LETTER TO CLIENTS – SAS 103

In 2006, a significant number of new accounting pronouncements and standards were issued. Some of these pronouncements may have a significant effect on the conduct or the reporting related to your company’s annual audit. We’d like to bring one of these, Statement of Auditing Standards (SAS) No. 103 Audit Documentation, effective for years ending December 15, 2006 and later, to your attention and explain briefly how this new standard could impact your company.

This statement provided for three important dates related to an audit: Audit Report Date, Report Release Date, and Documentation Completion Date. The last date impacts auditors only, but the first two depend more closely on the management of the company being audited than ever before. We as auditors are now required to date the audit report only after several specific things occur, including that the financial statements have been approved by management, and that representations letters from management and legal council have been received by us.

If you have ever found yourself trying to address important audit issues that were put on hold while the audit team was at your offices, and then realized that several days or weeks had passed before you had an opportunity to review the financial statements, you are not alone. As a result of SAS No. 103, however, the audit report date will now need to reflect this lapse of time. In addition, if too much time has passed, the auditor will now also need to conduct additional subsequent period audit procedures through the later audit report date.

Auditors and management need to work more closely together to ensure that final audit follow-up items are addressed quickly so that additional audit procedures, and additional audit cost, will not be necessary. As we plan audits for years ending December 31, 2006 and later, we will discuss this matter in more specific detail with you.

Please contact us if you have any questions.

Sincerely,

The Shareholders
Rubino & McGeehin, Chartered