Taking it public: the CPA's various roles in the IPO process.

• Author: Williams, Don
• Position: PROFESSIONALISSUES - Certified public accountants - Initial public offerings

The allure of taking a company public still brings a twinkle to the eye of a corporate executive, and can include many players in the process, such as:

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* CPAs who focus on financial statement compliance.

* Attorneys who ensure compliance with federal securities laws.

* Investment bankers who are the underwriters and create demand for the securities in both the institutional and retail markets.

* Financial printers who fulfill the need for both electronic filings and hard copy printing.

While the audit of the historical financial statements remains the most visible service in this process provided by an accounting firm, CPAs also play an active role in the review of filing and disclosure documents, issuance of comfort letters to underwriters, future compliance with Sarbanes-Oxley Sec. 404 requirements and other permitted services as approved by the company's audit committee.

AUDIT OF FINANCIAL STATEMENTS

As a general rule, going public requires audited financial statements for the past three years of the company's existence, as well as preparation of unaudited interim periods. The financial statements must meet the same level of disclosure and accuracy as is required of existing public companies under SEC rules.

In addition to the audited financial information, the accounting firm will assist the company in determining if any interim financial information is required. As a public registrant, the partner serving the engagement will be required to rotate every five years.

SEC COMMENT LETTER RESOLUTION

The SEC Division of Corporate Finance reviews all documents filed by the registrant to ensure compliance with federal securities law, appropriate accounting guidance and transparency to the reader. The SEC staff provides management with a comment letter addressing those areas which may be deficient or require additional clarity. Questions raised by the SEC staff may range from details of the offering, complexity of the capital structure, application of accounting guidance such as revenue recognition or per share data. The accountants, as well as legal counsel and underwriters, assist management in preparing the company's response to insure completeness and accuracy.

SUBMIT COMFORT LETTER TO UNDERWRITER

Underwriters are required to obtain a comfort letter from the accountants as part of their due diligence under the securities laws. The comfort letter confirms that unaudited financial information included in the prospectus...