For some firms, the assets under management (AUM) reported for GIPS® compliance purposes is different from the AUM reported in regulatory filings such as Form ADV. This is because the requirements related to the accounts that must be included — and how the value of those accounts are measured — differ for a number of reasons. For example, when reporting GIPS® AUM it must be presented net of leverage and is not allowed to be grossed up as if the leverage did not exist, which conflicts with some regulatory filing requirements.
Also, when updating compliant presentations, it is important to confirm that the firm’s AUM is consistent with the scope of the definition of the firm and doesn’t include accounts outside of that scope. In addition, be sure that advisory-only assets — assets that the firm doesn’t have authority to execute trades for — are excluded from the firm AUM that is reported for GIPS® compliance purposes.
Create and maintain a list of all accounts with the corresponding market values used to calculate the year-end firm AUM. It is important to maintain this list as part of the firm’s books and records, as data may change in a firm’s system and the list can be used to support the AUM total reported.