A2 (6) - Letters for Underwriters

Question 1

UNDERWRITERS

Answer 1

Client broker-dealer, financial intermediary, or buyer/seller

Question 2

COMFORT LEITER

Answer 2

letter from the CPA to the named underwriter just before.the registration of the client’s securities. It covers the period from the date of the last auditors’ report to the “effective date” of the registration. A comfort letter does not update the opinion on previously issued financial statements.

Question 3

Due Diligence

Answer 3

Underwriters, liable for omissions or misstatements in a registration statement

Question 4

Requirements for CPA to issues comfort letter

Answer 4

review of interim financial information in accordance with auditing standards

Question 5

Conform Letter limited and Restricted use

Answer 5

Comments in a comfort letter are limited to:

1. Financial information expressed in dollars; and
2. Financial information derived from the accounting records

A comfort letter must include a statement that the letter is solely for the information of the addressees and to assist the underwriters in conducting and documenting their investigation of the affairs of the company in connection with the offering, and that it is not to be used,
circulated, quoted, or otherwise referred to for any other purpose

Question 6

POSITIVE ASSURANCE

Answer 6

for Compliance (as to form) of the financial statements with the SEC Act, assuming the financial statements are audited

Question 7

NEGATIVE ASSURANCE

Answer 7

for Unaudited financial statements, unaudited condensed interim financial statements, and capsule financial information,

In a comfort letterer, no comment should be made regarding compliance of “MD&A” (Management’s Discussion and Analysis) with SEC rules and regulations.

Question 8

PROCEDURES PERFORMED AND FINDINGS OBTAINED

Answer 8

1. Pro forma financial information and forecasts Included in the registration statement.
2. Tables, statistics, and other financial information included in the registration statement