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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Archived

Effective: 1 June, 2010 - 31 December, 2019

Categories: Cash Flow

Source: GIPS Executive Committee

Can we choose to adopt a significant cash flow policy in which we remove portfolios from our composite in order to avoid valuing portfolios due to large cash flows?

No. A firm must not adopt a significant cash flow policy solely for the purpose of reducing or eliminating the number of instances where portfolios must be valued due to large cash flows. The GIPS standards define a significant cash flow as the level at which the firm determines that a client-directed external cash flow may temporarily prevent the firm from implementing the composite strategy. The significant cash flow level chosen by the firm on a composite-specific basis must represent the firm’s estimate as to the level of cash flows that would potentially disrupt the implementation of the investment strategy. Significant cash flow and large cash flow levels must be established independently of each other.