What it is
Significant deficiencies and material weaknesses must reach those responsible for oversight of financial reporting. This memo lets management report to the audit committee what it found, how it evaluated severity and what it is doing about it. It is separate from the auditor’s own written communication.
It sets out the material weaknesses and significant deficiencies with the accounts and assertions affected, the basis for each classification, the compensating controls and indicators considered, other deficiencies noted, remediation status and what management asks of the committee.
When to use it
- After management evaluates deficiencies at an interim date or year-end.
- When a deficiency is escalated between meetings.
- To brief the committee before the auditor’s communication.
What’s inside
- Material weakness and significant deficiency tables
- How severity was evaluated
- Other deficiencies and remediation status
- Requests of the committee
Standard cited
This template follows Reg S-X 1-02(a)(4) / ICFR. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
What is a significant deficiency?
Regulation S-X Rule 1-02(a)(4) defines it as a deficiency, or a combination of deficiencies, in ICFR that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant’s financial reporting.
Should minor deficiencies be in the memo?
Summarize them as a count and point to the tracker, and call out any that could become significant if not fixed.
Related templates
- ICFR Management Deficiency Aggregation Matrix
- Management Letter — Internal Control Communication (AU-C 265)
- Control Remediation Tracker
- Audit Committee Report from Internal Audit
Last updated 11/05/2026. All free templates.