The overall purpose of GIPS is to provide guidelines for fair and full disclosure of investment performance. This will allow current and potential clients to properly interpret investment results over time and between firms.
There are four goals of GIPS:
In 1999, the Investment Performance Council (IPC) was created to provide an implementation structure for the GIPS standards. All countries are encouraged to adopt the GIPS standards as the common method for calculating and presenting investment performance. When applicable local or country-specific laws or regulations conflict with the GIPS standards, firms should comply with the GIPS standards in addition to those local requirements.
As of January 2010, more than 32 countries had adopted or were in the process of adopting the GIPS standards.
Now IPC is entering its second phase of the convergence strategy to the GIPS standards: to evolve the GIPS standards to incorporate local best practices from all regional standards.
A global investment performance standard leads to readily accepted presentations of investment performance that
|surob: If local law conflicts with GIPS, how come you can comply with both? Any thoughts? I am a bit confused. Thanks for your comments in advance|
| pierreE14: hi surob|
GIPS is a voluntary guideline for presentation of fair reality. Not a legal requirement.
If conflict => follow the law.
I guess conflict would be disclosed
| quynhnk79: Is it right with the No.2 statement above? |
(serve as the minimum standard...)
1. Refer to CFA reading 4, Objectives, not include this point
2. Reading 4, Background: stating that GIPS are no longer a minimum worldwide standard, instead, promotes highest performance measurement and presentation practices...
Someone can explain?
| Khadria: Under section|
(h) The appropriate disclosure when the GIPS standards and local regulations are in conflict.
it is stated:
"In cases of conflicts with GIPS, the standards require that local laws and regulations take precedence over GIPS."
but in this section it says:
"When applicable local or country-specific law or regulation conflicts with the GIPS standards, firms should comply with the GIPS standards in addition to those local requirements."
WHAT IS TRUE?
| netty: I agree with Khadria, When there is a conflict, the standards require that local laws n regulations take precedence over GIPS hence how can firms comply with both?|
|bobert: I believe it is the stricter rule dominates, and also implement the rest of GIPS guidelines.|
|sanyukta: yes, i agree with bobert, the stricter rule applies..|
|jainrajeshv: As mentioned by pierreE14 We should follow local laws and disclose the conflicts separately.|
|Shalva: You must adhere to the local law, but fully disclose what was the nature of conflict with GIPS. In this case, I believe, you also stay compliant to GIPS|
|CFAVick: I agree with Shalva. The stricter rule principle applies to the 7 standards not to GIPS.|
|ChrisHam: According to the book, if there is a conflict with the local law, then there should be a full disclosure while abiding by the local law.|
|riouxcf: You can publish a GIPs compliant presenation AND a local law compliant presenatation. Two presentations. Then on the local law presentation you make it as GIPs compliant as possible and disclose what it is about it that is not GIPs compliant and the reasons why (i.e. local law)|
|schweitzdm: Just a heads up that reading 4 is marked as optional in the CFAI book. That means it won't be tested on.|
|Tkauffman: Only certain parts of reading 4 are optional. Beware or markings on the page.|
|dirdeb: I interpret it like this: If the local law and GIPS conflict, the local law must take precedent (as you can't voluntary enter into anything illegal) That said, when possible you must comply with GIPS in ADDITION to the law.|
|00ahmed: I understand the meaning of composite in general but what does it mean here in GIPS context?|