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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ArchivedEffective: 1 June, 2002 - 31 December, 2013Categories: Trade-Date AccountingSource: Investment Performance Council (IPC)
What does “trade-date accounting” mean?
Standard 1.A.4 states “Firms must use trade-date accounting for periods beginning 1 January 2005.” Trade-date accounting determines the correct economic value of the portfolio assets as of the transaction date. Because of the lengthy settlement periods of some markets, the GIPS standards strongly recommend the use of trade-date accounting to achieve accurate performance results. The use of trade-date accounting will be required beginning 1 January 2005. Firms currently using settlement-date accounting must make changes to their systems and processes prior to 2005 in order to remain in compliance with the GIPS standards.
Standard 4.A.4 requires firms to disclose if they are using settlement-date based accounting. For firms that use settlement date accounting, this practice must be disclosed. Under this requirement, firms that use trade date accounting are not required to disclose the use of trade date accounting.
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