I think it's fair to interpret from this that such a test can be applied to other "required" disclosures, too. Although there is no conditioning language embedded within the Standards, given that such leeway has been permitted here, it seems to be a logical step to extend the same test to other disclosures; wouldn't you agree? And so, if a firm feels that the departure of the CIO (Chief Investment Officer) 13 months ago is no longer relevant and meaningful, they can stop disclosing it, as well as changes to the composite's strategy, and other things.
Despite the fact that these changes were introduced through a Q&A, I welcome them. It appears that the GIPS EC has decided that the sunset rules are flexible and in the hands of the firm. I think clear wording to this effect should be provided, to ensure that this interpretation is correct. Rather than stipulate that certain disclosures have to stay for one, two, five, ten years, by attaching the "relevant and meaningful" conditioning language, it appears that firms can choose when to discontinue their appearance. I believe that in addition, anytime a disclosure is removed, that its removal be documented, so that the verifier (and probably anyone else) can have a look.
Perhaps a Guidance Statement on Sunset Provisions would be a good idea ... I'd welcome that, too.
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Dave,
ReplyDeleteI certainly hope guidance is provided because I'm quite sure the intention was not to allow a "relevant and meaningful" assessment to be allowed to all disclosures - that would be plain stupid.
There is a very easy solution - state disclosures are intended to be permanent - but list a few that after 10 years may be dropped - changing the name of the composite might be one on the list.
Regards
Carl
"Plain stupid, in deed. I think some circumspection would be in order. And yes, some guidance is needed. This change sort of slipped in without much notice and no fanfare, and yet it should have been offered with significant attention, given that it was groundbreaking, was it not? The first time sunset rules were offered and no extra notice given? Guidance is in order. And given that there will be no GIPS 2015, this should provide the Interpretations subcommittee and the EC time to develop some.
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