The write stuff: A letter of instructions

When you draft an estate plan, the centerpiece is your will or living trust. Such a document determines who gets what, where, when and how, as well as tying up the loose ends of your estate. A valid will or living trust can be supplemented by other legally binding documents, such as trusts (or additional trusts), powers of attorney and health care directives.

But there’s still a place at the table for a document that has absolutely no legal authority: a “letter of instructions” to your heirs. This informal letter can provide valuable guidance and act as a road map to the rest of your estate.

Taking inventory

Begin your letter of instructions by stating the location of your will or living trust. Then create an inventory of all your assets and include their location, any account numbers and relevant contact information. This may include, but isn’t necessarily limited to, checking and savings accounts, 401(k) plans and IRAs, health insurance policies, business insurance, life and disability income insurance, stocks, bonds, mutual funds and other investments, and any tangible assets your heirs may not readily find.

The contact information should include the names, phone numbers and addresses (including emails) of the professionals handling your financial accounts and paperwork, such as an attorney, CPA, banker, life insurance agent and stockbroker. Also, list the beneficiaries of retirement plans, IRAs and insurance policies and their contact information.

Guidance for personal preferences

A letter of instructions is more than just a listing of assets and their locations. Typically, it will include other items of a personal nature, such as funeral, burial or cremation arrangements, accounting of fees paid for cemetery plots or mausoleums, the names, addresses and telephone numbers of people and organizations to be notified upon death, and specific instructions for handling personal and financial affairs after you’re gone.

The letter can also expand on instructions in a living will or other health care directive. For example, it might provide additional details about the decision for being taken off life support systems. It may also cover charitable contributions you wish to be made after death or the manner in which property should be donated to charity.

Putting pen to paper

As you’re writing your letter, bear in mind that there are no legal requirements backing it. And just like a will or living trust, the letter should be updated periodically to reflect significant changes in your life. Finally, keep the letter in a safe place where the people whom you want to read it can easily find it. Contact us if you have questions about a letter of instructions.

© 2017

How external auditors can leverage your internal audit work

Does your company have an internal audit function? If so, you may be able to use your internal audit team to streamline financial reporting by external auditors. Here’s guidance on how to facilitate this collaborative approach.

Recognize the benefits

External auditors aren’t required to use internal auditors in any capacity. But collaboration between internal and external audit teams can be a win-win.

Collaboration can help minimize disruptions to normal business operations that sometimes happen during external audit fieldwork. And internal audit personnel may have information that’s useful to the external auditor in obtaining an understanding of the entity and its environment and identifying and assessing risks of material misstatement.

Understand AICPA guidance

In 2014, the Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA) issued Statement on Auditing Standards (SAS) No. 128, Using the Work of Internal Auditors. This standard clarifies an external auditor’s responsibilities when using internal auditors.

SAS 128 differentiates between two types of assistance provided by the internal audit function. Specifically, external auditors may consider using internal auditors to:

• Obtain audit evidence, and


• Provide direct assistance under the direction, supervision and review of the external auditor.

One of the most significant changes in SAS 128 is the requirement for the internal audit function to apply a systematic and disciplined approach to planning, performing, supervising, reviewing and documenting its activities. This includes having appropriate quality control policies and procedures.

If the external auditor determines that the internal audit function lacks a systematic and disciplined approach to its activities, the external auditor can’t use the work of the internal auditor in obtaining audit evidence.

Additionally, SAS 128 requires management (or other parties charged with governance) to provide a written acknowledgment that internal auditors providing direct assistance will be permitted to follow the instructions of the external auditor and that the entity won’t interfere in the work the internal auditor performs for the external auditor.

Challenge the status quo

SAS 128 could change the role your internal auditors play on our external audit team. So, before your next audit, let’s evaluate whether your internal audit function meets the requirements of SAS 128. If so, we can leverage our capabilities, ensuring that next year’s fieldwork will run as smoothly and efficiently as possible.

© 2017