What is SAS 72 comfort letter?
Comfort letters are an important part of the underwriters’ due diligence review and defence from potential liability under US securities law. Comfort letters are often referred to as SAS 72 letters, which relates to the Statement on Auditing Standards 72 (SAS 72) on which they are based.
What is the point of a comfort letter?
What Is a Comfort Letter? A comfort letter is a business document that is intended to assure the recipient that a financial or contractual obligation with another party can and will be met. The sender is often an independent auditor or accountant.
What is a comfort letter in IPO?
Comfort letters are typically signed prior to the pricing decision or closing date for a given public offering or other transaction, as a part of the due diligence process. Subsequently, a “bring-down” letter is used to re-verify, as of a later date, that the original comfort letter is still valid.
What is sas72?
72 (“SAS 72”) provides guidance to accountants in the preparation of comfort letters, including their scope and form. (SAS 72 is also referred to as “AU Section 634,” where it was subsequently codified.) SAS 72 sets forth the contents of sample letters, which have become the basic industry text for these letters.
What is a sas100?
SAS 100 provides guidance which is primarily in response to the requirement. The requirement is also applicable to a non-SEC registrant that makes a filing with a regulatory agency in preparation for a public offering or listing if the entity’s latest annual financial statements have been or are being audited.
Are comfort letters legally binding?
Comfort letters are generally issued by a parent or holding company giving ‘comfort’ to a lender about their support for a subsidiary in the context of a finance transaction. Comfort letters do not create rights over assets and, in most cases, they will not even be legally binding.
Can a CPA issue a comfort letter?
CPAs are regularly asked to provide a loan broker, lender or other third party with a comfort letter or verification letter on behalf of their clients.
How many years of financial highlights does a registered investment company disclose?
Currently, Rule 3-05 requires investment companies to provide between one and three years of audited financial statements in connection with a fund acquisition. As adopted, Rule 6-11[6] will require only a single year of audited financial statements for a fund acquisition that is significant.
Can a CPA write a comfort letter?
Is SAS 115 letter required?
The “SAS 115” letter is usually issued when any significant deficiencies or material weaknesses would have been discussed with management during the audit but is not required to be communicated in written form.