GIPS compliance - years of historical returns

CFA Level III
#1

To clarify, when they say you need to present 5 years of historical returns or since inception if less than 5 yrs… is this referring to 5 years of compliant returns or any?

Example:
Y1: 2014 non compliant. - firm inception
Y2: 2015 non compliant
Y3: 2016 non compliant
Y4: 2017 non compliant
Y5: 2018 compliant
Y6: 2019 compliant
Y7: 2020 compliant - Claims GIPS Compliance at end of this year

Would this example be in violation if they claimed GIPS compliance ending 2020 and presented 3 years of compliant returns ( 2020 to 2018) and 2 years of non-compliant returns (2017 to 2016)? Or is this allowed because the requirement is simply 5-years of historical returns, and not necessarily compliant years?

#2

To be compliant in 2020 they would have to show 5 years of performance.

I don’t know how they were presenting their performance between 2014 and 2017, but apparently they corrected it in 2018, which means that in 2018 they showed compliant performance from 2014 on.

#3

Perfect, thank you so much!

#4

My pleasure.