INDEPENDENT AUDITORS

REPORT TO THE BOARD OF

DIRECTORS
ABC COMPANY LIMITED

INDEPENDENT AUDITORS REPORT TO THE BOARD OF

DIRECTORS
ABC COMPANY LIMITED

We have audited the accompanying Balance Sheet of ABC Company Limited as

of December 2006 and the related Statements of Income and Statement of Cash Flows
related to the current assets, with the accompanying notes, expressed in thousand USD
as at 31 December 2006. These financial statements are the responsibility of the
management of the Company. Our responsibility is to express an opinion of these
annual accounts on the basis of our audit.
Except as discussed in the following paragraph, we conducted our audit in
accordance with the accounting principles generally accepted in the United States of
America issued by FASB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by the management, as
well as evaluating the overall financial statements presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, except for the effects of the Companys incorrect determination of
current assets, the financial statement referred to above, along with the explanatory
notes, with respect to the current assets present a true and fair view, in all material
respects, the financial position of the Company as of 31 December 2006, and the results
of its operations and its cash flows for the year then ended in accordance with
accounting principles generally accepted in (the country where the report is issued).

Team of auditors:
Ana Bulgar
Tibi Borza
Oana Cojocaru
Decebal Hogea
Andreea Matei
May 17th 2006

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Notes and findings

1. Trade Receivables, Net

There is a discrepancy between the Cash Flow and the Balance Sheet. The
Cash Flow shows an increase of 4.591.000 USD between the year 2006 and 2005,
however, the Balance Sheet records values of 11.960.000 USD and 7.546.000 USD, for
the year 2006, respectively 2005. Our calculated increase is 4.414.000 USD. We tracked
down the mismatch in note #4: the Cash Flow did not include the Allowance for doubtful
accounts.

2. Inventories, Net
According to the Balance Sheet, the Net Inventories have a recorded value of
7.444.000 USD in the year 2006. Note #5 states that the Inventories consist of Finished
Goods, with a value of 2.764.000 USD, Packaging materials, with a value of 296.000
USD, Raw materials, with a value of 3.983.000 USD and Other inventories, with a
value of 400.000 USD. The real total is in fact 7.443.000 USD, and not 7.444.000 USD
as recorded in the Balance Sheet; however this discrepancy is not material enough to
offer an adverse opinion.

3. Other Current Assets

The Cash Flow shows an increase of 1.532.000 USD for the year 2006, however,
the Balance Sheet records Current Assets worth 3.170.000 USD in 2006 and 1.763.000
USD in 2005. The increase should normally be 1.407.000 USD and we see nothing that
could justify that difference.

Suggestions

Total Current Assets

The Auditors suggest a re-recording of the Current Assets:
Current Assets
Cash

Balance
2006

2005

1.295.000 USD

1.956.000 USD

11.960.000 USD

7.546.000 USD

Inventories, net

7.443.000 USD

4.576.000 USD

Other Current Assets

3.170.000 USD

1.763.000 USD

Total Current Assets

23.865.000 USD

15.841.000 USD

Trade receivables, net

Qualified Opinion
Although misstatements were found, we do not consider them material enough to
sustain an Adverse Opinion, however, because they do not affect the rest of the financial
statements from being fairly presented when taken as a whole, we sustain a Qualified
Opinion.