I continue to get requests from members on how to handle the "comfort letter" issue, as well as feedback on guidance the AICPA has developed and suggestions for how we can better advocate for our members and their clients. By way of background for those of you who may have missed my previous blog post, CPAs are often asked to verify a variety of client information for regulators, banks, insurance providers, state taxing authorities and more.
What they're asking for, basically, is a guarantee that certain information about a client is correct, such as confirmation of a client’s self-employment status; verification of income from self-employment; verification of a self-employed borrower’s business ownership percentage; and profitability or sustainability of a self-employed client’s business. While it's certainly understandable why they would want verification of this information, depending on what the request is can place CPAs in a risky situation. At the AICPA, we’ve received several inquiries from members regarding what is often referred to as "providing comfort" or “comfort letters.” However, the requests are actually “third-party verifications."