Sample Response to U.S. Audit Enquiries

  • September 07, 2016

Caution: Use this sample response in conjunction with the accompanying article, Best Practices: Responding to U.S. Audit Inquiries. To follow best practices, forward the draft audit response to your client for review before releasing the response to the auditor.

[Date]

Privileged and Confidential

[Auditor Name]
[Address]

Attention:

Dear Sirs/Mesdames:

Re: [Company Name] (the “Corporation”)

This letter is in reply to the Corporation’s enquiry letter dated [date], a copy of which is attached.

We are unable to reply strictly in conformity with that enquiry, as we are not qualified to practice in the U.S. or to advise the Corporation with respect to its obligations of financial disclosure in the U.S. under FASB Accounting Standards Codification 450 or otherwise. In addition, our professional obligations may differ from those of U.S. attorneys.

Accordingly, for the purposes of this letter:

claim” means a matter involving the Corporation that is or may become litigious (including regulatory and administrative proceedings) with respect to which:

(a) we are representing or advising the Corporation; and

(b) a demand or indication of demand, carrying with it the possibility of future loss or gain, has been communicated to or by the Corporation.

possible claim” means a matter involving the Corporation that is or may become litigious (including regulatory and administrative proceedings) with respect to which we are representing or advising the Corporation, but with respect to which a demand or indication of demand, carrying with it the possibility of future loss or gain, has not been communicated to or by the Corporation.

records” means records that we have prepared and currently retain in our active files, which, when reviewed, would be likely to bring to our attention the existence of a claim or possible claim.

to our knowledge” means the actual knowledge of those lawyers currently in this firm who have performed services for the Corporation for the period **** to ****. We have not made any other investigations, and in particular, we have not reviewed our files or conducted any searches in the public records of any court or other governmental agency.

Subject to the foregoing, and based on an examination of our records, we confirm that to our knowledge, there are no claims outstanding as of [effective date of response], [except for the following:]

[Insert appropriate information]

With respect to possible claims, we cannot respond to a general enquiry relating to the existence or absence of possible claims; nor can we comment on the adequacy of the Corporation’s listing, if any, of possible claims. We can provide information concerning only those possible claims on which the Corporation has specifically requested that we comment.

This letter must not be quoted from or referred to in the Corporation’s financial statements, or quoted from or specifically referred to in the auditor’s report, or be provided in whole or in part to any other person,  without our prior written consent.

As requested by the Corporation, a copy of this reply is being provided directly to you solely for your information in connection with the audit of the Corporation’s financial statements. We confirm that the Corporation does not intend, and we are not authorized, to waive privilege in respect of the matters addressed in this reply.

Yours truly,

 

Copy to: [Client]