The Public Company Accounting Oversight Board (PCAOB) on November 3, 2026, voted unanimously to issue a proposal that would change when auditors can provide negative assurance on subsequent changes in specified financial statement items in “comfort letters” partly in response to a Securities and Exchange Commission (SEC) rulemaking project that would give public companies the option to provide semiannual reports instead of the currently mandated quarterly reports.
The PCAOB would make targeted changes to AS 6101, Letters for Underwriters and Certain Other Requesting Parties, which governs comfort letters. These are letters auditors give underwriters during securities offerings.
Underwriters need them for their due diligence defense and usually want the auditor to give negative assurance on subsequent changes. That means the auditor states that nothing came to their attention suggesting that items such as revenue, net income, or debt changed adversely after the latest financial statements in the offering document.
AS 6101 limits that negative assurance.
The standard today permits such assurance as of a date fewer than 135 days after the end of the most recent audited or reviewed period. For dates 135 days or more after the period end, auditors may report only procedures performed and findings obtained.
The proposal in Release No. 2026-008 would replace that fixed convention with the deadline for filing financial statements for the next annual or interim period.
The proposal would not change the relationship between negative assurance and the performance of an audit or interim review, alter what constitutes negative assurance or expand auditors’ procedures beyond those described elsewhere in AS 6101, the release said.
Auditors would still not be required to provide negative assurance. And when an issuer does not file on time, auditors would remain limited to reporting procedures performed and findings obtained.
The proposal would include a note to the standard listing examples of factors that may inform the auditor’s decision on whether to provide negative assurance:
- the time between the end of the most recent audited or reviewed period and the requested date;
- management’s ability to respond to inquiries through that date;
- the effectiveness of internal control over financial reporting;
- the company’s ability to continue as a going concern;
- during the change period, changes in senior management or key personnel;
- restatement activity or other retrospective changes; and
- the appointment of new accountants.
The list is not intended to be comprehensive.
Comments are due January 4, 2027.
The move follows requests from underwriters and companies to amend the standard. In a comment letter responding to the board’s first-ever request for feedback on its standard-setting agenda, the Securities Industry and Financial Markets Association (SIFMA) said that the 135-day period reflects the spacing between quarterly reviews under the current reporting regime.
A company that files a Form 10-Q every 90 days is within 135 days of its most recent review. “Semiannual reporting breaks that alignment,” SIFMA said.
The period from the semiannual reporting date, generally June 30, to the annual report filing could reach 274 days, the release said.
SIFMA said that leaving AS 6101 unchanged would effectively withdraw the comfort letter mechanism from underwriters for a substantial part of the year because the standard’s timing assumption no longer matches companies’ reporting cadence.
“Updating this outdated provision better aligns an auditor’s ability to keep investors informed about company performance with current reporting and filing deadlines,” PCAOB Chairman Demetrios Logothetis said. “This proposal would preserve investor protection, support efficient capital formation, and make clear that the decision to provide negative assurance remains solely a matter of the auditor’s professional judgment.”
Board member Kyle Hauptman said the PCAOB could have replaced the 135 days with another set number of days but wisely chose not to.
“If what matters is the reporting deadline, why not tie our standard to the reporting deadline? That’s what this proposal does,” he said. “I think it gives us a more durable standard. If reporting requirements change again down the road, we should not have to come back here just to change the number again.”
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