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INTRODUCTION
1. This Statement(1) provides reporting guidance when one of the parties identified in paragraph 3, 4, or 5 of Statement on Auditing Standards (SAS) No. 72, other than an underwriter or other party with a due diligence defense under section 11 of the Securities Act of 1933, requests a letter without providing the representation letter described in paragraphs 6 and 7 of SAS No. 72. The amendments in this Statement are effective for letters issued pursuant to paragraph 9 after April 30, 1996. Earlier application is encouraged.
2. This Statement-
*Replaces existing paragraphs 1 and 9 of SAS No. 72 with new paragraphs 1 and 9.
*Inserts a new paragraph numbered 10.
*Renumbers existing paragraphs 10 through 62 as 11 through 63.
*Renumbers existing footnotes 7 through 30 as 8 through 31.
*Adds new example Q to the Appendix.
Amendments to SS No. 72
1. This Statement provides guidance to accountants for performing and reporting on the results of engagements to issue letters for underwriters and certain other requesting parties described in and meeting the requirements of paragraph 3, 4, or 5 (commonly referred to as "comfort letters") in connection with financial statements and financial statement schedules contained in registration statements filed with the Securities and Exchange Commission (SEC) under the Securities Act of 1933 (the Act) and other securities offerings. In paragraph 9, this Statement also provides guidance to accountants for performing and reporting on the results of engagements to issue letters for certain requesting parties, other than underwriters or other parties with a due diligence defense under section 11 of the Act, that are described in, but do not meet the requirements of, paragraph 3, 4, or 5.
9. When one of the parties identified in paragraph 3, 4, or 5, other than an underwriter or other party with a due diligence defense under section 11 of the Act, requests a comfort letter but does not provide the representation letter described in paragraphs 6 and 7, accountants should not provide a comfort letter but may provide another form of letter. In such a letter, the accountants should not provide negative assurance on the financial statements as a whole, or on any of the specified elements, accounts, or items thereof. The other guidance...