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to this standard ensures that potential conflicts of interest are identified and addressed in a proactive, rather than reactive, manner, thereby minimizing potential loss of business and/or credibility.

      STANDARD 5C – A CONSULTANT'S RESPONSIBILITY TO DISCLOSE ADDITIONAL COMPENSATION

      It is the responsibility of consultants to disclose and obtain written approval from employers prior to accepting any compensation and/or benefits from clients or third parties that are in addition to compensation and benefits provided by employers.

      Explanation

      The purpose of this standard is to avert conflicts of interest and ensure objectivity in the delivery of consulting-related services to clients. Adherence to this standard should prevent the consultant from providing nonobjective advice or preferential treatment to any client. Under this standard, the consultant is barred from receiving compensation from outside sources or third parties without the approval of the employer. This includes payments to vendors by third parties for services that are for the benefit of the consultant.

      Procedures for Compliance

      Before entering into any compensation arrangement that has not been authorized or granted by the consultant's employer, the consultant must first disclose and obtain approval for the arrangement in writing. Additionally, the consultant may only provide services offered by the firm at the firm's stated fee schedules. The provision of additional services or the charging of fees not approved by the employer is prohibited.

      Impact of the Standard

      Adherence to this standard prevents the consultant from entering into compensation arrangements that could impair the consultant's ability to render objective and unbiased advice to each client.

      STANDARD 5D – A CONSULTANT'S RESPONSIBILITY TO EXERCISE REASONABLE SUPERVISION

      Consultants acting in a supervisory capacity (responsibility and authority over others) have a responsibility to exercise reasonable supervision to prevent, detect, and correct violations of the IMCA Standards of Practice.

      Explanation

      This standard helps to ensure that the IMCA Standards of Practice are carried out in a uniform and ethical manner by all employees in their relationships with consulting clients. To achieve this goal, supervisors should have a thorough and current understanding of the Standards and establish and implement compliance guidelines and procedures for employees to follow.

      Procedures for Compliance

      Through knowledge and periodic review of the Standards, supervisors are responsible for making a reasonable effort to detect violations. Once aware of any violation of the Standards, the supervisor must initiate a prompt and thorough investigation of the violation according to established compliance guidelines and procedures. Failure to supervise or to take prompt and thorough steps to assess, investigate, and correct violations of the Standards will be a breach of Standard 5d. However, if the supervisor implements steps to reasonably supervise but is not aware of a violation, the supervisor will not be in violation of this standard.

      Supervisors must report to their employers any knowledge of procedures and guidelines that are not being followed. If, after the passage of a reasonable amount of time from the date of notification, the employer fails to take any action to correct the violation of the Standards, the consultant shall notify IMCA. Supervisors also should report to their employer and to IMCA any inadequacies they perceive in the IMCA Standards of Practice or in the procedures designed to detect violations of the Standards.

      Impact of the Standard

      Establishing guidelines for the supervisor's responsibility under the IMCA Standards of Practice increases the likelihood that violations will be detected and that procedures for corrective action can be implemented in a timely manner.

      Part III IMCA Performance Reporting Standards

      Section 1: Introduction

      I. ENDORSEMENT

      Investment Management Consultants Association (IMCA) has established the following standards for investment performance reporting. Specifically, these standards cover the collection, analysis, and reporting of performance information related to manager search and analysis and the reporting of performance results to clients.

      II. PHILOSOPHY

      The IMCA Performance Reporting Guidelines stress the importance of consultants providing accurate and comparable investment performance information and appropriate disclosures to clients during manager search and analysis and performance measurement reporting. Disclosure in this context is used in a broad sense. It includes disclosures relating to preparation of the information provided as well as to potential conflicts of interest, relevant business relationships, and other pertinent considerations.

      III. PARTIES AFFECTED

      The IMCA Performance Reporting Guidelines are for investment management consultants. Consultants are encouraged to follow the Performance Reporting Guidelines in the course of conducting investment manager searches and monitoring performance.

      Because of the nature of the consultant, client, and investment manager relationship, these guidelines may also affect parties outside the consulting profession. IMCA believes that these parties – clients, investment managers, custodians, and others – will benefit from the guidelines. The intent of the Performance Reporting Guidelines is not to create unnecessary burdens on third parties but rather to enable consultants to fulfill their professional responsibilities while assisting clients.

      IV. CFA INSTITUTE PERFORMANCE PRESENTATION STANDARDS

      The IMCA Performance Reporting Guidelines were designed to complement the Global Investment Performance Standards (GIPS) of the CFA Institute.

      GIPS cover items detailed primarily in Section 2 of this document (Manager Search and Analysis – methodologies for managers to compile and construct performance composites). IMCA believes the CFA Institute has contributed a valuable service to the investment community and endorses GIPS.

      In their current form, GIPS apply mostly to the presentation of performance composites by investment managers to prospective clients. The IMCA Performance Reporting Guidelines, designed to complement GIPS, are applicable to the collection and analysis of performance data obtained from investment managers, as well as the consultant's reporting, monitoring, and analysis of performance results for the client.

      V. COMPLIANCE

      Like GIPS, IMCA's Performance Reporting Guidelines are voluntary. No one is required to comply. The consultant may represent to clients, managers, and others that specific reports are in compliance with these standards by meeting all items and disclosures as listed in Section 4 of this document. When a manager search or performance report meets all of the Section 4 recommendations, the following written statement may be added to the report:

      This report has been prepared and presented in compliance with the IMCA Performance Reporting Guidelines. IMCA has not been involved with the preparation or review of the report.

      Section 2: Manager Search and Analysis

      This section details standards to be followed by the consultant when assisting clients in selecting investment managers.

      I. SOURCES OF DATA

      A. Typically, the data used in providing manager search and analysis information is an investment manager's performance composite(s). Investment managers usually prepare these composites themselves. When this is the case, the consultant should disclose that the data were prepared by the investment manager and represent the average performance of actual portfolios. In other cases, the source and definition of the data should be disclosed.

      B. The consultant should obtain performance composites that best represent the investment performance the client might have experienced as a client of the investment manager during the period being evaluated. For each investment manager who is to be evaluated, the consultant should review all composites within a firm or product

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