2025-11-05 · Field Notes
What a management letter usually covers
The difference between an audit opinion and the companion letter that owners actually use to fix the books.
The audit opinion answers one question: whether the financial statements present fairly. The management letter is where we write about the messy edges — dual signatures missing on large payments, inventory write-downs delayed until tax season, or related-party rent without a written agreement.
We rank observations by how quickly they could distort a balance or invite a bank query. A missing dual signature on petty cash rarely tops the list; an unreconciled intercompany clearing account often does.
Owners sometimes ask us to soften wording. We will clarify facts, but we do not delete a finding that affected sample testing. Your board deserves the same picture we used to reach the opinion.
Treat the letter as a work list for the next close, not a scolding. Many of our returning clients bring last year’s letter to the planning meeting and show what they fixed.