And while we might debate the wisdom of this proclamation, one of our verification clients, Daruma Asset Management's founder and CIO, Mariko Gordon, uses "Love Means Always Having to Say You're Sorry" as her March newsletter's headline. She points out that we make mistakes (who doesn't) and it's okay to admit them. I think an investment firm's clients appreciate a manager who can not only acknowledge a mistake, but also identify its source, as it demonstrates that they have their finger on the pulse and know what's happening in their clients' portfolios. As Mariko points out, "our mistakes are calculated in real time and down to the penny, blinking red on [our] computer monitor for extra emphasis."
Mariko also wrote that "In the financial world, investors performing due diligence may ask about investment mistakes, but they often do so in an anecdotal way. They're more interested in specific examples of mistakes rather than assessing how mistakes are tracked, analyzed and dissected. Personally, I think it's more useful to ask the question broadly and see what sorts of mechanisms firms have to systematically track and learn from mistakes."
When it comes to mistakes, the GIPS(R) (Global Investment Performance Standards) of course have a (recently revised, thank you very much) guidance statement on error correction, which deals with some of the categories of mistakes firms encounter.
I encourage you to read Mariko's newsletter. Her practical and sound assessment and discussion of this topic is one that all should find interesting and insightful.