AU-C 920 Letters for Underwriters and Certain Other Requesting Parties

AU-C Original Pronouncements

Sources Statements on Auditing Standards (SASs) 122, 125, and 129.

Applicability

Accountants, in comfort letters, describe procedures applied and findings obtained by applying those procedures. Negative assurances may be provided in certain circumstances. The procedures applied are described in the comfort letters. Examples of comfort letters are presented in the “AU-C 920 Illustrations” section of this chapter.

In addition to issuing a comfort letter to an underwriter, accountants may also issue a comfort letter to a broker-dealer or other financial intermediary acting as principal or agent in an offering or a placement of securities in connection with the following types of securities offerings:

  1. Foreign offerings, including Regulation S, Eurodollar, and other offshore offerings
  2. Transactions exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the Act), including those pursuant to Regulation A, Regulation D, and Rule 144A
  3. Securities offerings issued or backed by governmental, municipal, banking, tax-exempt, or other entities that are exempt from registration under the Act

In those offerings, the accountant may issue a comfort letter only if the party provides a representation letter that represents that the party's review process is substantially consistent with the review process under the 1933 Act.

An accountant is also permitted to ...

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