7-year record retention: recommended in Ethics and in Asset Management Code of Conducts?

CFA Level III Ethics
#1

Hi.

Can somebody confirm that 7-year record retention is just a recommendation, not requirement both in Ethics and in AMCC? I am using a non-Schweser vendor summary package and it says it is required in AMCC.

Thanks in advance!

#2

Strange.

It is stated as recommendation in the standards.

“In the absence of regulatory guidance or firm policies, CFA Institute recommends maintaining records for at least seven years.” Pg 147

But it is stated like a requirement in the asset code

“Unless otherwise required by local law or regulation, Managers should keep records for at least seven years.” Pg 252 Section 4

Anyone else can clear this up?

#3

Hmm I take the word “should” as a recommendation as well. If it were a requirement it would say “must”.

#4

i thought must and should are the same.

Must = present tense

Should = past tense

#5

Yep, should and must are the same.

See a perfect example: This disclosure should be made by asset class and must be meaningful. Pg 257 Section g (Disclosures)

#6

Anyone else can comment on the above conflicting statements? Thanks

#7

Should ≠ must. Not from an English POV: All citizens should vote ≠ All citizens must vote.

But GIPS also differentiates it so clearly:

  • GIPS standards consist of requirements , which must be followed … and recommendations , which are optional but should be followed
  • Firms should be verified
  • For periods beginning on or after 1 January 2011, all portfolios must be valued in accordance with the definition of fair value

Taking the “Managers must” lead-in, they’re saying Managers must disclose [valuation methods], the disclosures must be meaningful, and we recommend disclosing the specific valuation method used for each asset class.

#8

I wouldn’t say that should and must are the same upon CFAI vocabulary.

Must - requirement

Should - strongly recommended

Therefore, I agree with Biuku.

#9

Having looked online, Biuku appears to be correct. Must is stronger than should.

And they said english skills wont be penalized in the exam…

#thingsCFAIshouldaddtotheirglossary

#10

If I recall correctly, there is an Ethics Topic Test that involves record retention, and the gist of the answer was that it was okay that the firm had a policy to maintain records for 5 years, as long as it met their regulatory requirements. I don’t remember the specific item set though. You guys will have to dig for it if you’re interested in looking into it further heh.

#11

Yeah I remeber it. Also, in the book there are questions relating to retention. 5 years is required digital OR hard copy is ok.

#12

But what if 5 years was the old requirement and now it must be 7 years? The Codes clearly say that the requirement is 7 years

#13

This is exactly standard recommendation if is not mandatory prescribed different.

AMC, Risk management, Compliance and Support:

  1. Regulators often impose requirements related to record retention. In the absence of such regulation, Managers must determine the appropriate minimum time frame for keeping the organization’s records. Unless otherwise required by local law or regulation Managers should keep records for at least seven years.
#14

  1. If a company keeps records for 6 years, while the local law requires 5 years.

  2. If a company keeps records for 6 years, while there is no requirement prescribed by law.

Is there any violation in the above cases?

  1. No

  2. No

Am i correct?

#15

Hi all.

Thank you for all the comments. I finally looked it up myself too.

In the absence of regulatory guidance or firm policies, CFA Institute recommends maintaining records at least seven years.

Manger must: 4. Maintain records for an appropriate period of time in an easily accessible format. … Unless otherwise required by local law or regulation Managers should keep records for at least seven years.

Therefore, 7-year is just a recommendation both in Ethics and AMCC.

kevinsfl, I think you are right on both.

Thanks.

#16

I think you’re talking about the one in South Africa/Uganda. The local regulation required a minimum of 5 years, the company was not in violation because they were in compliance with local laws. If there is no local regulation on record retention, then you must follow the codes and standards and keep records for 7 years

#17

But the 7-year-rule is recommended by the Code, not mandated. Because the textbook said should , not must. So you are not violating the Code if you are keeping records for 5-6 years.

#18

i think the reason they have used the word “should” is to not make it sound conflicting for companies under 7 years old. As “Must” will never apply for them.

i still feel they mean its a requirement to keep 7 years if its possible for the company to do so (in this case, being more than 7 years old)