To: Auditors128. a. From: Clientc. The management letter is sent by auditors to the client after the completion of the audit. The letter can include recommendations for improvement and suggestions for other possible auditors' services. Management letters are not required by generally accepted auditing standards; while they are typically prepared in writing, the related communication can be made orally.b. An internal control communication is normally made by auditors to the client or client's audit committee (those charged with governance). It involves the communication of deficiencies in the client's internal control. This communication is required by generally accepted auditing standards and should be made in writing.129. a. Written representations normally take the form of a letter on the client's letterhead, addressed to auditors, and signed by a responsible officer of the client. The purpose of this letter is to impress upon management its responsibility for the financial statements. The major categories covered by written representations include sections that discuss (1) the entity's financial statements, (2) information provided to auditors, and (3) internal control over financial reporting (for audits of public entities). This communication is required by generally accepted auditing standards and must be in writing.
If the client refuses to make the appropriate disclosures (as discussed in previous paragraph), auditors should notify each member of the board of directors that they will be notifying regulatory agencies having jurisdiction over the client (such as the Securities and Exchange Commission) as well as other persons who are currently relying on the reports.2. Persons are continuing to rely on the financial statements and auditors' reports.1. The facts affect the financial statements and auditors' reports.130. Auditors who become aware of facts that existed at the date of the reports should require the client to disclose the facts and their impact on the financial statements to persons relying on the financial statements if the following conditions exist:If the events are discovered after the audit report release date, auditors should recommend client disclosure of the event to persons relying on the financial statements if (1) the facts affect the financial statements and auditors' reports and (2) persons are continuing to rely on the financial statements and auditors' reports.When the events are discovered after the date of the auditors' report but prior to the audit report release date, auditors would recommend adjustment or disclosure in the financial statements and dual date the reports.Subsequent events related to conditions that existed at the date of the financial statements require adjustment of reported amounts in the financial statements. In contrast, subsequent events related to conditions that arose following the date of the financial statements will require disclosure in the financial statements.
- Spring '13