Assurance

Reviews and Sanity Checks

Formal QI Periodic Reviews

As required by Section 10.05 of the QI Agreement, Responsible Officers of Qualified Intermediaries, if they are not eligible for a waiver, are required to designate a reviewer to perform a QI Periodic Review. The periodic review includes:

• Procedures related to Account Documentation: This involves testing whether the QI has obtained account documentation that meets the requirements of the QI Agreement, as well as those required under FATCA regulations.

• Procedures related to Withholding Rate Pools: This entails testing whether the QI has correctly assigned account holders to the appropriate withholding rate pools and whether, with respect to a partnership or trust described in section 4.05 of the QI Agreement, the QI has applied the highest rate of withholding applicable to each type of reportable amount.

• Procedures related to Withholding Responsibilities: This involves testing whether the QI has applied the correct rate of withholding to U.S. sourced income earned and whether the QI has properly backup withheld or withheld under chapter 4 when required.

• Procedures related to Return Filing (1042) and Information Reporting (1042-S, 8966): This includes reconciling original and amended Forms 1042 and 1042-S filed by the QI with those received from the QI's withholding agents and testing, for a sample of Forms 8966, whether the QI has accurately reported the information.

• Procedures related to Significant Changes in Circumstances

The result of the Periodic Review will be a report that conforms to the formal requirements outlined in Section 10.05 of the QI Agreement and contains the factual information required to be provided by the QI Responsible Officer under Appendix I, Part IV of the QI Agreement.

Other Operational Tax Reviews and Sanity Checks

FATCA Review

Under FATCA, Some Foreign Financial Institutions are obliged by the FFI Agreement to perform a periodic certification in which the FFI confirms that they have conducted a periodic review of the sufficiency of the compliance program and their compliance with the requirements of the FFI Agreement / FATCA regulations. The FATCA Review is part of PQS's service offering and is usually performed in a very tailored form, as the FATCA review is not as formalized as, for example, the QI Periodic Review.

CRS Review

The PQS CRS Review serves as preparation for reviews/audits conducted by authorities, such as CRS audits by the ESTV (Federal Tax Administration). Same as the FATCA review, PQS offers tailor-made reviews that are adjusted in scope and size to the needs of our clients.

Many of our clients are interested in our Advisory Services after performing a review or sanity check.

Ongoing/Continuous Assurance

Over time, we have observed that financial institutions experience ongoing procedural, personnel, and operational changes. This dynamic environment often leads to the results of a review or sanity check not retaining its long-term effectiveness. Upon revisiting the financial institution after a few years, we have consistently observed the persistence of the same errors we previously encountered.

To address this challenge, we conduct bite-sized, periodic, and ongoing sanity checks, such as on an annual basis, that are characterized by their smaller scope but high effectiveness. For instance, rather than testing 100 accounts every five years, we test 20 accounts within that same five-year period. This approach enables the financial institution to continuously enhance its procedures and controls, while relying on us as a trusted and dependable partner.

We also utilize this approach in our Operational Tax Compliance Service.