The 2005 edition has the following requirements for policies and procedures (see section 0.A.6):
- "Firms must document, in writing, their policies and procedures used in establishing and maintaining compliance with all the applicable requirements of the GIPS standards."
- Firms must document their policies and procedures used in establishing and maintaining compliance with the GIPS standards, including ensuring the existence and ownership of client assets, and must apply them consistently."
Did someone say, "Bernie Madoff"?
This delineation of a specific required procedure, to me, speaks volumes. Hopefully, some guidance will be forthcoming regarding this, as it's doubtful that many firms today have such procedures or would know where to begin to develop them. We haven't yet given this much thought ourselves, but will offer our thoughts in the near future.