The GIPS(R) standards don’t have any wiggle room. While there may be other rules or standards where materiality can come into play, it isn’t the case with GIPS. Firms state that they comply in their presentation materials and don’t qualify, waffle or hedge their statement by saying that they “comply in all material respects.”
Some verifiers apparently allow their clients to use such wording in their “rep” letter. But why? Perhaps because the firm is uncomfortable making such a bold statement that they actually comply! Well, then why would they feel comfortable to make a claim of compliance in their presentation materials without such additional qualifying wording? Technically, a firm shouldn’t engage a verifier unless they believe they are compliant.
If the firm makes (what I would consider) a weaker claim (i.e., by using “in all material respects”) what happens if later on, after the verification, a determination is made that in reality the firm wasn’t compliant? Is the verifier now “on the hook” for not catching something? The verifier might say “well, you did say in all material respects, so I understood that you might not actually comply” or might the firm challenge the verifier by saying “I didn’t say I was completely compliant but expected you to discover those items where I had problems”? Or, perhaps the verifier should ask the client “in what non-material effects don’t you comply?”
This level of qualifying a claim is somewhat new to me and it’s unclear that such additional language is appropriate, warranted or a good idea. I’d love to hear the thoughts of others on this matter.