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comfort letter

   Also found in: Wikipedia 0.04 sec.
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
A statement issued by a Certified Public Accountant declaring no indication of false or misleading information in the financial statements being used in connection with a securities offering.
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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.
The winding road to reward: Rule 144A securities offerings can be a ... by Rabinowitz, Daniel A. / Best's Review
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.
Revisiting review engagements: (public & nonpublic companies) by Davis, A. Christine / California CPA
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.
AICPA issues auditing guidance by Journal of Accountancy
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