Illustrative Management Letter [For External Audits]

Publication Date: 1998
Published by: Consultative Group to Assist the Poor (CGAP)
Document Type: Other (Microsoft Word)

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What are the issues that a management letter addresses?

This document presents an illustrative management letter.

The document states that:

• A management letter is the written communication to an MFI’s management that:
  • Identifies significant internal control deficiencies;
  • Offers constructive recommendations;
  • Notes other matters that the external auditor wants to bring to the attention of the MFI’s management and audit committee.
• The management letter may identify a number of potential control weaknesses;
• The auditor should solicit and consider management comments on a draft of the management letter before preparing the letter in final form for presentation to the audit committee.

The document presents a dummy management letter that the partner of “XYZ Audit Company” wrote to the management of “Aspire MFI”. The letter states that the audit committee:

• Considered “Aspire MFI’s” internal control structure;
• Determined the auditing procedures;
• Expressed an opinion on the financial statements;
• Did not disclose all matters in the internal control structure that might be “material weaknesses” under the country’s established standards;
• Did not note any matter involving the internal control structure and its operations that it considers to be “material weaknesses”;
• Noted other matters related to the internal control structure and certain other issues and presented its comments in an attached report.

The document also contains:


• A clause about the confidentiality of the report;
• A statement about the auditors’ willingness to discuss their comments with the management.