A large step for global exempt offerings

Last month a small thicket in the vast forest of US capital markets regulation was cut back. This should lighten the hearts of issuers, which are regularly frustrated by the battles which break out between their underwriters, the auditors and the lawyers.

The change concerns a Statement of Auditing Standards (SAS) issued by the American Institute of Certified Public Accountants (AICPA). It affects all offerings which have a US tranche, even if made by non-US issuers. When an offering is made even in part in the US, the issuer's auditors are asked by the underwriters to provide them with what is known as a comfort letter.

Essentially, this letter confirms (1) that the financial statements included in the prospectus, and the auditors' opinion on those financial statements, are the ones the auditors actually audited (ie, tying the financial statements in the prospectus to the last set of audited accounts); (2) that certain procedures have been performed in respect of the other financial and statistical data in the prospectus (this usually says that the auditors have traced the figures back to accounting records or the financial statements) and; (3) that nothing has come to the auditors' attention which gives them reason to believe the issuer's financial state has materially adversely changed since the last audited accounts.