the company and to receive legal necessary papers on behalf of the company.
Q: Are directors personally responsible for keeping accounting records?
A: Yes, the directors are personally responsible for keeping accounting records in a manner that reflects the true and fair view of the company’s financial position.