Revenue Procedure 2002-55 - Audit Guidance for External Auditors of Qualified Intermediaries

based allocation ratio or a production cost gations covered by the QI Agreement. TheAudit Guidance for Externalallocation ratio) (§ 1.263A–1(h)), and the external auditor must conduct its audit inAuditors of Qualifiedsimplified production method without the accordance with the procedures describedIntermediarieshistoric absorption ratio election (§ 1.263A– in section 10 of the QI Agreement. This2(b)), but does not include any other rea- Revenue Procedure is intended to assist theRev. Proc. 2002–55sonable allocation method within the external auditor in understanding and ap-meaning of § 1.263A–1(f)(4). plying those procedures. This Revenue Pro-“(4) Multiple changes. Taxpayers cedure does not amend, modify, or interpretSECTION 1. PURPOSE AND SCOPEmaking both this change and another change the QI Agreement.in method of accounting in the same year This Revenue Procedure contains finalSECTION 2. BACKGROUNDof change must comply with the ordering Audit Guidance for an external auditor en-.01 Comments on Proposed Guidance.rules of § 1.263A–7(b)(2).” gaged by a qualified intermediary (QI) toThe IRS issued proposed audit proceduresverify the QI’s compliance with the with-for external auditors in Notice 2001–66,holding agreement entered into with the In-SECTION 7. TRANSITION RULES OF2001–44 I.R.B. 396. Because the IRS andternal Revenue Service (IRS) pursuant toREV. PROC. 2002–9.Treasury recognize that the audit processRev. Proc. 2000–12, 2000–1 C.B. 387 ...