GIPS® Firm Notification

This feature contains important information about the GIPS® firm notification requirement.  Specifically, we will cover:

  1. Important information on what is required and not required with respect to completing the form;
  2. New information concerning some of the optional form information;
  3. A change in procedure regarding submitting corrections to CFA Institute; and
  4. A look at what is anticipated in the future regarding this requirement.

Firm specific information will be kept confidential; summary information or statistics from the database may be released publically. The information gathered will help stakeholders better understand trends that indicate where growth in the adoption of the GIPS standards is taking place.

COMPLETING THE FORM

The new requirement for firms to notify CFA Institute of their claim of compliance with the GIPS standards became effective 1 January 2015. The notification form has been posted on the GIPS website at http://www.gipsstandards.org/compliance/Pages/compliance.aspx and is now operational.

When the next version of the GIPS standards is updated, this new requirement will be included as a numbered provision. Until that time, this requirement is documented in the form of a Q&A.  The Q&A has been posted to the GIPS standards website and reads:

Are GIPS-compliant firms required to notify CFA Institute of their claim of compliance?

Yes. Effective 1 January 2015, firms are required to notify CFA Institute of their claim of compliance with the GIPS standards by submitting the GIPS Compliance Form which is available on the GIPS standards website. The notification must be submitted annually by 30 June with data as of prior year-end.

The form is divided into sections and contains required and optional information.

Required Information:  Required information is identified with a red asterisk (*).  The Primary Contact and Firm Information sections are straightforward:

GIPS-Compliance-Form

Firm-Information

Firm Website:  The “Website Address” field appears only after you select “Yes” to “Does your firm have a website?”

Firm-Address

Firm-Structure

Firm Type:  Firm Type and Structure asks for information about your firm.  This information is optional.  “Asset Owners” are considered to be “…entities that manage investments, directly and/or through the use of external managers, on behalf of participants, beneficiaries, or the organization itself (‘asset owners’). These entities include, but are not limited to, public and private pension funds, endowments, foundations, family offices, provident funds, insurers and reinsurers, sovereign wealth funds, and fiduciaries.”  All others claiming GIPS should select “Asset Manager.”  We don’t believe there is anyone that would fall into the “Other” category.

Subsidiaries:  If you are a subsidiary of a larger parent company, select “Yes” even if your parent does not claim GIPS compliance.

 Firm-Assets

Total Firm Assets:  The Firm Assets and Investment Vehicles section is also optional.  You may choose to answer these questions to the best of your ability or ignore them.  Regarding GIPS Total Firm Assets, this number should correspond to your GIPS defined firm, which may differ from your regulatory reporting or your legal entity.  Furthermore, only ranges are reported, so it is not necessary to have final reconciled numbers before completing the form.  These values should be reported as of 31 December.

 History

Year firm first claimed compliance:  Regarding Verification History, we are now told that “Year firm first claimed compliance” is the year the firm created its first compliant presentation, not the historical year to which the standards may have been retroactively applied.  So, for example, if you claimed compliance in 2014 and applied the standards back to 2009, the year selected would be 2014.  Again this field is an optional field.  We asked why the years in the drop down box go back to 1980 considering no standards existed prior to 1992.  A CFA Institute representative explained that those years should not be there and should be removed.  As of this writing, those older years remain on the form but should not be selected.

Verification Status:  “Has your firm been verified within the last 24 months?” is a required field.  You should select “Yes” only if the “through” date of your most recent (presumably Ashland Partners’) opinion letter is 31 December 2012 or later.  This means that you do not need to wait for your 2014 GIPS verification to be completed in order to say you are verified.  The basis for this date is from the following Q&A:

Our firm has been in compliance with the GIPS standards since 2000. We obtained a verification from an independent verifier which covered the periods from 1 January 1995 through 31 December 2002. It is now 2011 and we have adopted the 2010 edition of the GIPS standards. May we still use the claim of compliance that states we are independently verified even though it is several years since our last verification? May we indicate that we have been verified when replying to consultant questionnaires or RFPs?

A firm that was verified for any period of time in the firm’s history may use the claim of compliance for a verified firm, because the periods for which the firm was independently verified are clearly stated within the claim of compliance. However, in the situation described above, it would be misleading to state or imply that the firm is currently verified. For example, when answering a consultant questionnaire or RFP question asking whether the firm is verified where the firm is not able to state the periods for which the firm has been verified, it would not be appropriate for the firm to simply answer “yes.” A firm may indicate that it is verified only if the end date of the period(s) covered by the latest verification report is not more than 24 months ago, or if the firm is able to indicate the periods verified in the response to such a question.

Categories: Verification Date Added: May 2010 Source: The GIPS Standards 2010 edition

SUBMITTING CORRECTIONS

If corrections need to be made to submitted information, firms are advised to NOT RESUBMIT THE FORM.  This differs from the FAQ published on the CFA website.  All changes should be communicated via email to gipscompliance@cfainstitute.org.  Simply indicate your firm name and the corrected information in the email.  CFA Institute has reiterated to us that unintentional submission of incorrect information does not jeopardize compliance.  Likewise, CFA Institute has no intention of “policing” submissions or testing information for accuracy.

QUESTIONS ABOUT THE FORM OR REQUIREMENT

CFA Institute has put out a Q&A on the notification requirement.

Some Q&A worth highlighting are:

Who will have access to the information provided?

Only CFA Institute staff will have access to the firm-specific information provided. No volunteers, committee members, or other third parties will have access to the firm-specific information.

Will CFA Institute check any of the information provided?

No, CFA Institute will not test the information for accuracy. The information provided will be self-reported by the firms claiming compliance. The GIPS standards are ethical standards and we expect that firms will provide truthful, accurate information. Failure to do so would violate the GIPS standards and invalidate a firm’s claim of compliance.

All other questions, comments and concerns should be directed to gipscompliance@cfainstitute.org.

UPCOMING ACTIVITY WITH RESPECT TO THE FORM AND REQUIREMENT

  • The GIPS Verification Sub-Committee is creating guidance on the firm notification requirement with respect to verifier responsibilities, specifically, whether firms need to update their verification status after June 30th and the role of the verifier in this process.
  • There will probably be changes and/or improvements to the form over time.  CFA Institute views this as “version 1.0.”  One such change that is anticipated is the ability of a compliant firm to login and view their submitted information history, as well as possibly print or send some sort of confirmation that information has been submitted.
  • In May, Ashland Partners will be reaching out to its clients to confirm that this requirement has been met, so expect a call from us around that time.

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