GIPS: Firm failing verification still claiming compliance? studying, failing, anything

mnieman

Just finishing the tedious reding on GIPS and it got me wondering whether a firm that fails independent verification (for obvious reasons) will still be able to claim compliance with GIPS. As I see it, if the compliance could not be verified thare is no compliance. The books do not say anything about this.
These are the things that keep my mind busy on a lonely Sunday studying.

soverby

For FIRMS that are verified:
“[Insert name of FIRM] claims compliance with the Global Investment
Performance Standards (GIPS?) and has prepared and presented this report
in compliance with the GIPS standards. [Insert name of FIRM] has been
independently verified for the periods [insert dates]. The verification
report(s) is/are available upon request.
Verification assesses whether (1) the firm has complied with all the composite
construction requirements of the GIPS standards on a firm-wide basis and
(2) the firm’s policies and procedures are designed to calculate and present
performance in compliance with the GIPS standards. Verification does not
ensure the accuracy of any specific composite presentation.”
————————
Please compare it with programmer’s post for case of not-verified. It seems it asks more if the firm is verified.

kkn006

Its true, you have to disclose it if you haven’t been verified. CFAI volume 6, page 308

Windjam

I couldn’t find it in the CFAI text because its too dense and hard to read, but from the 2011 Stalla Guide, page 18-18 it reads:
“For firms not verified, the disclosure must read:
‘[Name of firm] claims compliance with the Global Investment Performance Standards (GIPS(R)) and has prepared and presented this report in compliance with the GIPS standards. [Name of firm] has not been independently verified.’”
Schweser 2011 says the same thing on Page 199 of Volume 5.
I looked at my Schweser book from last year and it didn’t have this. So it looks like new stuff.

BelalM

I don’t think thats right either… i don’t remember you having to say anything if you aren’t verified and haven’t sought to be. It’s not mandatory anyhow.

SeanWest

Well now there are two ways to claim compliance. If you are not verified, you still have to state that you are NOT independently verified. I think that’s something new as I don’t remember it from before.

BC_MBA_student

You are right , it would be simpler to just not claim compliance , get things fixed , then try for compliance

lucasg85

I don’t think this is correct Jan, i don’t have the text in front of me but i’m pretty sure i remember thinking to myself “man, there is no real upside to doing this” …. because it seemed like if you fail verification you can’t claim compliance till remedied, so why would anyone do it?

canadiananalyst

but the claim of compliance in this case wasn’t verified. this seems like a scenario that when verification is sought it should be binding.

strikethree

You can still claim compliance.
You can say the claim was verified by so-and-so, and the verification report is available upon request.
It is up to the investor to go thru the report and see you are not compliant at all. Caveat emptor.