CIPM Level II 2025 Ethics: Transparent Disclosures—Checklist
- Kateryna Myrko
- Aug 6
- 3 min read
Transparent disclosures are at the heart of the CIPM Code and Standards. They ensure that clients and stakeholders receive full, fair, and accurate information about performance measurement, attribution, and related assumptions. This checklist covers the essential elements you must document and disclose under latest industry best practices and regulatory guidance. CIPM Level II 2025 Ethics
1. Purpose & Scope CIPM Level II 2025 Ethics
Statement of Purpose
Disclose the primary objective of the report (e.g., performance evaluation, attribution analysis).
Scope and Coverage
Specify the portfolios, composites, or mandates included, their inception and end dates.
Intended Audience
Identify recipients (e.g., clients, prospects, regulators) and any restrictions on distribution.
Materiality Thresholds
Define what constitutes a material change or omission for this report.
2. Data Integrity & Sources
Data Providers
Name and version of market data vendors (e.g., pricing, benchmarks).
Valuation Timing
Cut-off times, time zones, and treatment of stale or missing prices.
Cash Flow Treatment
Method used (e.g., Modified Dietz, daily cash-flow adjustment) with rationale.
Data Quality Controls
Procedures for data validation, error correction, and reconciliation.
3. Calculation Methodology
Return Methodology
Specify time-weighted vs. money-weighted returns and compounding convention.
Attribution Framework
Decompose performance into allocation, selection, and interaction effects; state formulas.
Currency Conversion
Exchange-rate sources and treatment of FX effects (e.g., cross-currency hedging).
Handling of Corporate Actions
Adjustments for dividends, splits, spin-offs, and other events.
4. Composite Definition & Attribution
Composite Construction
Inclusion/exclusion criteria, rebalancing policy, and changes over time.
Reconciliation Procedures
How composite returns are aggregated from individual portfolio returns.
Attribution Segments
Asset classes, sectors, regions, or styles used in analysis.
Bridging Periods
Linking multi-period contributions using Carino, Menchero, or GRAP (method disclosed).
5. Benchmark Disclosures
Benchmark Selection
Rationale for chosen benchmark(s), including risk/return profile alignment.
Custom vs. Standard Benchmarks
If custom, provide construction methodology and weights.
Benchmark Changes
Document any changes, effective dates, and performance impact.
Benchmark Currency & Reinvestment
Currency denomination and assumption about dividend reinvestment.
6. Fees & Expenses
Fee Structures
Management, performance, and incentive fee formulas, including hurdle rates.
Net vs. Gross Returns
Clearly state whether returns are reported before or after fees.
Expense Reimbursements
Disclose any third-party fees or expense caps and waivers.
High-Water Mark Treatment
Explain calculation of high-water marks and reset conditions.
7. Risk & Return Measures
Risk Metrics
Standard deviation, beta, tracking error, Value-at-Risk, downside deviation—method disclosed.
Return Statistics
Annualized, cumulative, arithmetic vs. geometric returns, drawdown measures.
Assumptions & Estimates
State any forward-looking assumptions (e.g., volatility forecasts) and their sources.
Dispersion Measures
Across composite portfolios, provide dispersion statistics and calculation basis.
8. Conflicts of Interest
Firm Ownership & Affiliations
Disclose parent companies, affiliates, and investment-related relationships.
Compensation Arrangements
Detail how portfolio managers and analysts are compensated and any performance incentives.
Related-Party Transactions
Identify any allocations to affiliates or proprietary vehicles.
Soft Dollar & Research
Describe use of soft-dollar arrangements and research-payment practices.
9. Material Changes & Events
Strategy or Process Changes
Document any changes to investment philosophy, strategy, or process.
Key-Person Events
Disclose departures or additions of portfolio managers and their effective dates.
Regulatory or Legal Actions
Summarize any material regulatory inquiries, litigation, or enforcement actions.
Market Disruptions
Note any exceptional market events affecting performance (e.g., trading halts).
10. Reporting, Presentation & Compliance
Report Frequency & Format
State whether reports are quarterly, monthly, etc., and delivery format (PDF, online).
GIPS/Local Standards
If claiming compliance, specify standards (e.g., GIPS) and location of GIPS Reports.
Disclaimers & Limitations
Include standard language covering forward-looking statements, past performance, and accuracy.
Audit & Review
Note whether performance data are subject to internal review or third-party verification.
Adhering to this Transparent Disclosures Checklist ensures that your performance measurement and attribution outputs not only satisfy CIPM Level II Ethics requirements but also uphold the highest standards of integrity and client trust. Use this checklist to validate every report, maintain audit trails, and facilitate clear, consistent communication with all stakeholders.
Preparing for the CIPM Exam?
Boost Your Success Rate with Swift Intellect — Try It Free for 14 Days (No Credit Card Required!)
Whether you're tackling the CIPM Level 1 or CIPM Level 2 exam, Swift Intellect gives you the edge with AI-powered learning, structured study tools, and real-time feedback.
Our platform is designed to cut study time, improve retention, and help you focus on exactly what you need to pass. Join thousands of candidates already using Swift Intellect to stay sharp and on track.
Why Choose Swift Intellect?
AI-Powered Learning Support
Daily Knowledge Refreshers
Real-Time Progress Tracking
Comprehensive Practice Tools – Question Bank & Mock Exams (Pro Plan)
Flexible Study Planning
Multi-Device Access
Community Access
Video Library
Start your 14-day free trial today — no credit card required — and boost your chances of passing smarter, faster, and more confidently.
Comments