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Basic Question 2 of 3
Which statement(s) is (are) true?
II. Firms may claim compliance without verification.
III. Firms may only claim verified compliance for those years that have actually been verified.
IV. Verification can be performed on specific composites.
I. Verification can be performed either by an independent third party or by the firm itself.
II. Firms may claim compliance without verification.
III. Firms may only claim verified compliance for those years that have actually been verified.
IV. Verification can be performed on specific composites.
User Contributed Comments 17
| User | Comment |
|---|---|
| kulla | How can firms claim complaince without verification ? either the question is wrong , it should have been"which statement is false?" or the correct answer is III. |
| justin | yes they can without verification, but they cannot say the compliance is a verified one. |
| bigzero | Why III is not in the answer? Isn't it directly quoted from the standard? |
| kaliokale | Cause GIPS is not mandatory. They can claim compliance without verification |
| mtcfa | I think this question is flawed. To my understanding, verification must be informed to insure compliance. However, an independent 3rd party performing the verification, is not necessary. (I.e. the firm can verify its own compliance). |
| mtcfa | Strike my last comment. Verification is nor a requirement of GIPS, but may become so after 2005. |
| Slothrop | This answer is not fully correct. III can also be correct. 0.B.3 says "The verification disclosure language SHOULD read: '[Insert name of FIRM] has been verified for the periods [insert dates] by [name of verifier]. ...' |
| sunny | III is false because of the word 'only'. |
| surob | But it is saying "verified compliance". You can claim verified compliance only when you had third party company verify the compliance. Any comments? |
| Challs | the answer is II...it takes care of III which then become unsubstantiated by "self"...mean of one's own accord; the firm. |
| Ioannis | Wrt III,: "It is recommended though that firms have all years for which they are claiming compliance verified." recommended <> obliged, necessary |
| Readalert | If II is correct, how can a firm possibly claim compliance if it cannot verify self? I must be therefore be correct. |
| bc9115a | I think the standard says firm may claim compliance, but independently verified compliance ADDS credibility. Am I right to say that? |
| geofin | "Verification does not ensure the accuracy of any specific composite presentation. Verification tests: 1. Whether the investment firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis, and 2. Whether the firm?s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards." CFA Institute. Level I Volume 1 Ethical and Professional Standards and Quantitative Methods, 7th Edition. Pearson Learning Solutions. Page 173. |
| johntan1979 | I agree that III should be correct. Note the difference between "VERIFIED compliance" and "compliance". You may claim compliance without verification. But you can ONLY claim VERIFIED compliance WITH verification. |
| nathi_8 | III is false because it is "recommended" they claim compliance for verified years |
| ctschro | ya, i agree w/ johntan1979's analysis (among the others that state something similar), and not a single comment that claims that III is false addresses his main point. |
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu
Learning Outcome Statements
describe the concept of independent verification
CFA® 2024 Level I Curriculum, Volume 6, Module 4.