Q & A Database
The GIPS Standards Q&A database contains questions and answers (Q&As) on various searchable topics that provide additional interpretation on an issue. Q&As are considered to be authoritative guidance and must be followed in order to claim compliance with the GIPS standards.
Content from prior Q&As was included in the GIPS Standards Handbook as much as possible and many Q&As were archived. Change the Status drop-down filter to "Archived" to see the archived Q&As.
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ArchivedEffective: 1 May, 2013 - 31 December, 2019Categories: VerificationSource: GIPS Executive Committee
Our firm is in the process of being verified. My firm’s management has decided to omit the required measure of internal dispersion from our compliant presentations due to the complexity of the calculations. All of our composites have more than five portfolios for each full year. Our verifier has agreed to issue a verification report with an “except for” paragraph. The verifier contends that as long as we disclose in the compliant presentation why we have omitted this disclosure that we can still state our composites are prepared and presented in compliance with the GIPS standards. Is this correct?
No. Firms must not omit required information from a compliant presentation. Firms must be in compliance on a firm-wide basis. In order to claim compliance, firms must adhere to all the requirements of the GIPS standards, including any updates, Guidance Statements, interpretations, Questions & Answers (Q&As), and clarifications published by CFA Institute and the GIPS Executive Committee, which are available on the GIPS standards website (www.gipsstandards.org) as well as in the GIPS Handbook. Firms must not represent or state that they are “in compliance with the Global Investment Performance Standards except for…” or make any other statements that may indicate partial compliance with the GIPS standards. If your firm chooses to not include all of the required disclosures in a composite presentation, your firm must not claim compliance with the GIPS standards and the verifier must not issue a verification report.
The GIPS standards require that compliant presentations include a measure of internal dispersion of individual portfolio returns for each annual period presented. However, if a composite contains five or fewer portfolios for the full year, a measure of internal dispersion is not required to be presented for that year. In this instance, all of the firm’s composites have more than five portfolios for each full year and so this exception would not apply.
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