Changes in the language of engagement letters used by accounting firms prior to a transaction being offered have caught issuers and underwriters off guard. As a result, some deals initially scheduled for an earlier date are just hitting the market now and deals now in the planning stages could be in for a delay. The changes, which have been in the planning stages since last year, just recently came to fruition, and issuers have had trouble getting their arms around the new documentation.
The first accounting firm to implement such changes is Deloitte & Touche, arguably the leading accounting firm in the securitization industry, which one source described as "the most aggressive accounting firm on this front," by one source. Other sources have heard of changes afoot from the other three large accounting firms in how they outline responsibilities and liabilities in these engagement letters. This change in no way has any impact on the actual procedures taken by the accountants or at the issuer, it was also noted. But as a result of these changes, and the subsequent negotiations back- and-forth between the issuer, underwriter and accounting firm, at least one transaction was delayed by more than a week.