CAT / FIA FAU Syllabus C. Internal Control - Reporting on Internal Controls - Notes ^{1 / 2}

The management letter will express the fact that the weaknesses found are not necessarily all weaknesses but just those found by the auditor.

The report will also express that it is for the sole use of management and no disclosure will be made to third parties

The structure of the report will be:

1. Weakness

2. Consequence

3. Recommendation

Significant deficiencies should always be reported to those charged with governance

In the Exam

Often you have to report deficiencies in the form of a management letter in the exam...

So use this structure..

• Deficiency

  • Clear description of what is wrong

• Consequence

  • What would happen if this is not corrected

    Look at this from the client viewpoint - not the audit

    So think of costs, time, reputation, lost sales etc

• Recommendation

  • Be specific here - on the actual deficiency in the scenario

    Also make sure that the benefit of the recommended action outweighs the cost

    Don't just think of what to do, also think of who and when

• A table format is perfect for the exam...

  Deficiency	Consequence	Recommendation
  I'm an idiot	I will fail my ACCA exam	Buy aCOWtancy.com now :)