Comfort Letter Procedures Relating to Capsule Financial Information ...

Positive assurance that the year-end capsule financial information has been
audited (or the year-end financial statements have been audited);
Underwriters sometimes request that accountants make a statement in the comfort letter
indicating that an audit of the recently ended fiscal year is complete prior to the date that
the client has issued the underlying annual financial statements.
The accountants should not comment on the completion (or the status, other than the
fact that the audit is pending completion) of the audit prior to the issuance of the
underlying financial statements. Even though audit fieldwork may be substantially
complete or the date of the audit report has passed, both the company and the auditor
are responsible for evaluating post-balance sheet (pre-issuance) subsequent events for
their impact on the financial statements and disclosures up to the issuance date.
Therefore management cannot assert that the financial statements are complete until
the date that the financial statements are issued. Since management is not in a position
to represent that the financial statements are complete, the auditor cannot indicate that
the audit is complete. Additionally, as noted above, if the audited financial statements
were complete (and therefore, by definition, “available”), S-X 3-12(c) would require that
they be included in the registration statement.
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Copyright © 2005 by the American Institute of Certified Public Accountants, Inc.,
New York, New York.
10 CPCAF Comfort Letter Procedures
www.aicpa.org/CPCAF