Considerations for Ongoing GIPS® Compliance

January 2, 2015

Compliance with the GIPS® standards is not a one-time exercise that, once completed, can be permanently checked off a firm’s to-do list.  Once GIPS® compliance has been achieved, it is essential to maintain compliance on an ongoing basis. There are tasks that must be completed on a monthly and annually basis in order to maintain compliance. 

Monthly

Portfolio Performance Calculations

  • Compile and calculate portfolio returns
  • Review returns for accuracy (test on a sample basis)
  • Load portfolio returns into composite management system

Composite Construction

  • Compilation/review of composite membership list
  • Identify new, terminated and changed accounts and confirm appropriate composite assignment
    • Confirm supporting documentation is on file for membership changes


Composite Performance Calculations

  • Calculate composite performance
  • Review composite returns for accuracy
  • Review and investigate performance outliers
  • Assess impact of any errors identified

Quarterly 

GIPS® governance and oversight meeting

  • The Firm should establish a GIPS® Working Group, comprised of representatives from different departments/offices, which meets on an as needed basis to discuss and review items related to GIPS® compliance. Such items would include:
    • Assess changes to the GIPS® standards (including new Guidance Statements and other interpretations issued by CFA Institute) and the impact to the Firm
    • Changes in investment management style or process
    • Composite membership changes
    • Benchmark changes
    • Composite errors
    • Changes in presentation footnotes
    • Changes to fee schedules
    • Composite creation and maintenance issues
    • Changes in laws or regulations regarding the calculation and presentation of performance

 

Annually

  • Compile and confirm that the Firm AUM used for GIPS® purposes is complete
  • Review and update list of composite descriptions to ensure accuracy
  • Review and update the firm’s GIPS® policies and procedures
  • Review and update compliant presentations
  • Confirm all annual statistics are accurate (e.g. firm AUM, composite returns, number of accounts, dispersion, 3-year annualized standard deviation)
  • Confirm disclosures are accurate and appropriate
  • Review and update marketing books for supplemental information and other GIPS®-related disclosures
  • Confirm and test the process for distribution of GIPS® compliant presentations
  • Provide internal education to various groups that are impacted by GIPS® compliance
  • If verified, manage and oversee completion of GIPS® Verification