Recall that the GIPS(R) (Global Investment Performance Standards) Executive Committee (EC) issued a “Q&A” that introduces a change to the Standards, allowing firms to remove disclosures of composite name changes after five years.
During the recent EC open meeting call, I asked if it’s possible to see additional GIPS requirements receive similar “sunset provisions.” The response was, as one might have expected: “yes, of course it’s possible.” I would hope we could do better, though.
I remain of the opinion that Q&As are not the place where changes should be introduced. There’s a clear precedence for them to be put forward for public comment. We know that President Barack Obama has been criticized and accused of bypassing congress, by making changes to laws (only time will tell if this is formally addressed); the EC’s practice of using Q&As as a way to avoid putting new rules out for public scrutiny is one that I believe should cease, unless those very same Q&As are also put out for comment (which actually wouldn’t be a good idea).
I received an email this week from a verification client asking if they can drop some of the disclosures which to them, and probably just about everyone on the planet, are no longer relevant. However, in the absence of an official change, they cannot. In an earlier post I suggested that since this change was introduced through a Q&A, perhaps the ability to make “judgment calls” applies everywhere, but prudence suggests that one should be circumspect about such actions.
Given that the EC has decided to cease the practice of quinquennially reviewing and introducing new versions of the Standards, one would think that time is available to take a serious look at all the required disclosures, and determine which, like composite name changes, can be permitted to disappear. A “Guidance Statement on Sunset Provisions” would be welcome by all, I believe.
We will shortly conduct a “mini survey” on these topics, to gain some insights into what others think.