A written request for information about a person or entity undergoing an audit, typically sent to an attorney, banker, or other relevant party, is known as an audit letter. This letter seeks details about any pending or potential litigation that could impact the audit. The recipient of the audit letter is expected to send a response, known as an audit-letter response, directly to the financial auditors. This response should adhere to the American Bar Association’s Statement of Policy Regarding Lawyer’s Responses to Auditors’ Requests for Information.
An audit letter is a written request for information regarding the subject of an audit, typically sent to individuals or entities such as attorneys, bankers, or other relevant parties who may possess information about the financial status of the audited subject. It may also inquire about any ongoing or potential legal disputes involving the audited entity. Once the recipient of the audit letter provides the requested information, they may directly respond to the financial auditors with an audit-letter response, which should adhere to the American Bar Association’s Statement of Policy Regarding Lawyer’s Responses to Auditors’ Requests for Information. For instance, if a financial firm is auditing a company, they may send an audit letter to the company’s attorney, seeking details about any ongoing or potential legal disputes. The attorney would then furnish a response to the auditors, providing relevant information about the litigation. Similarly, an audit letter may be sent to a bank, requesting information about an individual’s financial situation. The bank would then respond to the auditors, furnishing details about the person’s account balances, transactions, and other pertinent financial information. These examples exemplify how an audit letter is employed to gather information from relevant parties during an audit process.
An audit letter is a formal communication sent by a regulatory authority or auditing firm to request information or documents related to a specific audit or investigation.
You are receiving an audit letter because you or your organisation has been selected for an audit or investigation by a regulatory authority or auditing firm. It is a routine procedure to ensure compliance with applicable laws and regulations.
Upon receiving an audit letter, it is important to carefully review its contents and understand the specific information or documents being requested. It is advisable to consult with legal counsel to ensure compliance and to determine the appropriate response.
Ignoring an audit letter is not recommended. It is a legal obligation to cooperate with audits and investigations conducted by regulatory authorities or auditing firms. Failure to respond or cooperate may result in legal consequences or penalties.
In some cases, it may be possible to negotiate the scope of the audit or investigation mentioned in the audit letter. However, this typically requires legal expertise and should be done in consultation with legal counsel.
If you are unable to provide all the requested information or documents mentioned in the audit letter, it is important to communicate this to the regulatory authority or auditing firm in a timely manner. They may provide alternative options or work with you to find a solution.
In certain circumstances, it may be possible to request an extension to respond to the audit letter. However, this should be done promptly and with a valid reason. It is advisable to consult with legal counsel to determine the best course of action.
Non-compliance with an audit letter can have serious consequences, including legal penalties, fines, reputational damage, and potential legal action. It is crucial to take the audit letter seriously and respond appropriately.
Yes, you have the right to have legal representation during the audit or investigation mentioned in the audit letter. It is advisable to engage legal counsel to protect your rights and ensure compliance with applicable laws and regulations.
The duration of an audit or investigation mentioned in the audit letter can vary depending on various factors, such as the complexity of the matter and the cooperation of the parties involved. It is advisable to consult with legal counsel to get a better understanding of the expected timeline.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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