Verification Explained
Frequently Asked Questions
- What is verification?
- What does verification test?
- Why should my firm undergo verification?
- How do I know which verifier to choose? What kinds of questions should I ask them?
- What will a verifier ask for during verification?
- How can I obtain general information about verification?
Verification is the review of an investment management firm’s performance measurement processes and procedures by an independent third-party “verifier.”
Verification tests whether the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and whether the firm’s processes and procedures are designed to calculate and present performance results in compliance with the GIPS standards.
Why should my firm undergo verification?
Third-party verification brings credibility to the claim of compliance and supports the overall guiding principles of fair representation and full disclosure of investment performance. Not only do firms benefit from improved internal processes and procedures, but they also receive the marketing advantages of verification as well.
How do I know which verifier to choose? What kinds of questions should I ask them?
- Make sure the verification firm you choose has no conflicts of interest; see the Guidance Statement on Verifier Independence (PDF)
- View a list of questions you should ask your verifier before hiring (PDF)
What will a verifier ask for during verification?
Section III of the Standards details the procedures that verifiers must complete. All verifications are different as each firm is unique; however, these are the minimum procedures a verifier will complete before issuing a verification report.
How can I obtain general information about verification?
The Guidance Statement for Verification (PDF) provides an excellent framework for both verification firms and investment management firms searching for verification engagements.