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.

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Archived

Effective: 1 March, 2006 - 31 December, 2013

Categories: Trade-Date Accounting

Source: GIPS Handbook, 2nd Edition

If a portfolio contains foreign stocks, when the stocks are settled, the foreign exchange rate will vary from the rate used at trade date, causing a foreign currency gain or loss. Should these gains and losses be included with the original stock transaction or are they just shown as a cash adjustment?

The firm should determine a methodology for recognizing foreign exchange gains and losses when the stock transactions are settled and use it consistently. The firm must ensure that the transactions in the portfolio are accurately reflected.