Performance Audit

AAA

DEFINITION of 'Performance Audit'

An audit performed on an asset manager by an outside accounting firm to verify that the performance figures shown to the public on marketing materials represent the true aggregate results of the firm's clientèle. The CFA Institute has established performance presentation guidelines, called global investment performance standards (GIPS), that must be maintained by asset managers.

INVESTOPEDIA EXPLAINS 'Performance Audit'

There are many stories about money managers showing the performance of only one or two specific accounts out of hundreds or more because the numbers looked much better than the rest. A performance audit allows for the verification of the performance numbers reported by the company to ensure that they are an accurate reflection of the true returns generated by the firm.

RELATED TERMS
  1. Comparison Universe

    A comprehensive grouping of investment managers with similar ...
  2. Certificate in Investment Performance ...

    A certificate which signifies competency in the area of evaluating ...
  3. Annual Return

    The return an investment provides over a period of time, expressed ...
  4. Audit

    1. An unbiased examination and evaluation of the financial statements ...
  5. Global Investment Performance Standards ...

    Ethical standards to be used by investment managers for creating ...
  6. Fund Manager

    The person(s) resposible for implementing a fund's investing ...
Related Articles
  1. 12 Things You Need To Know About Financial ...
    Investing Basics

    12 Things You Need To Know About Financial ...

  2. Evaluating The Board Of Directors
    Insurance

    Evaluating The Board Of Directors

  3. Published Mutual Fund Returns Not Always ...
    Mutual Funds & ETFs

    Published Mutual Fund Returns Not Always ...

  4. Examining A Career As An Auditor
    Professionals

    Examining A Career As An Auditor

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center