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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1 Result
  • Archived

    Effective: 1 May, 2013 - 31 December, 2019
    Categories: Performance Examinations
    Source: GIPS Executive Committee

    How does a performance examination differ from a verification?

    Verification is a process by which a verifier assesses 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 policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.

    A performance examination tests, for a specific composite, whether 1) the firm has constructed the composite and calculated the composite performance in compliance with the GIPS standards, and 2) whether the firm has prepared and presented the composite presentation in compliance with the GIPS standards. A performance examination includes testing of a specific composite to ensure the firm has implemented its policies and procedures to comply with the composite construction, calculation and presentation requirements of the GIPS standards for a specific composite.  

    For example, when conducting a verification, the verifier must determine the firm’s policy with regard to the accrual and receipt of interest income. The verifier must ensure that the policies and procedures are clear, unambiguous, and consistent with the GIPS standards and meet any applicable requirements of the GIPS standards. The verifier must perform sufficient procedures for selected portfolios to determine that the treatment of interest accruals and receipts is consistent with the firm’s policy. Verifiers may use a sampling methodology when performing such procedures. The selected sample of portfolios may or may not include portfolios from all of the firm’s composites.  

    When a performance examination is conducted for a specific composite, the verifier can perform testing for a selected sample of portfolios in the specified composite and the verifier must determine for the examined composite whether the firm has properly recorded interest accruals and interest income receipts in the proper portfolio at the correct amounts on a timely basis. In addition, sufficient procedures must be performed to determine for the examined composite that the income recorded reflects supporting documentation such as custody statements or internal records and the methods used to record income is appropriate and consistently applied in accordance with the firm’s policies and procedures. The verifier must also perform sufficient procedures for the examined composite to determine that the calculation and use of accrued income is reasonable, appropriate, and consistently applied in accordance with the firm’s policies and procedures. A performance examination may only be performed either concurrently with, or subsequent to the completion of, a verification.

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