"All Composites will have the same beginning and ending annual dates. We will apply accrual accounting to all interest generated by the bonds in our portfolios. Starting 2010 we will calculate time-weighted portfolio returns on the date of all large external cash flows. All discretionary, fee-paying portfolios will be included in at least one composite and composites will be defined according to investment strategy, mandate, and/or objectives."

"My firm is approximately seven years old. Since GIPS only requires five years of annual investment performance, I can easily meet that requirement. Since my reporting systems are So effective, I also will have no problem maintaining the 5-year reporting requirement into the future."

"My effective electronic systems will have no trouble capturing and maintaining cost and market values for portfolio valuations. My system automatically generates return information every quarter and, for my international composites, uses the same exchange rate sources for the portfolios and the benchmark."

"All of my fee-paying portfolios will be included in at least one composite. When clients decide they no longer need my services, my system automatically recalculates previous portfolio performance to reflect the removal of the portfolios from relevant historical performance presentations."

Required: A. Indicate whether each of Rachel's statements is an accurate representation of GIPS. If you find these statements to be inaccurate, explain the reason(s) for the inaccuracies. (20 marks