A hedge fund is considering us and a small CPA firm to do their GIPS(R) (Global Investment Performance Standards) verification and they also want an examination done. If they pass, they want to be able to say that their records "have been audited." We never use this expression, because I was concerned that the auditor community had an official "lock" on it. Perhaps by implication, the reader might interpret it to mean that an auditor did the work. If our client wants to say that their numbers "have been audited," can they?
Well, I passed this question along to a couple colleagues at very large CPA firms to get their thoughts. I mentioned that this may fall under the category of a "silly question," but I've been known to ask these and obviously have no shame. While both responded I'm only at liberty to share one at this time:
“Audit” does have a defined meaning for us in public accounting. However, there is no ownership of the term of course. IRS does “audits” – in the generic use of the word. Anyone who does an “audit” is an “auditor” – nothing to do with a professional designation.
The CFA Institute did not use that term for the PPS and now GIPS, basically because our profession convinced them that it was the incorrect term for us when WE do the work, and we wouldn’t use it. Nor do we, as our work is performed under the ATTESTATION standards, not AUDITING standards.
Wouldn’t their use of the term conflict with GIPS?
This raises at least two issues, does it not? First, if our competitor has suggested that they are doing an "audit" and that the client could state that their numbers "were audited" would conflict with the profession's governing body as well as GIPS, itself. Second, it appears that the common use of the term ("our numbers have been audited") is improper. Interesting, is it not? And perhaps not such a silly question, after all!