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发表于 2012-3-24 14:31
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For the past fifteen years, John and Jessica Smith have had their own small financial planning company named JJS Financial in a country where financial regulation is still developing. They have a goal of bringing JJS into compliance with the Global Investment Performance Standards® (GIPS) by January 1, 2012. They begin by researching the history and philosophy of GIPS so they can better understand the requirements for GIPS compliance. As they discuss what they have learned concerning the objective of GIPS with respect to competition among financial firms such as theirs, John expresses his eagerness for the competitive edge GIPS compliance will give JJS. “Soon, those of us that are GIPS compliant will have a monopoly,” he says. Jessica counters by saying “the goal of GIPS is to promote competition, but that will probably benefit small firms like ours that are in developing countries.”
John and Jessica discuss how they should define themselves as a firm. John says that they only need to define themselves as an investment firm held out to clients or potential clients as a distinct business unit. Jessica says that they must also define themselves as being registered with the appropriate national regulatory authority overseeing the entity's investment management activities.
John and Jessica begin compiling and computing the data needed for GIPS compliance. They choose to report annual returns for all years and the cumulative returns for composites and benchmarks for all periods. In computing past returns as well as future returns, they choose to use accrual accounting for fixed income securities but not for equities. Other measures they compute are the dispersion of individual component portfolio returns around the aggregate composite return as well as the number of portfolios and amount of assets in the composite and the percentage of JJS's total assets represented by the composite at the end of each period.
As John and Jessica compile the data, they realize that they can satisfy GIPS requirements for the past five years, but they cannot do so for years prior to that. John says they can link non-GIPS-compliant performance to their compliant history as long they disclose the periods of non-compliance with an explanation of why the presentation is not GIPS compliant. Jessica says this will not be sufficient since only the previous five years will be in compliance.
Finally, they must decide on a performance compliance statement. John proposes: “In this statement, JJS Financial has used the CFA Institute® guidelines outlined in the Global Investment Performance Standards (GIPS®).”
Jessica proposes: “JJS Financial claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. JJS Financial has not been independently verified.”
As they put the finishing touches on their report, they realize that some local laws may conflict with the GIPS Standards. John says they need to compare the local laws with the GIPS Standards to make sure there are no conflicts and if there are to change their report to meet the requirements of the local laws and make full disclosure of the conflicts. Jessica disagrees and says if there is a conflict between local laws and the GIPS Standards that the GIPS Standards should be followed. In the conversation that John and Jessica had concerning the objective of GIPS with respect to competition: A)
| only John was incorrect. |
| | C)
| only Jessica was incorrect. |
|
An objective of the GIPS standards is to promote fair, global competition among investment firms for all markets without creating barriers to entry for new firms. The establishment of global standards places managers from all countries on an equal footing in soliciting clients. Managers from countries that previously had inferior standards will be taken more seriously when presenting their performance, while managers from countries with stronger standards will not be penalized when competing in markets where inferior standards prevail. (Study Session 18, LOS 43.b)
With respect to the conversation that John and Jessica had concerning how to define themselves as a firm: A)
| only Jessica is correct. |
| | |
Firms must be defined as: "An investment firm, subsidiary, or division held out to clients or prospective clients as a distinct business entity." (Study Session 18, LOS 43.c)
Of the choices made concerning the presentation of the data, all of the following are presentation and reporting requirements of the GIPS EXCEPT: A)
| a measure of the internal dispersion of individual component portfolio returns around the aggregate composite return. |
| B)
| cumulative returns of the composites and the benchmark for all periods. |
| C)
| annual returns for all years. |
|
GIPS recommend, but do not require, presentation of cumulative returns for composites and benchmarks for all periods. All of the other choices are required by Requirement 5.A.1 (Study Session 18, LOS 43.l)
With respect to the discussion concerning the reporting of the historic performance record of the portfolios under management, whose statement is CORRECT? | B)
| only John is incorrect. |
| C)
| only Jessica is incorrect. |
|
According to Standard 5.A.3 a firm must not link non-GIPS-compliant performance to their compliant history for periods after January 1, 2000. Five years of compliance is sufficient, and after five years of compliant history has been achieved, firms must add additional years of performance each year until a 10-year performance record of GIPS-compliant history has been established. (Study Session 18, LOS 43.b)
Which of the proposed compliance statements is acceptable under GIPS? A)
| Jessica’s statement only. |
| B)
| John’s statement only. |
| C)
| Neither Jessica’s nor John’s statements. |
|
Standard 4.A.1. states that once a firm has met all the requirements of the GIPS standards, the firm must disclose its compliance with the GIPS standards using one of the following compliance statements.
For firms that have not been verified:
[Insert name of firm] claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. [Insert name of firm] has not been independently verified.
For firms that are verified:
[Insert name of firm] claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. [Insert name of firm] has been independently verified for the periods [insert dates]. The verification report(s) is/are available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.
For composites of a verified firm that have also had a performance examination:
[Insert name of firm] claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. [Insert name of firm] has been independently verified for the periods [insert dates]. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. The [insert name of composite] composite has been examined for the periods [insert dates]. The verification and performance examination reports are available upon request. (Study Session 18, LOS 43.k)
With respect to John and Jessica’s statements regarding comparing the local laws to the GIPS Standards: A)
| only Jessica is incorrect. |
| B)
| only John is incorrect. |
| C)
| John's statement is correct as long as the local laws are more strict than the GIPS Standards. |
|
If a conflict exists between country specific laws and GIPS the standards require that firms comply with the local law or regulation and make full disclosure of the conflict. (Study Session 18, LOS 43.b) |
|
