Comfort Letter
Categories: Regulations, Company Management
Dear Investors,
This company is fine. We've looked at the books and everything is A-Okay.
Love,
A Bunch of Auditors
That note characterizes the underlying gist of a comfort letter. It's a document put together by an auditor that attests that a company is financially sound.
There's a similar form of assurance known as a "verification letter." This document has the same general function as a comfort letter, but applies to a broader range of situations. In these cases, an accountant might be asked to weigh in on an individual's financial soundness, in situations like a loan negotiation or a child adoption proceeding. It can also come up in relation to employee medical insurance. These verification letters are typically issued by the individual's personal accountant.
And the whole thing is very different from a Southern Comfort letter, which carries a hangover...but that's a different story.
Related or Semi-related Video
Finance: What is a Comfort Letter?6 Views
Finance a la shmoop what is a comfort letter? S....See the smooth curves there is [An S letter appears]
that comforting okay okay comfort letter is a letter
this kind of letter written by an expert usually someone like an auditor or a tax [Expert appears with comfort letter]
attorney in one form or another who has done deep due diligence into a company
looked at myriad details and data and volume counts of plastic cubes in their
inventory and then they've looked at their distribution contracts
you know with truckers and retail stores and drone deliverers and then they've [Drone flying in the air]
looked at their bank accounts both the onshore ones and the offshore ones that
you know they don't really like to talk about and then about 87 ish other things
that all those people look at and then they write a letter like an actual
letter which is usually given to the Board of Directors or an acquirer or
the investigating party whoever that is and that letter states that what the
company says it has or does is in fact what it has or does which is a good [Man discussing comfort letters]
thing to know so this letter well it just gives comfort to everyone
the only challenge can be you know trying not to become too comfortable [Man working near a waterfall]