Bank Comfort Letters Should Make You Uncomfortable

Source: CPA Success

According to this blog post, many banks are requesting “comfort letters” from CPAs in connection with their clients' mortgage and loan applications. Some say that these letters are required by new regulations under the Dodd-Frank Act.

According to AON/CNA, CPAs should not assume this additional responsibility. These requests are an attempt by lenders to get CPAs and their liability insurers to serve as “a backstop to the client in the event the loan goes south.” This is highly risky, though, because CPAs rarely perform an actual audit or review when working with individual clients. Instead, they rely on the client for disclosure and documentation.

Also, a comfort letter is not required by the regulations, although it was an option. Freddie Mac removed this option from its Single Family Seller/Servicer Guide.

The AICPA AON/CNA resource center provides guidance on comfort letters and samples you can use to avoid unnecessary liability.

For the complete blog post, read “Beware of Bank Comfort Letters.”

From CPA Success, the blog of the Maryland Association of CPAs, September 7, 2012, http://www.cpasuccess.com.