To be GIPS compliant, is the firm REQUIRED to comply with the GIPS standards AND local laws/regulations? Especially when the GIPS standards are stricter. ----------------------------------------- “Where existing laws, regulations, or industry standards already impose requirements related to the calculation and presentation of investment performance, firms are strongly encouraged to comply with the GIPS standards in addition to applicable regulatory requirements. Compliance with applicable law and/or regulation does not necessarily lead to compliance with the GIPS standards. In cases in which laws and/or regulations conflict with the GIPS standards, firms are required to comply with the laws and regulations and make full disclosure of the conflict in the compliant presentation.” – GIPS standards, Page 3.
double standards I think ! Maybe to claim compliance you make available a GIPS compliant strict version and to file statutory reports you follow the legal requirements. How else do you satisy two contrary requirements?
I came across this also… try not to think of it from an Ethics standard 1A point of view. Basically, if GIPS & local law conflict, you follow local law and disclose. Key word here is “conflict”. It doesn’t matter which is stricter.
“Compliance with applicable law and/or regulation does not necessarily lead to compliance with the GIPS standards.” The question is: when the GIPS standards are stricter than the local laws/regulations, is it a “conflict”? My understanding is: there is a conflict when the firm can’t comply with both, as janakisri said.
Your still thinking about it from the wrong point of view. “Strict” is easily defined in an ethical or legal sense, but not in a performance sense. Take the “3 year ex-post standard deviation” provision. Lets say country X, thinks standard deviation is the biggest load of cr@p that ever came into statistics and mandates that you can never make reference to it. Do you think GIPS or country X’s law is stricter? It doesn’t matter to be honest. You follow country X’s law and disclose. Your opening quote in your last response deriv108 needs to be put into the context that the next sentence in your opening post brings. “Compliance with applicable law and/or regulation does not necessarily lead to compliance with the GIPS standards. In cases in which laws and/or regulations conflict with the GIPS standards, firms are required to comply with the laws and regulations and make full disclosure of the conflict in the compliant presentation.”
soddy1979, it’s just a discussion…I’ve never disagreed with you. Thanks again. To be honest, I have never worked on GIPS. How often are the GIPS standards and local laws/regulations the same? Whenever there is a difference, there is a possibility of “conflict”, but not always. It’s a simple question…Correct me if I’m wrong.
No need to determine whether it’s a conflict in the exam…If there is a conflict, the firm can still be GIPS compliant by complying with the local laws/regulations and disclosing it. No confusion.
What’s the alternative, breaking the law just so the firm can claim GIPS compliance? I dont’ think CFAI has the balls to ask firms to do anything against the law which by itself is against CFAI’s own policy. Regardless of if CFAI grant the permission or not, in terms of caliming compliance as long as you disclose. firms have to follow the law and not CFAI’s GIPS when there is a conflict.
soddy1979 Wrote: ------------------------------------------------------- > I came across this also… try not to think of it > from an Ethics standard 1A point of view. > > Basically, if GIPS & local law conflict, you > follow local law and disclose. Key word here is > “conflict”. It doesn’t matter which is stricter. From mock exam Q7, the answer says, ’ In the event of conflict, Members must comply with the stricter law, rule or regulation, including those of the Code and Standards. As the South African laws are considered to be stricter than the CFA Code and Standards or Ugandan law, Mutini must adhere to the South African laws and regulations ’ So stricter???
hellscream Wrote: ------------------------------------------------------- > soddy1979 Wrote: > -------------------------------------------------- > ----- > > I came across this also… try not to think of > it > > from an Ethics standard 1A point of view. > > > > Basically, if GIPS & local law conflict, you > > follow local law and disclose. Key word here is > > “conflict”. It doesn’t matter which is > stricter. > > > ’ > > So stricter??? In this case yes. However, if you do something which is allowed under CFA Code and Standards but not allowed under Ugandan law, then you have to comply with Ugandan law.
I posted on this before- you have to think about what this is trying to accomplish- it may disadvantage a firm if they have to comply with GIPS when it conflicts with a local standard- they can’t compete locally. So in that case, they can comply with the local law as long as it is disclosed.