GIPS Compliance and Performance Reporting

Very Hard Global Investment Performance Standards Compliance

In the context of the Global Investment Performance Standards (GIPS), compliance plays a crucial role in ensuring performance presentations are fair and comparable across different firms. Firm A, which is GIPS compliant, reported a 10% return for the year 2022 after all fees and expenses. Firm B, which is not GIPS compliant, claimed a return of 12% for the same period, without adequately disclosing the impact of fees on their stated performance.

According to GIPS standards, which of the following statements accurately reflects the compliance requirements concerning performance reporting?

Both Firm A and Firm B should have their performance data audited by an independent third party to ensure compliance.

Only GIPS-compliant firms like Firm A can claim to present performance in a manner that is consistent and comparable across all firms.

Firm B can claim GIPS compliance by stating their returns without disclosing fees, as they are not required to comply with GIPS.

Hint

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