In this forum thread stellaloella says:

Hi there–

Some of our sellers will be receiving letters like this from a third-party firm that is helping Etsy. We are performing a standard internal audit to be sure our records are accurate. Nothing to worry about and definitely legit!

If you have concerns or questions, please email support [!at] etsy.com.

Thank you for your cooperation.
Posted at 3:44 pm, August 19 2008 EST

The thread was started by a seller who received an email claiming to be from Etsy’s law firm, but not sent from an Etsy address, and the email contained an attachment. Etsy had not announced anything about the audit before it started. The recipient, and most users who replied, thought this sounded like a phishing attempt. (we are always told never to open attachments from people we don’t know)
But Etsy now says the emails are legitimate and safe.

Stella explains further here

stellaloella says:
The information requested is very basic. The letter just asks for a seller to confirm their balance was a certain amount (contained in the letter) on a certain date, to verify that it matches our internal records.

I will check with the rest of the team to see if there is a way we can get more info out about this to those who will receive letters.
Posted at 3:54 pm, August 19 2008 EST

and here:

stellaloella says:
I don’t know all the details of this process. Our in-house business team is coordinating with a third-party accounting firm. The outside accounting firm is sending the letters.

As I said, we will try to get more information to those who need it. In the meantime, if you receive a letter and have questions, please contact Etsy Support. Thank you.
Posted at 3:59 pm, August 19 2008 EST

and here

stellaloella says:
Yes, Dingo is exactly right (on page 10).

And our hope was to provide a way for members to verify this was a legitimate inquiry and understand that this is about helping Etsy *before* the letters went out, so members could verify.

We are communicating with the third-party firm to get a clearer picture of the current situation regarding when and how the letters were sent.

Thank you for your patience and understanding.
Posted at 4:08 pm, August 19 2008 EST

Marymary adds this

marymary says:
Hey guys,

Just to help clarify a couple questions, you are not obligated in any way to open or answer the email if you received one. While we encourage you to do so, there is no obligation.

Additionally, if you did not receive this email already, you most likely will not be receiving one. As Lauren said, we are in contact with the third party firm to confirm that the sampling of emails have all been sent.

We’d like to apologize if this has caused any of you any inconvenience or confusion and will continue to keep you updated.
Posted at 4:15 pm, August 19 2008 ES

Matt has added this comment:

matt says:
Dear Friends,

We are indeed in the process of undergoing our first independent audit. We are contractually obligated by our financiers to have independent audits performed each year. We do these to prove that our accounting practices are accurate and valid. Just to clarify, this is in no way to related to any acquisition of or by Etsy.

The facts: Less than 50 randomly-selected members of our selling community were contacted by Etsy’s independent auditing firm via email and, though they might not yet have received the letter, via USPS. The email and address information of these sellers was used only in connection with our obligatory financial audit, the auditors will not store or retain any personally identifying information. They were only seeking independent verification of the fees the sellers owed Etsy as of December 2007. This is a standard and common feature of the audit process.

Everyone selected has already been contacted, and no additional members will be contacted.

Furthermore, we have now reached out to these sellers to confirm the validity of the emails they received from the auditing firm.

If you received an email from an auditing firm, but not a secondary email from us, please email me directly at matt [!at] etsy.com.

Just to clarify, those who receive the email/letter are under no obligation to respond. At no point will you be asked for credit card, password, or other sensitive personal information. If you receive something that seems suspicious, please contact abuse [!at] etsy.com.

I apologize for any confusion this may have caused.

Thanks, Matt
Posted at 7:10 pm, August 19 2008 EST