The ODD review is not a ‘tick the box’ exercise. There is expected to be a strong advisory element to an ODD report which provides insight to whether a manager is capable of fulfilling its operational obligations and that these operations are in line with industry practice. The expectation is that an ODD review also includes third party descriptions and observations of key processes and systems, and relevant evidencing and testing.
ODD must include critical areas of the investment manager’s activities that are integral to the provision of services to funds, including an understanding of the functioning of the investment operations, accounting, compliance, risk management, IT systems and processes and the management of service providers.
An ODD report will comment on the ability of the fund manager’s operational processes to meet future obligations and targets outlined in an IMA or Trust documentation. Such opinion is expected to be based on an analysis of data used to verify systems and processes, desktop analysis and an onsite visitation program. To carry out the review and make these observations, it would be expected that the ODD reviewer team would include relevant experience relating to the operations of investment managers.
Areas are identified in the Guidance Note may not be exhaustive, as a range of operational events may vary according to asset class, investment-style and geographic region.