§ 1773.20 CPA's submission of the auditor's report, report on compliance, report on compliance and on internal controls over financial reporting, and management letter.  


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  • (a) Time limit. As soon as possible after completion of the audit, but within 90 days of the as of audit date, the CPA should deliver the auditor's report, report on compliance and on internal control over financial reporting, and management letter to the president of the borrower's board of directors. As a minimum, copies should be provided for each member of the board of directors and the manager. Further, three copies must be provided to the borrower for transmittal to RUS.

    (b) Communication with the board of directors. In addition to providing sufficient copies of the auditor's report, report on compliance and on internal control over financial reporting, and management letter for each member of the borrower's board of directors, RUS requires that the CPA report all audit findings to the borrower's board of directors. RUS recommends that audit findings be communicated orally; however, the communication may be oral or written, at the borrower's discretion. If the information is communicated orally, the CPA must document the communication by appropriate memoranda or notations in the workpapers. If the CPA communicates in writing, a copy of the written communication must be included in the CPA's audit workpapers or permanent file.

    (c) Matters to be communicated. Matters communicated to the board of directors must include, but are not limited to the matters to be communicated to the audit committee as prescribed in SAS No. 61, entitled “Communication with Audit Committee”,:

    (1) The initial selection of and changes in significant accounting policies;

    (2) The methods used to account for significant or unusual transactions and the effects of significant accounting policies in controversial or emerging areas;

    (3) The process utilized by management to formulate significant accounting estimates and the basis for the CPA's conclusions regarding the reasonableness of these estimates;

    (4) Audit findings and recommendations, including audit adjustments that either individually or in the aggregate have a significant effect on the borrower's financial statements;

    (5) The CPA's responsibility for other information presented with the audited financial statements, any audit procedures performed, and the results thereof;

    (6) Any disagreements with management, whether or not satisfactorily resolved, concerning matters that individually or in the aggregate may be significant to the borrower's financial statements or the auditor's report, report on compliance and on internal control over financial reporting, or management letter;

    (7) Significant matters that were the subject of consultations with other accountants;

    (8) Significant issues discussed with management with regard to the initial or recurring retention of the CPA; and

    (9) Any serious difficulties encountered in dealing with management during the performance of the audit.

    [56 FR 63360, Dec. 3, 1991, as amended at 59 FR 659, Jan. 6, 1994; 66 FR 27835, May 21, 2001]