Management letter
In one sentenceA letter the auditor sends to the business's management after the audit, setting out the weaknesses he noticed in controls and systems and his recommendations to fix them.
Simply put
The opinion in the auditor's report is short and read by everyone, while the management letter is internal and detailed: a finding, its possible impact, a recommendation, and usually management's response.
Its real value is in follow-up: a finding repeated every year without being fixed is a sign of weak governance.
Example
After auditing a restaurant, the auditor wrote in the management letter that the physical count of the storeroom is done only once a year, recommended a monthly count of expensive items, and asked management for an implementation date.
Don't confuse it with
Auditor's reportThe report is attached to the statements and read by outsiders, while the management letter is addressed to management and is not usually published.