Comfort letters: some not so comforting thoughts

Article Abstract:

Auditors finalizing corporate accounts and creating an audit opinion often rely on comfort letters when accounts have been prepared on an ongoing basis and there is reliance on the obligation of a group company to support the first company. However, reliance on comfort letters can result in professional indemnity claims against the auditor. Auditors should not assume that comfort letters are legally binding, but should consider whether the parties intended to enter into a legally binding agreement, whether the agreement is for consideration or under seal, and whether the obligations in the letter are adequately specific. Questions to be considered in the area of company law are whether the company giving support is able to fulfill its obligation, and whether procedural requirements are met.

Interpretation and construction, Letters of comfort, Comfort letters

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Exposure draft of an auditing guideline: prospective financial information (issued November 1990)

Article Abstract:

The UK Auditing Practices Committee's Exposure Draft of an Auditing Guideline: Prospective Financial Information (issued November 1990) is presented. The exposure draft covers areas of concern to auditors engaged to review and report on prospective financial information. Areas covered by the exposure draft include the responsibilities of management, the acceptance of the engagement, and planning.

Laws, regulations and rules

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The impact of regulations on public sector audits: auditing guideline

Article Abstract:

Guidelines for applying Auditing Standards and Guidelines to a public sector audit are presented. Because the public sector is subject to a high degree of regulation, the guidelines focus on the extent to which regulations should be identified and taken into account in carrying out such an audit assignment.

Accounting and auditing, Public sector, Great Britain

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