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. Though an audit is not performed, the comfort letter is essentially stating that audited financial statements would not differ materially from those appearing in the prospectus. Comfort letters are most commonly issued as part of an initial public offering. A comfort letter only contains an opinion; it is not an assurance or guarantee that the entity being reported upon will remain financially viable.

Comfort letters are also issued in other situations, such as in relation to the issuance of a loan or mortgage.

Related Courses

Guide to Auditor Legal Liability
How to Conduct an Audit Engagement