Chapter 2 Section 5: Letters for Underwriters

Question 1

What is a comfort letter?

Answer 1

It gives negative assurance on unaudited interim financials. It’s used by underwriters as part of their reasonable investigation and due process

Question 2

What is required before you issue a comfort letter?

Answer 2

A review engagement - you need to know what you’re signing off on

Question 3

Is there restricted use on comfort letter?

Answer 3

Yes. It must say so in the letter

Question 4

What positive assurance can be given to underwriters?

Answer 4

CPA’s independence

Compliance of financials with regulation if they’re audited

Question 5

What negative assurance can be given to underwriters?

Answer 5

On unaudited financials
On changes in financial information
Whether non-financial information included with a registration statement conforms with regulations

Question 6

What can you not comment or provide assurance on?

Answer 6

Market risk sensitive instruments

Qualitative disclosures