What it is
A management letter carries observations that are not significant deficiencies or material weaknesses, which AU-C 265 requires in writing. Good comments say what was seen, how many items were tested, what could go wrong and exactly what to do, with an owner and a date.
This library has comments by area: financial close, cash and disbursements, receivables and revenue, inventory and fixed assets, payroll, information technology, and governance, tax and compliance. Each is a three-column row (condition, risk, recommendation) with placeholders for numbers. A guide at the front shows how to word a comment and when an observation should be evaluated as a deficiency first.
When to use it
- Drafting the management letter at the end of an audit or review.
- Standardizing comment quality across a firm’s engagement teams.
- Training staff on how to word a condition, risk and recommendation.
What’s inside
- A short guide to wording a comment and the AU-C 265 distinction
- Comments for financial close, cash, receivables, inventory, fixed assets, leases, payroll, IT and governance
- Sales tax nexus, related party policy and nonprofit donor restriction comments
- A summary table for the cover page: priority, owner, target date and management response
Standard cited
This template follows AU-C 265. 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. See AU-C 265 explained.
Questions
Is a management letter required?
No. AU-C 265 requires significant deficiencies and material weaknesses to be communicated in writing. Other comments are voluntary, and many firms deliver them as a management letter. Keep the two separate in your documentation.
How many comments is right?
Enough to be useful and few enough to be read. Prioritize, group related items, and state what you tested.
Can I copy a comment as it is?
Adapt it. A comment is only as good as its facts, so change the condition to what you saw, quantify it and make the recommendation fit the client’s size and staffing.
Related templates
- Management Letter — Internal Control Communication (AU-C 265)
- Audit Finding Sheet (5 Cs)
- Segregation of Duties Conflict Matrix
Last updated 11/05/2026. All free templates.