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SUGGESTED MEMO WRITING INSTRUCTIONS

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1. Learning to prepare well written and concise memos is an important part of success in auditing or

any accounting position. The following are the instructions for memos that summarize the audit of

account balances. Appropriate modification should be made for memos that serve other purposes.

2. PURPOSE AND CONTENT

The account balance audit memos are prepared to support the final audit report and direct

attention to important items to the reviewers of the workpapers.

The memo should give the reader an overall view of this part of the audit. You can assume

that the reader is an expert accountant and auditor, but has little knowledge of Valley Publishing

Company. Do not assume knowledge of client transactions or details of the audit in writing the

memos. Memos should not contain specific details such as voucher numbers or account

numbers. If the reader is interested in this level of detail, he/she can refer to the workpapers.

Each memo should contain an introductory/scope paragraph, an conclusion paragraph and as

many middle paragraphs as are necessary to explain important items concerning the audit.

3. The INTRODUCTORY AND SCOPE PARAGRAPH should identify the items audited

and include the following statements:

a) The audit was performed in accordance with Generally Accepted Auditing

Standards,

b) The procedures required in the audit program have been performed, and

c) I believe our audit provides a reasonable basis for a conclusion.

Any audit procedures listed in the audit program that were not performed and any audit

procedures performed that are not listed in the audit program should be noted in the scopeparagraph. Specifics of samples selected, such as a test month or number of items selected for

testing, should be included.

4. MIDDLE PARAGRAPHS should be used to discuss:

a) Significant events affecting the clients business,

b) Accounting estimates,

c) Major audit problems, and

d) Major accounting problems.

Problems resulting in MAJOR adjusting entries should be considered major accounting problems.

Do NOT discuss minor problems or routine adjusting entries in the memo. If there are no

significant items to consider, mention this in a middle paragraph. Deciding what is significantrequires judgment. As a part of the professional program you should learn to develop judgment.

Prepare a separate paragraph for each issue discussed. Do not combine two problems in one

paragraph.

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To adequately discuss an item, the following should be included in the order indicated:

a) What happened,

b) Impact on the financial statements, including the approximate dollar amounts,

c) What you did (additional audit procedures performed or investigation conducted),

d) Your decision,

e) The reason for your decision.

NOTE: It is generally NOT necessary to give the audit procedures from the audit program in the

middle paragraphs.

5. The CONCLUSION PARAGRAPH should identify the items covered and state that the

amounts as adjusted appear fairly stated in conformity with general accepted accounting

principles (GAAP) or include a discussion as to why the amounts are NOT fairly stated. If not

fairly stated, discuss what the audit team proposes to do to resolve the problem.

6. The memo should be SIGNED and DATED.