Global Investment Performance Standards (GIPS)

Consider the following requirements that the SPH establishes for firms claiming compliance with the GIPS standards:

I. Firms must meet all the requirements of the GIPS standards
II. Firms must make all mandatory disclosures required by the GIPS standards
III. Firms must meet any other GIPS requirements that apply to that firm's specific situation

How many of the above are explicitly identified in the SPH as obligations that arise when a firm claims GIPS compliance?

Consider the following practices that the SPH explicitly lists as methods by which firms not complying with the GIPS standards may satisfy their Standard III(D) obligations:

I. Presenting the performance of a composite of similar portfolios rather than using a single representative account
II. Including terminated accounts as part of any composite performance history
III. Maintaining the data and records used to calculate the performance being presented

How many of the above practices are explicitly enumerated in the SPH as satisfying Standard III(D) for non-GIPS-compliant firms?

Consider the following statements regarding a member whose firm claims GIPS compliance and has distributed performance materials containing an error:

I. A member who unknowingly distributes a performance presentation containing a typographical error before the mistake is discovered has not violated Standard I(C)
II. Once an error in a distributed GIPS-compliant performance report is discovered, the member must cease distribution of the incorrect material and correct the error by informing recipients
III. A member whose firm claims GIPS compliance is not subject to any GIPS requirements regarding error correction as long as the error is typographical rather than methodological

How many of the above statements are accurate according to the SPH?

Consider the following three scenarios involving performance presentation:

I. A firm circulates a performance report claiming GIPS compliance when composite returns are calculated using simple-average (equal) weighting of portfolio returns rather than asset weighting
II. A member at a firm claiming GIPS compliance unknowingly distributes a performance presentation containing a typographical error that overstates composite assets tenfold before the mistake is discovered
III. A member presents an advertisement attributing performance achieved at a prior employer to the current firm without identifying that the results were earned while at the prior entity

How many of the above scenarios constitute a violation of the Standards according to the SPH?

Consider the following practices employed by a firm that does NOT comply with the GIPS standards when presenting performance history to prospective clients:

I. Presenting the performance of a composite of similar portfolios rather than using a single representative account
II. Excluding terminated accounts from composite performance history to avoid downward skew in reported returns
III. Using one top-performing account as a single representative proxy for the firm's overall performance record

How many of the above practices would satisfy the firm's obligations under Standard III(D)?

Consider the following practices that a member at a non-GIPS-compliant firm might adopt when presenting performance history:

I. Considering the knowledge and sophistication of the audience when determining what performance information to provide and tailoring it accordingly
II. Presenting the performance of a composite of similar portfolios rather than using a single representative account
III. Including disclosures that fully explain performance results, such as disclosing whether performance is gross of fees, net of fees, or after tax

How many of the above practices are explicitly enumerated in the SPH as methods by which non-GIPS-compliant firms can satisfy Standard III(D)?

Consider the following disclosures that a member at a non-GIPS-compliant firm might include in a performance presentation:

I. A disclosure stating whether the performance shown is gross of fees, net of fees, or after tax
II. A disclosure identifying the names and years of service of every portfolio manager who contributed to the composite's historical returns
III. A disclosure stating that performance results are simulated when model results have been used

How many of the above disclosures are explicitly listed in the SPH as examples of inclusions that help a non-GIPS-compliant firm meet its Standard III(D) obligations?

Consider the following statements about a firm that claims compliance with the GIPS standards:

I. The firm must asset-weight portfolio returns when calculating composite returns
II. The firm may use simple-average (equal) weighting of portfolio returns within a composite if the composite contains fewer than ten portfolios
III. The firm must comply with GIPS requirements addressing the treatment of material errors in performance presentations

How many of the above statements accurately describe the firm's obligations under the GIPS standards as discussed in the SPH?

Consider the following statements concerning the Madeline scenario from the SPH, in which an unpaid intern assists a firm's effort to achieve GIPS compliance:

I. Because Madeline did not receive monetary compensation, she is not considered an employee for purposes of Standard IV(A) and may take GIPS compliance software she developed
II. Madeline violates Standard IV(A) by copying and taking proprietary GIPS compliance software she helped develop, because she used firm resources in creating it
III. Work product created by an intern using firm resources — such as GIPS compliance software — constitutes employer property regardless of whether the intern receives monetary compensation

How many of the above statements accurately reflect the SPH's analysis of this scenario?

Consider the following actions by Warrenski, a member of the CFA Institute GIPS Standards Technical Committee:

I. Using advance knowledge of confidential upcoming GIPS standard changes to promote her firm's services and imply a strategic advantage to clients
II. Factually stating to clients that she serves on the GIPS Standards Technical Committee when explaining her familiarity with GIPS requirements
III. Assisting clients in facilitating compliance with GIPS changes after those changes have been publicly released by CFA Institute

How many of the above actions constitute a violation of Standard VII(A) according to the SPH?

Consider the following statements concerning the role of GIPS compliance in the selection of external advisers or subadvisers under Standard V(A):

I. GIPS compliance is among the CFA Institute guides that the SPH identifies as criteria members and candidates may use when selecting external advisers
II. Under conditions of tight time constraints, relying solely on a subadviser's GIPS compliance and recent total return performance satisfies the due diligence required by Standard V(A)
III. The SPH indicates that GIPS compliance alone is insufficient — members must also thoroughly investigate firms and their operations before making a subadviser recommendation

How many of the above statements accurately reflect the SPH's guidance?

Consider the following characterizations of Standards-related conclusions from SPH examples involving GIPS:

I. A member who unknowingly distributes a GIPS-compliant firm's performance report containing a typographical error prior to discovering it has violated Standard I(C)
II. A firm that calculates composite returns using equal weighting — rather than asset weighting — while claiming GIPS compliance has violated Standard III(D)
III. A member who factually discloses her membership on the CFA Institute GIPS Standards Technical Committee to clients has violated Standard VII(A)

How many of the above characterizations are accurate according to the SPH?

Consider the following general statements about GIPS standards as presented in the SPH:

I. Compliance with the GIPS standards is described as the best method for members and candidates to meet their Standard III(D) obligations when showing the performance history of assets they manage
II. Members and candidates whose firms do not comply with the GIPS standards have no obligation under Standard III(D) to present fair, accurate, or complete investment performance history
III. Members and candidates should encourage their firms to comply with the GIPS standards

How many of the above statements accurately reflect the SPH's guidance on GIPS standards?

Consider the following disclosures that a member's firm — which does NOT claim GIPS compliance — may include to satisfy Standard III(D):

I. Tailoring the performance presentation based on the knowledge and sophistication of the audience
II. Disclosing that results are simulated when model results are used in the performance presentation
III. Disclosing whether the performance record presented is that of a prior entity rather than the current firm

How many of the above are explicitly identified in the SPH as methods of meeting Standard III(D) obligations for non-GIPS-compliant firms?