When considering an Accounting Book of Record (ABOR), Investment Book of Record (IBOR), and Performance Book of Record (PBOR), it begs the question: What, if anything, is in a name?
The ability to seamlessly access data will enable asset managers to respond more quickly to market challenges, thereby averting potential losses. This will be essential if investment firms are to win mandates moving forward.
An ABOR is a centralized, accounting book of record that can be accessed to support various investment functions and return calculations. It supports basic back- and middle-office functions, such as generating daily net asset value data, and day-to-day fund administration, transfer agency, and custodial services, as well as client and regulatory reporting. An ABOR is focused on costs, on total net asset value, and on charts of accounts. It is critical for determining cash positions, conducting reconciliations and for closing periods.
The IBOR goes further, providing users with broader, more granular and real-time views of performance and risk data. IBORs are focused on market price and on start-of-day and even intra-day positions. They support performance returns at the individual position level, with updates applied to historical holdings or open periods. With increasing market and regulatory demands, firms need to take decision-making, compliance and operational efficiency to the next level. That means they need better access to more comprehensive, accurate and timely data. This has become the hallmark of the modern IBOR.
Unfortunately, another defining characteristic of the IBOR is complexity of design and implementation. Creating a single, real-time system that can sufficiently support the front, middle and back-office requires a significant investment of time, effort and expense—one that increases proportionately with the size and complexity of a firm’s infrastructure. For the largest firms, this investment is justified by the business benefits of the IBOR. But for smaller firms, expanding the use of the ABOR to achieve similar results makes better sense.
Historically, data from the accounting system had limited use beyond the back office. It was batch processed at the close of each day and stored in an isolated database. It lacked the timeliness, context and accessibility necessary to support decision-making for the middle and front office. But today’s leading accounting systems function in real- or near real-time, aggregate data from internal and external systems, and provide robust reporting capabilities. To that end, the right accounting system can serve as an effective IBOR solution for mid- or smaller-size firms without the significant resources to implement and support a complex, dedicated solution.
In addition to ABOR and IBOR, investment firms are also looking at PBOR. PBOR is effectively a superset of IBOR in that it is more granular and covers greater ground. PBOR datasets will typically include investment information, integrated performance results, risk exposure analysis, reference data and adjusted data In essence, PBOR is the platform that enables investment managers to process some of the more complex data sets used in performance measurement and risk analytics providing transparency and visibility into all investments.
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For more information on PBOR, listen to our webinar recording on analytics dashboards for a performance book of record.
Broadridge’s investment accounting solution is built on a real-time platform and links to an open-architecture database with seamless connectivity to market and application data. Therefore, the resulting book of record is, at any given time, complete and accurate enough to provide a solid, contextual foundation for compliance, risk, modeling, trading and other functions outside of accounting.