What To Expect During Your GIPS Verification.
For firms looking to become compliant and verified for the first time, or those considering a change in verifiers, it is important to understand the GIPS verification process and what you should expect during your GIPS verification.
The graphic and description below describe our GIPS verification process.
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- We begin with a review of your written policies and procedures to:
∘ learn what your rules are: for example, your timing for adding/removing accounts from
composites, your rules for discretion, your rules for handling large cash flows (if applicable). These rules are then tested later in the process.
∘ check for completeness: for example, are there items we believe should be included?
∘ freely offer commentary on the content, grammar, clarity, consistency, etc.
- We then review of all of your GIPS presentations. This review serves several purposes; for example, we:
∘ confirm that all composites have a corresponding presentation.
∘ check to ensure that all presentation and disclosure requirements have been satisfied.
∘ look for signs of possible problems, such as large return dispersion.
- We next begin the detailed review of your composites. As you may be aware, verification is done on a sampling basis. However, we expect to review all of your composites and sample from a timing standpoint (i.e., we won’t look at every month for every composite). We can assure you that the analysis will be sufficient to satisfy our requirements for a thorough review.
∙ This review will necessitate the delivery of several reports from you, including:
∘ open/closed account list
∘ composite membership list
∘ list of accounts not included in composites and the reason(s) for their exclusion.
- We will request specific reports based on our findings. These may include:
∘ account folders
∘ account holdings and transaction reports.
We provide ongoing consultation and support to our clients. You can send emails or contact us by phone with inquiries about the standards as well as broader aspects of performance and risk. We serve not only as the verifier but the “industry expert” for our clients. We also freely opine on the standards and proposed changes. We host monthly webinars for which we charge a fee; however, our verification clients are invited to participate at no cost. Topics such as GIPS 2010, fixed income attribution, and risk-adjusted performance measurement have been addressed.
During our visit, we can review marketing materials and supplemental information to ensure they are in line with the GIPS guidelines. We also encourage you to send us any new materials you create throughout the year.
Assuming we find no problems, we will issue our reports in line with the GIPS standards. For any issues that are discovered, we will provide a report which details them. We will also offer (if appropriate) recommendations. You will then make the necessary changes and address the areas of deficiency and respond directly to our report. We will then review your response and come back with any questions or issues that remain. Once we are satisfied all of the outstanding items have been addressed, we will send your verification letter (hard and soft copies).
