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BULLETIN 

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February 13, 2009 

No. 2009-1 

Subject: Relationship of SAS 112 and SAS 115 “Communicating Internal 

Control Related Matters Identified in an Audit” and SAS 114 “The 

Auditor’s Communication With Those Charged With Governance” to 

25 C.F.R. § 571.13, “Copies of Audit Reports.” 

This Bulletin provides guidance on the relationship between the submission of audit 

report(s) and management letter(s) to the National Indian Gaming Commission (NIGC) 

as required under 25 C.F.R. § 571.131 and new auditing standards. 

In May 2006 and October 2008, the American Institute of Certified Public Accountants 

(AICPA), the national professional organization for certified public accountants, issued 

Statement on Auditing Standards (SAS) No. 112 and SAS No. 1152 Communicating 

Internal Control Related Matters Identified in an Audit, respectively. In December 2006, 

SAS 1143The Auditor’s Communication With Those Charged With Governance was 

issued. Both SAS 112 and SAS 114 statements apply to audits of financial statements for 

periods ending on or after December 15, 2006 and SAS 115 applies to audits of financial 

statements for periods ending on or after December 15, 2009. Although SAS 115 will 

 

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A tribe shall submit to the Commission a copy of the report(s) and management letter(s) setting forth the results of each annual audit 

within 120 days after the end of each fiscal year of the gaming operation.

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SAS 115 - The Auditing Standards Board has issued Statement on Auditing Standards (SAS) No. 115, Communicating Internal 

Control Related Matters Identified in an Audit. SAS No. 115 supersedes SAS No. 112 of the same title and was issued to eliminate 

differences within the AICPA’s Audit and Attest Standards resulting from the issuance of Statement on Standards for Attestation 

Engagements (SSAE) No. 15, An Examination of an Entity’s Internal Control Over Financial Reporting That Is Integrated With an 

Audit of Its Financial Statements. For additional information click on the following link 

http://www.aicpa.org/download/members/Div/auditstd/Summary_SAS_No115.pdf

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SAS 114 – The Auditing Standards Board has issued Statement on Auditing Standards (SAS) No. 114, The Auditor’s 

Communication with Those Charged with Governance. SAS No. 114 supersedes SAS No. 61. For additional information click on the 

following link http://www.aicpa.org/download/members/div/auditstd/AU-00325.PDF
supersede SAS 112 and apply to all financial statements after December 15, 2009, the 

core standards included in 112 are retained; however, the definitions have been revised. 

SAS 112 and 115 establish standards and provide guidance on communicating matters 

related to an entity's internal control over financial reporting identified in an audit of 

financial statements. SAS 114 establishes standards and provides guidance on the 

auditor’s communication with those charged with governance in relation to an audit of 

financial statements. The noted standards are applicable whenever an auditor expresses 

an opinion on financial statements (including a disclaimer of opinion). 

In accordance with 25 C.F.R. §571.13, reports documenting SAS 112, SAS 114 or SAS 

115 findings must be communicated to the NIGC. 

Definitions – SAS 115 

The following are definitions included in SAS 115, effective December 15, 2009: 

Deficiency in Internal Control – exists when the design or operation of a control does 

not allow management or employees, in the normal course of performing their assigned 

functions, to prevent, or detect and correct misstatements on timely basis. 

Deficiency in Design – exists when a control necessary to meet the control objective is 

missing or an existing control is not properly designed so that, even if the control 

operates as designed, the control objective would not be met. 

Deficiency in Operation – exists when a properly designed control does not operate as 

designed or the person performing the control does not possess the necessary authority or 

competence to perform the control effectively. 

Material Weakness – a deficiency, or combination of deficiencies, in internal control, 

such that there is a reasonable possibility4

 that a material misstatement of the entity’s 

financial statements will not be prevented, or detected and corrected on a timely basis. 

Significant Deficiency – a deficiency, or a combination of deficiencies, in internal 

control that is less severe than a material weakness, yet important enough to merit 

attention by those charged with governance. 

Excerpt from the Written Communication Requirements of SAS 115:

Deficiencies identified during the audit that upon evaluation are considered significant 

deficiencies or material weaknesses under this SAS should be communicated, in writing, 

to management and to those charged with governance as a part of each audit, including 

significant deficiencies and material weaknesses that were communicated to management 

and those charged with governance in previous audits and have not yet been remediated. 

Significant deficiencies and material weaknesses that previously were communicated and 

 

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In this SAS, a reasonable possibility exists when the likelihood of the event is either reasonably possible or probable as those terms 

are used in the Financial Accounting Standards Board Statement No. 5, Accounting for Contingencies.
have not yet been remediated may be communicated, in writing, by referring to the 

previously issued written communication and the date of that communication. 

Definitions – SAS 114

The following are definitions included in SAS 114, effective December 15, 2006: 

Those Charged with Governance – the person(s) with responsibility for overseeing the 

strategic direction of the entity and obligations related to the accountability of the entity. 

This includes overseeing the financial reporting and disclosure process. In some cases, 

those charged with governance are responsible for approving the financial statements (in 

other cases, management has this responsibility). For entities with a board of directors, 

this term encompasses the term board of directors or audit committees expressed 

elsewhere in the Statements on Auditing Standards.5

Management – the person(s) responsible for achieving the objectives of the entity and 

who have the authority to establish policies and make decisions by which those 

objectives are to be pursued. Management is responsible for the financial statements, 

including designing, implementing, and maintaining effective internal control over 

financial reporting. 

Excerpt from The Auditor’s Communication With Those Charged With 

Governance Requirements of SAS 1146:

This section establishes standards and provides guidance on the auditor's communication 

with those charged with governance in relation to an audit of financial statements.7

Although this section applies regardless of an entity's governance structure or size, 

particular considerations apply where all of those charged with governance are involved 

in managing an entity. This section does not establish requirements regarding the 

auditor's communication with an entity's management or owners unless they are also 

charged with a governance role. 

More on SAS 112, SAS 114 and SAS 115

Additional information pertaining to SAS 112, SAS 114 and SAS 115 can be obtained by 

contacting your CPA or clicking on the following link: 

http://www.aicpa.org/Professional+Resources/Accounting+and+Auditing/Audit+and+Att

est+Standards/Authoritative+Standards+and+Related+Guidance+for+NonIssuers/auditing_standards.htm

 

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Paragraph .03(a) of SAS 114, AU Section 380, The Auditor’s Communication With Those Charged With Governance

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SAS 114 - The Auditing Standards Board has issued Statement on Auditing Standards (SAS) No. 114, The Auditor’s 

Communication With Those Charged With Governance. For additional information click on the following link 

https://www.aicpa.org/download/members/div/auditstd/AU-00380.PDF 

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The provisions of this section apply to audits of financial statements prepared either in accordance with generally accepted 

accounting principles or in accordance with a comprehensive basis of accounting other than generally accepted accounting principles. 

References in this section to generally accepted accounting principles are intended to also refer to other comprehensive bases of 

accounting when the reference is relevant to the basis of accounting used.