PCAOB proposes changes to auditor comfort letter rules

PCAOB recently proposed updating what it says are outdated provisions in the auditing standard related to auditor comfort letters.

The proposed amendments to the existing standard — AS 6101, Letters for Underwriters and Certain Other Requesting Parties — would modernize its provisions, notably by removing the 135-day rule that can prevent auditors from providing negative assurance as to subsequent changes in selected financial statement items in comfort letters.

Negative assurance is a statement by an auditor that no adverse issues have been found regarding the accuracy of a client’s financial statements.

PCAOB said AS 6101 has not been substantially amended since its adoption as an interim standard in 2003. If adopted, the proposal would replace the 135-day convention with an approach tied to applicable filing deadlines.

Under the proposal, an auditor could provide negative assurance after the end of the most recent period for which the auditor performed an audit or review and before the filing deadline for the issuer’s next required annual or interim financial statements. Learn more.