What it is
AU-C 265 requires the auditor to communicate significant deficiencies and material weaknesses identified in the audit in writing to management and those charged with governance.
This template has the required elements and a separate section for other recommendations (the traditional management letter points), so the two can be split if the firm prefers.
When to use it
- At the end of an audit where significant deficiencies or material weaknesses were found.
- To give other control and efficiency recommendations to management.
What’s inside
- Statement that the audit’s purpose was an opinion on the statements, not on internal control
- Definitions of deficiency, significant deficiency and material weakness
- Each matter: condition, effect and recommendation, with management’s response
- Other recommendations not rising to a significant deficiency
- Restricted-use paragraph and signature
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
When must the AU-C 265 letter be issued?
The written communication is best made by the report release date and must be made no later than 60 days after it.
Can I say no significant deficiencies were found?
No. AU-C 265 does not allow a written statement that no significant deficiencies were identified, because it could be misunderstood. AU-C 265 requires written communication of the significant deficiencies and material weaknesses that were identified; it does not require a letter when there are none.
Do I repeat deficiencies reported last year?
Yes, if they still exist. You may refer to the earlier communication and its date rather than repeat the full description.
Related templates
- Communication With Those Charged With Governance (AU-C 260)
- Independent Auditor's Report — Unmodified Opinion (AU-C 700)
- SOX Control Deficiency Evaluation Worksheet
Last updated 11/04/2026. All free templates.