I have committed a cardinal sin of my final 8 weeks prep… I have participated in an event some may know as “getting plastered”. This may affect my ability to provide a “reasonable and adequate” basis, for investment opinions. In the event that it does, fuck off. Anyhow, before I pass out, there are a few issues i came across studying today i wanted to clear up. 1.) for GIPS, is there a requirement for gross or net of TAXES in presenting. I know for the code of standards its either one, so long as you disclose, and for GIPS it is RECOMMENDED that returns are presented net of “non-reclaimable” taxes… or something like that. 2.) In the absence of regulatory guidance for record retention, there seems to be a discrepancy between the Asset Manager Code (firm wide compliance) and the code of standards (individual compliance). Asset code says 6 years of either electronic or hard copy, code says 7 years, is this the case? Does one prevail? 3.) Is there a minimal $ level of gifts you must report to avoid the appearance of jeopardizing “independence and objectivity” with regards from gifts from clients, or is it “subjectively determined” as far as what would inhibit independence and objectivity. I have seen both, where it is subjective, and one area where it said “minimum dollar limits no longer apply”. 4.) Do we have to calculate the dietz, modified IRR, and daily weighted TWRR or not? The LOS says “describe”, but EOC’s have us calculate(i think this may have been addressed in another thread but asking anyhow). 5.) for Real Estate valuation, is verification of values by an independent third party verifier required at the date of each valuation (quarterly after 2008), or every three years? Again, i have seen both.
There is an errata issued by CFAI that the record retention for Asset Manager is 7 years. In addition, there are additional paragraph for the code in the latest errata with regard to risk management (seems targeted at alternative investment industry). It is not true that the GIPS require gross or net. It depends on what you are presenting. For example, for WRAP/SMAs, presentation is net of fees. For Real Estate Close Ended, presentation net of fees. For private equity, presentation must show BOTH Gross & Net. Beginning 1 January 2012, Real Estate valuation by 3rd party every once a year unless client agree to do less but not less frequently than once every three years.
Thanks for the bit on fees, but I was more concerned about Gross or Net of taxes. I didn’t read anywhere where the GIPS require presentations be either gross or net, or even that it must be stated which one is being used. This conflicts with the code, which says you can provide either, so long as it’s disclosed… if i remember correctly.