Of all the sections in the Cayman Islands Fund Annual Return, the financial section is the one that generates the most errors, the most CIMA queries, and the most last-minute scrambles before the June 30 deadline. It is also the one that is most directly tied to the audited financial statements — meaning that errors here create inconsistencies between two documents that CIMA receives simultaneously.
This guide walks through the key components of the FAR financial section, explains what each field is asking for, and identifies the most common mistakes that lead to rejection.
When to Complete the Financial Section
The single most important rule about the financial section: complete it only after the audited financial statements are finalised. Every number in the financial section of the FAR must match a corresponding number in the audited accounts. If the audited accounts are not yet final when the FAR is being prepared, leave the financial section blank and return to it when the accounts are ready.
Filing a FAR with financial data drawn from draft accounts — and then discovering that the final audited figures differ — creates a rejected or queried filing and potentially requires a resubmission.
The Currency
The FAR financial section must be completed in the fund's base currency (the currency in which the fund's financial statements are prepared). Where a fund has assets denominated in multiple currencies, those assets should be translated into the base currency consistently with how they are presented in the audited financial statements — typically using the year-end exchange rate applied in the accounts, not the rate prevailing on the date the FAR is completed.
Net Asset Value (NAV)
The FAR requires the fund's NAV as at the end of the financial year — the figure that appears on the face of the audited financial statements as total net assets or total partners' capital (depending on the fund's structure).
The NAV figure must:
- Match the audited financial statements exactly
- Be reported in the fund's base currency
- Reflect the position as at the financial year-end (not the date the FAR is completed)
A common error is using a NAV figure from a management accounts or administrator report rather than the final audited figure. These should be the same — but where they differ due to audit adjustments, the audited figure must prevail.
Subscriptions, Redemptions, Capital Calls, and Distributions
The FAR asks for flows during the financial year — not just the closing position. Depending on the fund type, this includes:
For mutual funds (open-ended): Total subscriptions received and total redemptions paid during the year. These should correspond to the Statement of Changes in Net Assets in the audited accounts.
For private funds (closed-ended): Total capital contributions drawn from investors (capital calls) and total distributions made to investors during the year. These correspond to the Statement of Changes in Partners' Capital (or equivalent) in the audited accounts.
Common errors include:
- Reporting gross subscriptions when the financial statements show net subscriptions (after redemptions)
- Including management fees or expenses as a component of capital calls
- Omitting in-kind distributions (distributions of securities rather than cash)
- Entering zero when there were no redemptions/distributions (which may be correct, but should be verified rather than assumed)
Investment Portfolio Data
The FAR requires a breakdown of the fund's investment portfolio by asset class. The categories available in the FAR drop-down lists reflect CIMA's classification framework — they must be selected from the list, not typed manually.
Where a fund holds assets across multiple categories, each category must be reported separately with the corresponding NAV allocation.
The investment strategy classification — separate from the asset class breakdown — has been updated by CIMA since November 2023 to incorporate enhanced ESG and strategy categories. Funds using the old classification codes in a rolled-forward form will fail validation.
The Leverage Section
The FAR requires disclosure of whether the fund uses leverage, and if so, the nature and extent of that leverage. For many private funds, leverage is used at the asset level (within portfolio companies) rather than at the fund level. This distinction matters — fund-level leverage and asset-level leverage are reported differently, and CIMA expects operators to understand the difference.
For hedge funds, the gross exposure and net exposure figures must be consistent with those reported in the audited financial statements or the notes thereto.
Cross-Referencing Before Submission: A Practical Checklist
Before the financial section is considered complete, run through this checklist:
- Opening NAV matches the closing NAV from the prior year's audited accounts (or zero for first-year filings)
- Closing NAV matches the audited financial statements to the penny
- Subscriptions/capital calls and redemptions/distributions match the Statement of Changes in Net Assets or Partners' Capital
- All asset classes have been selected from the drop-down lists (not typed)
- Investment strategy classification uses the post-November 2023 CIMA codes
- Leverage disclosures are consistent with financial statement notes
- Currency is correct and all figures are in the fund's base currency
Every discrepancy between the FAR financial section and the audited accounts is a potential CIMA query or rejection reason. The cross-reference step is not optional.
Validate your FAR financial section — and every other section — before submission with our drag-and-drop FAR Validator →
All blog posts are for informational purposes only and do not constitute legal, regulatory, or compliance advice. Fund operators should always confirm current requirements with CIMA or their legal and regulatory advisors.