M7-Letters for Underwriters

Question 1

In a typical comfort letter, the accountants express an opinion (i.e., positive assurance) concerning the financial statements’ compliance (as to form) with the pertinent accounting requirements of the SEC. (true or false)

Answer 1

true

A typical comfort letter is addressed to the underwriters of the securities.

Question 2

A comfort letter is a letter containing a negative assurance from the CPA to the underwriter or certain other requesting parties just before the registration of the client’s securities. (true or false)

Answer 2

true

Question 3

When an accountant issues to an underwriter a comfort letter containing comments on data that have not been audited, the underwriter most likely will receive negative assurance on capsule information. (true or false)

Answer 3

true

Positive assurance cannot be given if the information was not audited.