Investment industry leaders from 11 countries gathered in March for the inaugural meeting of the Investment Performance Council (IPC) in Paris. The newly appointed council will promote worldwide acceptance of a single, uniform set of standards for investment managers to calculate and publicly report their investment returns. To help build international awareness of global investment reporting standards, the council's semiannual meetings around the globe will be open to the public.
Significantly, the IPC will encourage worldwide implementation of the Global Investment Performance Standards (GIPS) adopted last year by the Association for Investment Management Research (AIMR), a nonprofit organization of financial analysts, portfolio managers, and other investment professionals from 95 countries. The GIPS is a set of ethical standards for investment performance reporting that addresses fair representation and disclosure of an investment firm's performance history. The standards benefit investors by enabling them to make fair, "apples to apples" comparisons of investment results across firms and international borders. CPAs will have the opportunity to issue attestation reports on the standards.
According to IPC Chair John Stannard, a managing director with Frank Russell Company in England, the council "will operate as the investment industry's think tank for performance measurement, presentation, and research and will lead the development of new performance standards as needed by the industry." Without standards for the calculation and presentation of investment performance, Stannard noted, the cross-border investor is at a severe disadvantage.
The council will also implement new procedures and controls to ensure that GIPS is consistently applied, interpreted, and expanded with broad public input. In addition, IPC will oversee the AIMR Performance Presentation Standards (AIMR-PP), a precursor to GIPS.
The AIMR board of governors formed IPC following a broad public comment period and after soliciting nominations. The council consists of 15 member seats with two categories of membership: geographic (at least four seats, filled primarily to ensure diverse geographic representation) and industry (at least four seats, filled primarily to ensure representation by industry-specific areas such as mutual funds, banking, and insurance). More information about IPC and the standards is available at www.aimr.org. *
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