The management letter in Maltese public limited companies : an assessment

Abstract

The management letter is a means of communication through which the external auditor communicates significant and appropriate audit matters to those charged with governance of the audit client. The objectives of this dissertation are to ascertain the usefulness, determine the significance and assess the effectiveness of the management letter within local public limited companies (PLCs). The objectives were achieved through a series of semi-structured interviews conducted with a sample of local external auditors and PLCs. The study reveals that the perception of the well-structured and dynamic local PLCs, with regards to the management letter, is changing. These companies consider the letter as a list of opportunities from which the company could benefit, rather than a letter that reports all the weaknesses identified within the firm during the course of the audit. However, local PLCs are of the opinion that some of the matters raised in the letter are insignificant for their entity. Contrary to what is found in literature and previous studies, the majority of local PLCs tend to have recurring weaknesses from one letter to another which is due to the limited resources of the company.This study also recommends certain measures to be taken in order to improve the usefulness, significance and effectiveness of the management letter within local PLCs.