The Portable MBA in Finance and Accounting, 3rd Edition

Going Public 505

APPENDIX C

COMFORT LETTER

AICPA Professional Standards
(Updated as of January 1, 2000)
Copyright © 2000, American Institute of Certified Public Accountants Inc.

[Note: dating throughout, in 1900s]

1. The contents of comfort letters vary, depending on the extent of the infor-
   mation in the registration statement and the wishes of the under writer or
   other requesting party. Shelf registration statements may have several clos-
   ing dates and different under writers. Descriptions of procedures and find-
   ings regarding interim financial statements, tables, statistics, or other
   financial information that is incorporated by reference from previous 1934
   Act filings may have to be repeated in several comfort letters. To avoid re-
   stating these descriptions in each comfort letter, accountants may initially
   issue the comments in a format (such as an appendix) that can be referred
   to in, and attached to, subsequently issued comfort letters.

Example A: Typical Comfort Letter

2. A typical comfort letter includes—

a. A statement regarding the independence of the accountants (para-

graphs .31 and .32).

b. An opinion regarding whether the audited financial statements and fi-

nancial statement schedules included (incorporated by reference) in the

registration statement comply as to form in all material respects with

the applicable accounting requirements of the Act and related rules and

regulations adopted by the SEC (paragraphs .33 and .34).

c. Negative assurance on whether—

(1) The unaudited condensed interim financial information included

(incorporated by reference) in the registration statement (para-

graph .37) complies as to form in all material respects with the ap-

plicable accounting requirements of the Act and the related rules

and regulations adopted by the SEC.

(2) Any material modifications should be made to the unaudited con-

densed consolidated financial statements included (incorporated

by reference) in the registration statement for them to be in con-

formity with generally accepted accounting principles.

d. Negative assurance on whether, during a specified period following

the date of the latest financial statements in the registration statement

and prospectus, there has been any change in capital stock, increase in