Concerns Regarding Comfort Letters/Third Party Verification
Increasingly, CPAs are receiving requests from clients, lenders, loan brokers, health insurance providers, adoption agencies, regulators, and various other agencies to confirm client information. In turn, the AICPA has received several inquiries from CPAs on what they often refer to as “comfort letters" and we have developed the following resources:
The AICPA would like to know more about the types of third-party verification requests you’re receiving and we’re here to help answer your specific concerns. Please email us at firstname.lastname@example.org for more information.
General InformationAU-C section 920, Letters for Underwriters and Certain Other Requesting Parties (AICPA, Professional Standards), defines a comfort letter as a letter issued by an auditor in accordance with AU-C section 920 to requesting parties in connection with an entity’s financial statements included in a securities offering.
The requests that CPAs are actually receiving from third parties pertain to verification letters. The requested information may relate to a pending loan, employee medical insurance, child adoption applications, or use-tax certification. Mortgages originated by private mortgage companies, which were resold to Fannie Mae and Freddie Mac and past due, are subject to required quality reviews. Quality review standards may require the mortgage originator to contact CPAs whose comfort letters/third party verification are contained within the loan file to confirm the statements made in such letters.
Sue Coffey, CPA, CGMA, Senior Vice President - Public Practice and Global Alliance, discusses the AICPA response to member concerns regarding third-party verification letters.More on AICPA TV