What is a SAS 72?
What is a SAS 72?
72 (“SAS 72”) provides guidance to accountants in the preparation of comfort letters, including their scope and form. (SAS 72 is also referred to as “AU Section 634,” where it was subsequently codified.) SAS 72 sets forth the contents of sample letters, which have become the basic industry text for these letters.
What is AML comfort letter?
A comfort letter assures the recipient of the soundness of an individual or company it is considering doing business with. Such letters may be sent by auditors, accounting firms, or parent companies. A comfort letter does not contain any legally enforceable promises.
What is a circle up document?
Circle Up- In order to receive Ticking and Tying in a Comfort Letter, Underwriters’ counsel will send a Circle Up of the Offering Memorandum or Prospectus to the Issuer’s auditors, in which such counsel circles each number it would like to see Ticked and Tied.
Are comfort letters legally binding?
Comfort letters are generally issued by a parent or holding company giving ‘comfort’ to a lender about their support for a subsidiary in the context of a finance transaction. Comfort letters do not create rights over assets and, in most cases, they will not even be legally binding.
What is a letter of comfort which of the following is correct?
A letter of comfort, sometimes called a “letter of intent”, is a communication from a party to a contract to the other party that indicates an initial willingness to enter into a contractual obligation absent the elements of a legally enforceable contract.
What is a comfort letter in an IPO?
The comfort letter can be issued by a Certified Public Accountant declaring no indication of false or misleading information in the financial statements and that the company’s prospectus follows the prevailing accounting standards. This is sometimes used in connection with an initial public offering.
What is included in a comfort letter?
A comfort letter is a written statement issued by an outside auditor, stating that there is no inaccurate or misleading information in the prospectus of an entity that is issuing securities. As such, the assurance provided only relates to the current status of a business, and not to its future financial performance.
Why would a bank accept a comfort letter?
It is usually used where the parent company is unable or unwilling to give a guarantee but wishes to give some comfort to the lender in respect of the subsidiary’s ability to perform its obligations.
Why might a bank accept a comfort letter?
What is a SAS 72 comfort letter under Rule 144A?
This note explains the purpose and content of SAS 72 comfort letters in connection with international offerings of equity and debt securities, including those that are sold in the US under Rule 144A under the US Securities Act 1933, as amended.
What is the new SAS for comfort letters?
The new SAS, which supersedes SAS no. 49, Letters for Underwriters, is effective for comfort letters issued on or after June 30, 1993. SAS no. 72 was issued to clarify who is entitled to obtain comfort letters and to address changes in related authoritative auditing literature.
Who are the parties to the comfort letter restriction?
SAS no. 72 restricts the availability of comfort letters to the following parties: 1. Named underwriters with a due diligence defense under section 11 of the act. 2. Other parties who have a due diligence defense in connection with a securities offering registered with the SEC.
What is the SAS 71 review?
SAS no. 72 requires all CPAs to perform SAS no. 71 reviews when they are requested to provide negative assurance on interim financial information in such comfort letters. This requirement covers all comfort letters, including those requested by named underwriters in connection with registered securities offerings.
