Reporting Firm Assets Under Management

January 14, 2015 by  
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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.

TIP:

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.

Considerations for Ongoing GIPS® Compliance

January 2, 2015 by  
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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

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