Financial Services Insights - November 2012 - Updated AICPA Auditing Standards Board Guidance on Reporting Pursuant to the GIPS

In October 2012, the AICPA Auditing Standards Board issued Statement of Position (SOP) 12-1, Reporting Pursuant to the Global Investment Performance Standards.  This standard supersedes the predecessor Statement of Position 06-1 as well as related sections of chapter 11, “Independent Auditor’s Reports and Client Representations,” of the AICPA Investment Companies Audit and Accounting Guide (as of May 1, 2012).  CPA practitioners perform such engagements pursuant to AT section 101, Attest Engagements of the AICPA, Professional Standards.

The SOP provides guidance to CPA practitioners for engagements to examine and report on aspects of a firm’s claim of compliance with the Global Investment Performance Standards (GIPS®) standards (a verification). The GIPS standards recommend that investment management firms obtain independent third-party verification.

The SOP also provides guidance on engagements to examine and report on any of the firm’s composites and their associated compliant presentations (a performance examination). The GIPS standards permit a report on the performance examination of a composite and its associated compliant presentation to be issued only if a verification report has also been issued.

References to the GIPS standards in Statement of Position 12-1 refer to the 2010 edition of the GIPS standards. The GIPS standards specify that they include any updates, guidance statements, interpretations, questions and answers, and clarifications published by the CFA Institute and the GIPS Executive Committee.

SOP 12-1 became effective upon issuance.

Financial Services Insights - November 2012 

• Additional Disclosure Requirements Related to Balance Sheet “Netting” Take Effect in 2013 
• Navigating the Morass of OID Rules for Private Equity Funds 
• Updated AICPA Auditing Standards Board Guidance in Reporting Pursuant to the Global Investment Performance Standards (GIPS)