GIPS® Standards Do’s and Don’ts
First Quarter 2019 is almost half over. Now is a great time for an in-depth review and refresh of firm-wide GIPS standards policies and procedures, especially for firms on an annual verification cycle.
Here’s a list of Do’s and Don’ts to help with those P&P reviews and final polishing of GIPS Composite Reports.
| DO provide a compliant presentation to all prospective clients prior to or along with any other performance related inform|
• Add desktop procedures to effectively support this policy?
| DON’T include inappropriate claims of GIPS verification/compliance. |
• Add as a compliance annual training point for your marketing team?
|DO consider Consultant databases/RFPs as a prospective client and provide a compliant presentation.||DON’T reference performance as GIPS compliant; the claim of compliance applies to the firm.|
|DO confirm all required disclosures are included in compliant presentations.||DON’T use the term audited performance when referring to a firm-wide verification.|
|DO update the “verification through” date on the firm’s compliant presentations and policy & procedure document after each verification opinion is issued.||DON’T present partial period performance for new/closed composites without also disclosing the period it represents.|
|DO disclose all material events/changes to the firm and composites. Consider/discuss with PMs any disclosure that might need to be added due to significant events?|| DON’T link performance periods that have a gap between them. |
• Are visual separations of different periods effective/not misleading?
|DO link performance from a prior firm if it meets ALL portability requirements.||DON’T link performance from a prior firm unless it meets ALL portability requirements.|
|DO clearly label model/representative account data as “supplemental” if it’s on the compliant presentation.||DON’T link hypothetical and actual performance.|
|DO disclose the most appropriate fee schedule for prospective clients. Agree to ADV to capture any updates?||DON’T use model fees that could result in composite net performance that is better than actual net of fee performance.|
|DO apply a consistent policy for the inclusion/exclusion of new/closed accounts in firm and composite year-end assets. Do GIPS standards firm AUM and ADV AUM reconcile?||DON’T change the benchmark presented without including required disclosures.|
|DO keep a record of prospective clients who have received compliant presentations, to: Confirm provision at least annually, andAppropriately limit redistribution in the event of a material error.||DON’T disregard local laws or regulations; they must be followed in addition to the GIPS standards requirements.|
Questions/Comments? Contact Us: 503-887-5842 https://cascadecompliance.com/