This Standard on Related Services (ASRS) addresses the auditor’s responsibilities when requested by the responsible party of the entity making an offering of securities to provide a comfort letter to certain requesting parties relating to particular financial information included in the entity’s offering document.  The auditor is ordinarily the appointed auditor of the entity for the period covered by the comfort letter and the entity ordinarily receives a copy of the comfort letter.  The requesting parties may be underwriters, buyers, sellers, brokers, selling agents, or other auditors appointed by the entity in connection with an offering being undertaken by the entity.  The entity may or may not be the issuer of the securities included in the offering document.  References in this ASRS to ‘entity’ are taken to mean the issuer unless otherwise stated.  The comfort letter is prepared based on the auditor having performed the requesting parties’ specified procedures and consequently no assurance is expressed in the comfort letter.  The auditor is not required by any AUASB Standard to accept the engagement, and ordinarily does so only if certain preconditions are met by both the responsible party of the entity and requesting parties. (Ref: Para. A1)

Any request by the entity to the auditor to perform an audit or review of the entity’s interim financial information included in the offering document is covered by a separate engagement to the comfort letter engagement and performed in accordance with applicable AUASB Standards. 

The subject matter that may be covered in a comfort letter includes: 

1. the independence of the auditor; 
2. unaudited financial statements, interim financial information, pro forma historical financial information and changes in selected financial statement items during a period subsequent to the date and period of the latest audited and /or reviewed financial statements of the entity; and
3. tables, statistics, and other financial information included in the offering document. 

The following types of offerings are included within the scope of this ASRS: (Ref: Para. A2)

1. initial public offerings;
2. overseas private placements of equity or debt securities;
3. offerings of debt securities that are issued or backed by public sector entities in overseas jurisdictions; and
4. acquisition of, or merger with, another entity domiciled in an overseas jurisdiction, where there is an exchange of equity shares between the two entities.

In certain jurisdictions, requesting parties who are underwriters may be held liable under applicable law or regulation for any material omissions or misstatements in an offering document.  Requesting the entity’s auditor to issue a comfort letter in respect of particular financial information included in the offering document is one of a number of procedures that may be used by the requesting parties to establish a due diligence defence against exposure to any liability. 

Relationship with applicable Standards of other jurisdictions

The auditor may undertake a comfort letter engagement in accordance with:

1. this ASRS, when issuing a comfort letter to requesting parties in a jurisdiction where there is no existing standard issued by a national auditing standards setting body; or
2. the requirements of another standard, when issuing a comfort letter to requesting parties in jurisdictions where the other standard has been issued by a national auditing standards setting body.^[1]