What is a “comfort letter?
Comfort letters are informal letters that are sometimes prepared by accounting firms. The subject matter of the comfort letter often centers on the results of a review of financial data associated with a given company. While not considered a binding document, the letter will provide the general opinion of the accountant regarding the current financial status of the company. It is important to note that the review conducted for the preparation of a comfort letter should not be considered to be a thorough or in depth exploration into the financial workings of the corporation in question. More commonly, the review will be a cursory one that is simply to make sure that the accounting practices currently used by the company are in harmony with any applicable government regulations. As a secondary concern, the review may also involved making sure that the documentation is in order for the company to issue a public offering. When an accounting firm issues a comfort letter, it is usually at th
A comfort letter is letter written by an OGC attorney stating an individual or entity has done enough activities to satisfy the third party defense. Individuals or entities seek these letters when they want assurance that they have done enough to avoid 780 liability without completing an SRCO. These letters do not discharge the individual or entity from liability if new evidence arises in the future. It merely gives them comfort that the Department will not be seeking enforcement at this time. When is a comfort letter appropriate? Comfort letters are rarely requested and even more rarely issued/sent because they are not expressly mandated by statute or rule. The Department staff should not encourage PRPs to seek comfort letters. A comfort letter will only be appropriate when the Department is satisfied the PRP completed all the elements of the third party defense. This includes evidence that the discharge was solely the result of the act or omission of a third party and the PRP took ac
Whenever a big business deal closes stock issue, bond issue, merger the outside accountants must give written comfort by assuring everybody that nothing very bad has happened in the weeks since the financial statements were published. What if there is a problem? Ordway Smith is no specialist in these matters. Ordway Smith is a popular Philadelphia Gentleman with a handsome wife, two beautiful children and the unforgettable first love of his youth. He is a rainmaker partner at Conyers & Dean, the oldest and biggest law firm in town. His job is to bring in business. He has been doing that quite well, through his club memberships, directorships, extensive family connections, and now through his biggest client Charlie Conroy, the gardener son who fought his way up to become Chairman of a huge, international conglomerate. The intricate night-and-day work on Conroy’s deals has always been done by Conyers & Deans brilliant corporate workhorses, but when the head of that department is suddenly
