Com 530

You are receiving this Memo to give you information that will help you understand the accounting process while observing the rules we must follow as auditors. This memo will explain the changes that have become effective for all financial audits. It is the responsibility of the management to establish and maintain internal control to represent the position of the financial statements. As the auditor, we will evaluate your set controls and discuss any deficiencies, to include any deficiencies that may have been noted and not resolved from a previous audit.

One of the changes to the to the audit process is that the term reportable condition is no longer used, and the terms significant deficiencies and material weakness are now used to describe control deficiencies that must be communicated to management. Any deficiencies will be evaluated to determine if it is a significant deficiency or a material weakness. All significant deficiencies and material weakness discovered by the auditor will be discussed properly to identify what caused the deficiency and if the deficiency will continue. Another change would be that all communications to management may be verbally, but must be given to the organization in writing in 60 days. All significant deficiencies and material weaknesses of the organization will be reported yearly to the board. It is a change that each significant deficiencies and material weakness must continue to be reported until they have been resolved even if they were reported in the past. They must continue to be reported until they have been resolved.

In order to prevent control deficiency in the organization, it is important for the organization to have someone to prepare financial statements in a format that is approved by (GAAP) Generally Accepted Accounting Principles. This would also include having safeguard procedures in place. Where different staff is responsible for opening the mail and log in checks received, processing deposits, and...