AMC D3 states " Use an independent third party to verify that information provided to clients is accurate and complete" and this ia required for the AMC.
When I read that sentence, I am thinking about GIPS which is not required to have the third party verification.
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Anyone knows why it is required by AMC but not by GIPS? Then during the exam, do we need to look for specific wording on this?
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Also, any good strategy to practice AMC questions? Or it is the same as all the other ethics and GIPS, just keep practicing? I feel like AMC can be a little tricky sometimes.
Thank you!
AMC is concerned with manager responsibilities towards clients while GIPS is concerned with performance presentation and reporting standards. The latter is more of a marketing tool to instill credibility in prospective clients. If not verified (audited) your chances of being taken seriously are not as great.
In AM if you do not verify information you provide to clients you may risk misstatement, errors etc which are more serious as you are dealing with real existing assets.
Thanks for your response! That totally makes sense now! Just started review AMC seriously so trying to figure out everything now.
Based on the questions below, can we assume that Performance and Valuation section of the AMC is the same as GIPS? Or GIPS is only a part of the Performance and Valuation in AMC.
Which of the following procedures is NOT part of the Performance and Valuation section of the Code?
A)
Having an independent third party value client accounts.
B)
Implementing the Global Investment Performance Standards (GIPS®).
C)
Performing stress testing on complex derivative products.
The Performance and Valuation section of the Code deals with reporting the client’s and manager’s results in an accurate manner without misrepresentation. Stress testing falls under the section of the Code dealing with Investment Process and Actions.