Tim Buckley, Monette Windsor and John Ackerly (from left)


compliance costs, you may have to have a chief compliance officer, these are significant costs. Investors demand a greater structure to the management entity, they want analytics around portfolios.


So I don’t think that it’s a Cayman issue, I think it’s across the board,


and I think that every service provider is getting squeezed, even from a directorship perspective, as minimal as our fees may be in the life cycle of a decent-sized fund.


TB: And only some of the fees can move—obviously the fixed


government fees can’t and therefore the only fees that can move are those of the professional service providers.


ID: There’s also a cultural difference between how different regions/


jurisdictions will view these fees, some guys come back a couple of years later, see that the fees have gone up, overall, by only $1,000 or $2,000 and that’s still a massive issue for them. Clients from the US and Europe in particular tend to be much less fee-sensitive than say, Asia-Pacific clients, and always have been. I think this is where this competitive issue with other jurisdictions will come in. Cayman is still the premier jurisdiction for offshore hedge funds but if other jurisdictions could get their act together, we’re going to be in for bigger problems.


GT: There is an election coming up. ID: There is, but no matter what happens at that election, if anyone’s


suggesting that the fees that have all been increased or introduced in recent years are going to go down, then they are at best overly optimistic, and at worst deluded. The best we can hope for is that they won’t increase any more, and if we get that stability, that we’re not going to touch fees now for a while, then that may just be okay.


Every year, some large fee has either been introduced or gone up


much more than it was before. Each year they’ve picked something to attack and increased revenue from it.


Best practice PS: What does best practice look like for accountants? What particular things are cropping up more, and how are you dealing with those at the moment?


GT: The challenge for everyone is talent retention, that’s probably


across the board. From our point of view, there’s fee pressure coming down from the investment managers, use of cheaper jurisdictions and back office people. We have to try to reduce some of the cost burden. Increased deadline pressure—it used to be that you had your audit portfolio from January, with a deadline in June, but over the last


few years a lot more investment managers are squeezing that June deadline back further and further. Plus there’s always the litigation spectre hanging over many of the audit firms as well.


JS: In addition to what Glen has said, another major challenge is


keeping up with the changing regulatory environment. GT: We have our own internal reviews in office, we have the BDO


global review that comes around every three years and does an inspection, and we have a regional audit advisor that comes every two years and does a mini inspection. We are also registered with the ACCA, they come round every three years to give an inspection, we have the PCAOB due to do an inspection, we’re now signed on with the Irish regulator, the Japanese regulator and Cayman now it has its own auditor inspection regime.


You get to a point where you’re wondering where’s the time to do


the work, compared to having to do the regulations. JS: As a result of guidance which continues to be issued by


regulators, the difference in performing an audit years ago compared to today, is quite significant.


We are focused on bringing more value to our clients, whether it’s


keeping them up to date on regulations and their business needs, or supporting their global expansion.


JA: I guess just from the users’ side of the table, we certainly see


much more of the auditors than perhaps we did previously. It’s certainly never the case that directors will receive a set of financials and simply be asked to “sign off” on them. We have conversations with the auditors at the very least at the end of the process and preferably at the planning stage also and we want to have transparency in the audit process and to receive the right information and have it delivered to us directly by the auditors to have that direct connection.


JS: That’s a perfect example of the change in our auditing standards


and making sure we communicate with the board. GR: I think the general level of communication has increased


across the board which includes the end investor now. From my perspective, there’s more communication with investors, there’s more communication with service providers such as the auditors, administrators, prime brokers—effectively everybody. I think it’s great that the communication flow is increasing, but the problem with that is it all takes time.


GT: There’s far too much information and you have to have the right people to deal with it.


CAYMAN FUNDS | 2013 9


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