oversight group in greater detail. RESPONSIBILITIES OF AN INDEPENDENT VALUATION OVERSIGHT GROUP The mission statement of an independent valuation oversight group should include the need to: Establish, monitor, and address valuation practices and issues across the investment management division's products, globally, with particular focus on pooled investment vehicles. Responsibilities of a valuation oversight area include the following objectives: II Maintain and monitor formalized valuation procedures and valuation authorizations for various products. II Monitor pricing data sources for coverage and quality aspects. II Prepare and analyze periodic price verification reports that compare prices obtained from different sources, and manage any pricing exceptions. II Coordinate any necessary fair valuation adjustments. II Organize activities of the valuation committee. 11 Provide timely and value-added management and board reporting. Valuation Verification Tools Controls need to be incorporated at every level of the valuation process, starting at the operational (primary pricing group) and then continuing through the supervisory structure. Various techniques and tools can be employed for valuation verification. The objective is to use various forms of independent data points that help validate the accuracy or valuations used. It is the combination of the tools that increases the control level around pricing, as one technique alone is often not able to validate all aspects. Here are some techniques that are typically employed. Transaction Prices versus Valuation Prices With this technique, actual transaction prices for securities purchased or sold are used to validate end-of-day valuation levels. Actual transaction prices fin an orderly market) are probably the strongest indicator of what fair market valuation of a security may be, given that two independent counterparties contractually agreed to purchase and sell a security at a price. So, for example, if a fairly liquid bond position changes hands at a price of 105 today, and during previous and subsequent days the pricing service provides a price of, let's say, 110, the valuation oversight process should challenge the latter's appropriateness for daily valuations. This technique may also be applied for similar and comparable securities when an actual transaction price is known. Price Comparisons between Various Pricing Sources This control tool encompasses periodic cross checks of prices received from pricing services or brokers