| | diligence | A | in compliance with |
| | creditworthiness | B | referring particularly |
| | sufficiency | C | approve |
| | verification | D | requirement |
| | authorize | E | solvency |
| | in response to | F | punctiliousness |
| | relating specifically | G | independence |
| | a request | H | be allowed |
| | am permitted | F | in regard to |
| | in accordance with | I | confirmation |
2. Read a CPA comfort letter filling the gaps with phrases from ex. 1. What are its main features?
| Dear sirs, I am writing to you ________a written request of my tax clients, FIFI ltd. This letter confirms to you that I prepared the federal tax forms for 2013 and 2014 for FIFI ltd. These forms included Balance sheet, Profit and Loss account, Cash Flow statement. If the Clients __________ me to do so, I can send you a copy of these tax forms so that you can perform your due diligence. If you are making such ________, please send my firm an authorization form signed by the Client authorizing me to release this information to you. I prepared the tax forms from information that was provided to me by the Clients. As is normal in this type of professional service by my office, I was not hired to perform and did not perform audit or other types of ____________ of the information provided to me. Thus, I cannot make any professional representation or assurance of the accuracy of this information or the ____________ of the tax form for your credit decision-making purposes. I prepared the Client tax forms _____________ the applicable IRS rules and regulations solely for filing with the IRS. The tax forms thus do not represent any assessment on my part as to the _____________ of the Clients. The tax forms do not include any statement of financial position or income and expense for these years in accordance with generally accepted accounting principles (GAAP), and should not be construed to do so. I can provide a GAAP report, but it will require additional time and resources to prepare and will result in a significant fee to the Clients. The standards of my profession prohibit me from making assurances relating to solvency; however, I ____________ to present prospective or pro forma financial information. These, too, would require additional work and fees to the Clients. As you know, a credit-granting decision should be based on a lender’s exercise of due _________ in considering many factors. Your use of this letter from me, and the tax forms, in the exercise of your due diligence is solely a matter of your responsibility and judgment. This letter is not intended to establish a client relationship with you but is a response to a request from my clients, the Clients. This letter gives you all the information I can provide to you according to my professional standards. If you need additional information ____________ to the tax forms prepared by me, please let me know. John Black, CPA, a sole practitioner in Los Angeles, California |
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