Q:

What is a management letter?

A:

Quick Answer

A management letter is an auditor's letter addressed to the client, according to Allbusiness.com. It is a letter written by company management that confirms the accuracy of an audit. An audit is an examination and verification of a company's financial and accounting records and supporting documents presented by a professional, such as a certified public accountant.

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Full Answer

According to VentureLine, "A management letter identifies issues not required to be disclosed in the annual financial report, but represents the auditors concerns and suggestions noted during auditing." It includes the public accountant's conclusions concerning the company's accounting policies and procedures, internal controls and operating policies. It confirms that all the information enclosed within the company's financial statements is true and accurate and that all the required information has been disclosed. An evaluation is made of the present system, pointing out problem areas. Recommendations for improvement are cited. An audit is an IRS assessment of an individual or corporation's tax return to verify its accuracy. There are three types of audits: correspondence audits (the IRS mails a request for additional information), office audits (an interview is conducted at a local IRS office), and field audits (an interview is conducted at a taxpayer's place of business for a corporate tax return).

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