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 June, 2010 - 31 December, 2019

Categories: Cash Flow

Source: GIPS Executive Committee

We understand that portfolios must be valued on the date of all large cash flows for periods beginning on or after 1 January 2010. We are worried about our ability to meet this requirement. Can we define our large cash flow level using a high threshold to reduce or potentially eliminate the number of instances we need to value portfolios?

No. A firm must not establish a high cash flow level solely for the purpose of reducing the number of instances when portfolios must be valued due to large cash flows. The GIPS standards define a large cash flow as the level at which the firm determines that an external cash flow may distort performance if the portfolio is not valued. The large cash flow level chosen by the firm on a composite-specific basis must represent the firm’s estimate as to the level of external cash flow that would potentially distort the accuracy of a portfolio’s performance calculation if the portfolio is not valued at the time of the external cash flow.