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.

meghanjackson

no i guess verification is a one up on compliance which gives a higher trust and credential for performance presentation. a firm can be gips complaint but may or may not be verified.

John10

Verifying your firm’s compliance to GIPS, is a recommendation of GIPS.

bodhisattva

“a firm that fails independent verification (for obvious reasons) will still be able to claim compliance with GIPS”
I believe the verifying firm would provide them with a list of why they did not comply and were not verified, then they get a chance to fix the stuff and try again no?

mar350

i think it would be unethical since you claim GIPS compliance knowing you are not compliant. Don’t think its something they’d test.

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.

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.

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?

BC_MBA_student

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

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.