Report of Independent Registered Public Accounting Firm
To the Board of Trustees of American Beacon Funds and Shareholders of the funds listed in Appendix A
In planning and performing our audit of the financial statements of the funds listed in Appendix A (hereafter collectively referred to as the “Funds”) as of June 30, 2020 and for the periods indicated in Appendix A, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), we considered the Funds’ internal control over financial reporting, including controls over safeguarding securities, as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-CEN, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Funds’ internal control over financial reporting.
The management of the Funds is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A deficiency in internal control over financial reporting 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 misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Our consideration of the Funds’ internal control over financial reporting was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control over financial reporting that might be material weaknesses under standards established by the PCAOB. However, we noted the following deficiency in the Funds’ internal control over financial reporting and
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their operation, including controls over safeguarding securities, that we consider to be a material weakness as defined above as of June 30, 2020.
The Funds’ disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting with respect to the American Beacon TwentyFour Short Term Bond Fund (the “Fund”) relating to the recording and review of the Fund’s expenses related to its initial registration. Specifically, controls in place to record and review the accuracy of the Fund’s initial registration fees, professional fees and reimbursements thereof did not operate effectively.
This report is intended solely for the information and use of the Board of Trustees of American Beacon Funds and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties.
/s/ PricewaterhouseCoopers LLP
September 1, 2020
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Appendix A
American Beacon Funds
Fund
American Beacon ARK Transformational Innovation Fund American Beacon Shapiro Equity Opportunities Fund American Beacon Shapiro SMID Cap Equity Fund American Beacon TwentyFour Strategic Income Fund American Beacon SSI Alternative Income Fund American Beacon TwentyFour Short Term Bond Fund
Financial Statement Period
For the year ended June 30, 2020
For the year ended June 30, 2020
For the year ended June 30, 2020
For the year ended June 30, 2020
For the year ended June 30, 2020
For the period February 18, 2020
(commencement of operations) through
June 30, 2020
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