GIPS verification - independent third party party

metoyoushe

Hi I need help with this question (note question changed around for copyright purposes):

An investment management firm, ABC, Inc, was recently audited by the United states securities and exchange commission (SEC). ABC included the following statement in its performance presentation report: "this report has been verified as GIPS compliant by ABC's compliance department and the United States Securities and Exchange commission." Does this constitute verification under GIPS?
a) no only one party may perform GIPS verification.
b) no neither party involved in the audit constitutes an acceptable GIPS verification
c) yes because an audit was performed implicitly by the SEC and explicitly by the firm's audit team.

The answer was B) however my question is.. why isn't an audit by the SEC constituted as an acceptable GIPS verification. Under GIPS it says "firms are encouraged to pursue independent verification" and "verification is performed by a third party, not by the firm itself" SEC is a third party? what am i missing here?

thanks

marsilni

There's probably a more "official" explanation than this, but my thinking is that the SEC wouldn't qualify because they're not in the business of auditing for GIPS compliance. The SEC has its own laws to worry about enforcing, and GIPS is a separate set of best practice guidelines for the investment industry.

disiz64

right on morebeans