Which of the following is NOT a requirement of the Global Investment Performance Standards (GIPS) for a firm seeking compliance?

• A. Have performance records verified by an independent third party.
• B. Include all discretionary, fee-paying portfolios in at least one composite.
• C. Present a minimum of five years of annual investment performance compliant with GIPS.
• D. Publish the firm's composite descriptions for all strategies.

Answer: (A)

Under GIPS, firms aiming for compliance must meet several mandatory elements that ensure performance is calculated and presented consistently. Having performance records verified by an independent third party is not one of those required elements; verification is optional and serves as external assurance that the firm’s policies and procedures align with GIPS, but a firm can claim compliance without it.

What is required include: including all discretionary, fee-paying portfolios in at least one composite to prevent cherry-picking and ensure representativeness; presenting a minimum of five years of annual performance that is compliant with GIPS (or since inception if the firm has less than five years of history); and publishing the firm’s composite descriptions for all strategies to disclose how portfolios are grouped and calculated. These requirements collectively promote transparency, comparability, and honesty in performance reporting.