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Comfort Letter |
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Comfort letter A letter from an independent auditor included in a preliminary prospectus stating that, while a full audit has not been undertaken, the auditor has done a 'review' sufficient to assure that financial statement information in the preliminary prospectus is correctly prepared to the best of the auditor's knowledge. The auditor in effect states that, had a full audit been done, they are comfortable that the audited financial statements would not be materially different from the ones presented in the preliminary prospectus.
Comfort Letter Before or during a new issue, a statement by an auditor stating that, while a full audit has not been done, a review of the issue's prospectus has revealed nothing inaccurate or misleading. The comfort letter also states that the auditor is confident that a full audit would not uncover anything unusual that would negatively affect the issue. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| As part of the due diligence process, the initial purchasers, like underwriters in a registered offering, require, as a matter of practice and custom, an accountant's comfort letter on all financial information contained in the OC, and disclosure or negative assurance letters from both the initial purchasers' and the company's respective counsel. In a recent case against a CPA firm, the jury awarded damages to the CPA's public client in connection with the CPA's reviews of the interim financial statements and related comfort letter. 72 required any party requesting a comfort letter (a special type of agreed-upon-procedures report issued in connection with a securities offering registered with the Securities and Exchange Commission) that did not have a due diligence defense under section 11 of the Securities Act of 1933 to provide CPAs with a letter making certain representations. |
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