You’ve probably seen this bumper sticker that reads something like “Don’t follow me, I’m lost too.” Well, an analogous idea arises in school, when you look at what a neighboring student answered to an exam question, thinking that they surely got it right. But what if they didn’t? A sure way to get caught cheating is to copy someone’s mistakes.

I recently reviewed an asset manager’s materials as part of a GIPS(R) (Global Investment Performance Standards) verification. There were many, many errors, including the use of language from the 2005 rather than the 2010 edition. For some reason they were sure this firm had to be compliant. Yes, they had been verified, but their verifier was a small-town CPA firm. No offense to small-town CPA firms, but chances are they don’t have many GIPS clients, and so probably aren’t as strong on the Standards as one might want.

Use what’s in the Standards as your GIPS composite presentation template

I frequently encourage clients who are new to GIPS to review the sample in Appendix A of the Standards as a guide to their GIPS composite presentation format. It’s laid out well, and demonstrates how one can display not only their statistics but also their disclosures. With GIPS 2020 the location of the sample may change, but we have a little bit of time before that occurs.

Not cheating, but the same “rules” should apply

Of course, to suggest that someone who uses another manager’s presentation is cheating is unfair. But, they are making a pretty big assumption that the party whose GIPS composite presentations they’re using as an example got it right. Fortunately, this client only created one of their several presentations as a start, and asked that I review it before they put the effort into developing them for their other composites. Good idea!