Page 682 - Auditing Standards

As of December 15, 2017

22 When the accountant does not perform a review or an examination of MD&A or does not attach or refer to
a report on MD&A, the accountant may perform agreed-upon procedures with respect to items in MD&A, subject

to controls over financial reporting (see paragraph .55).

22a The SEC, in Financial Reporting Release No. 50 dated February 18, 1998, recognized the establishment
of the Independence Standards Board (ISB) and indicated that the SEC intends to look to the ISB as the private
sector body responsible for establishing independence standards and interpretations for auditors of public
entities.

23 The phrase rules and regulations adopted by the SEC is used because accountants should not be
expected to be familiar with, or express assurances on compliance with, informal positions of the SEC staff.

24 Certain financial statements may be incorporated in a registration statement under the Act by reference to

filings under the Securities Exchange Act of 1934 (the 1934 Act). In those circumstances, the accountants may
refer to whether the audited financial statements and financial statement schedules included (incorporated by
reference) in the registration statement comply as to form in all material respects with the applicable accounting
requirements of the 1934 Act and the related rules and regulations adopted by the SEC (see example B
[paragraph .64]). However, the accountants should not refer to compliance with the provisions of the 1934 Act
regarding internal accounting control. See AT section 501, Reporting on an Entity's Internal Control Over
Financial Reporting, paragraph .82.

25 Departures from rules and regulations adopted by the SEC that require mention in a comfort letter

ordinarily do not affect fair presentation in conformity with generally accepted accounting principles; however, if
they do, the accountants will, of course, mention these departures in expressing their opinion and in consenting
to the use of their report in the registration statement. If departures from rules and regulations adopted by the
SEC that require mention in a comfort letter either are not disclosed in the registration statement or have not
been agreed to by representatives of the SEC, the accountants should carefully consider whether a consent to
the use of their report in the registration statement should be issued.

26 Accountants should not comment in a comfort letter on compliance as to form of MD&A with rules and
regulations adopted by the SEC; accountants may agree to examine or review MD&A in accordance with AT
section 701.

27 The SEC requirements specify condensed financial statements. However, the guidance in paragraphs .37

and .38 also applies to complete financial statements. For purposes of this section, interim financial statements
may be for a twelve-month period ending on a date other than the entity's normal year end.

28 When accountants are engaged to perform procedures on interim financial information, they may have
additional responsibilities under certain circumstances. The accountants should refer to AS 4105 for guidance.

29 For purposes of issuing a comfort letter, if the forecast is included in the registration statement, the forecast

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