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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Effective

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1 Result

Archived

Effective: 1 October, 2006 - 30 April, 2013

Categories: Performance Examinations

Source: GIPS Executive Committee

How does a performance examination differ from a verification?

The purpose and scope of verification is to confirm that the firm has complied with all the composite construction requirements of the Standards on a firm-wide basis and the firm’s performance measurement processes and procedures are designed to calculate and present performance results in compliance with the Standards on a firm-wide basis. Verification is not to be seen as an attempt to confirm the appropriateness of a specific composite presentation. Verification ensures the policies and procedures used to establish and maintain compliance with all the applicable requirements of the GIPS standards are in place and, on a sample basis, tests whether or not the processes and procedures used to implement those policies are in place.

A performance examination tests whether a specific composite has been constructed, calculated, and presented in compliance with the Standards. A performance examination includes testing on a specific composite to ensure the firm has implemented its processes 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 of interest income. The verifier should perform testing for a selected sample of portfolios on a firm-wide basis to determine whether the firm’s policies and assumptions with respect to the accrual of interest income is reflected in the calculation of returns. 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, a sample of portfolios in the specified composite is selected and the verifier must determine whether the firm has properly implemented the firm’s policy, i.e., income is recorded in the proper portfolio, at the right amount and on a timely basis.

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