Document background
The Audit Letter is a critical document in the United States audit process, serving as a formal communication channel between external auditors and a client's legal counsel. This document is typically used during the annual audit process or special audit engagements to gather information about potential legal liabilities that could materially impact financial statements. The letter must comply with professional standards set by the AICPA, PCAOB, and relevant U.S. securities laws, particularly post-Sarbanes-Oxley Act requirements. It specifically requests information about pending litigation, unasserted claims, and legal assessments that could affect the company's financial position. The Audit Letter plays a crucial role in ensuring proper disclosure of legal matters and maintaining transparency in financial reporting, while respecting attorney-client privilege considerations.
