Page 627 - Auditing Standards

As of December 15, 2017
.57 regarding Regulation S-K items. 26 )

Commenting in a Comfort Letter on Information Other Than Audited Financial
Statements

General

.35 Comments included in the letter will often concern (a) unaudited condensed interim financial
information (see paragraphs .36 through .38), 27 (b) capsule financial information (see paragraphs .36 and

.39 through .41), (c) pro forma financial information (see paragraphs .42 and .43), (d) financial forecasts (see
paragraphs .36 and .44), and (e) changes in capital stock, increases in long-term debt, and decreases in
other specified financial statement items (see paragraphs .36 and .45 through .53). For commenting on these

matters, the following guidance is important:

a. As explained in paragraph .16, the agreed-upon procedures performed by the accountants should be
set forth in the letter, except that when the accountants have been requested to provide negative

assurance on interim financial information or capsule financial information, the procedures involved
in an AS 4105 review need not be specified (see paragraphs .37 through .41 of this section and
paragraph 4 of example A [paragraph .64]).

b. To avoid any misunderstanding about the responsibility for the sufficiency of the agreed-upon
procedures for the underwriter's purposes, the accountants should not make any statements, or

imply that they have applied procedures that they have determined to be necessary or sufficient for
the underwriter's purposes. If the accountants state that they have performed an AS 4105 review,
this does not imply that those procedures are sufficient for the underwriter's purposes. The
underwriter may ask the accountants to perform additional procedures. For example, if the

underwriter requests the accountants to apply additional procedures and specifies items of financial
information to be reviewed and the materiality level for changes in those items that would necessitate
further inquiry by the accountants, the accountants may perform those procedures and should

describe them in their letter. Descriptions of procedures in the comfort letter should include
descriptions of the criteria specified by the underwriter.

c. Terms of uncertain meaning (such as general review, limited review, reconcile, check, or test)

should not be used in describing the work, unless the procedures comprehended by these terms are
described in the comfort letter.

d. The procedures performed with respect to interim periods may not disclose changes in capital stock,

increases in long-term debt or decreases in the specified financial statement items, inconsistencies
in the application of generally accepted accounting principles, instances of noncompliance as to form
with accounting requirements of the SEC, or other matters about which negative assurance is

requested. An appropriate manner of making this clear is shown in the last three sentences in

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