1.

In the meeting held on January 5, 2011, the BOD discussed their expectations regarding
an increase in the sales for around 10% but other expenses such as COGS and admin and
general expenses are expected to remain same as per last years figure. However, in the
next meeting which held on June 30, 2011, it was presented to BOD that such
expectations were not met for the increase in sales due to change in parents behavior but
the company had to increase the selling price by 10% to cover up the decline.
2. Another important area that needs to be considered is the BODs decision in the meeting
held on June 30, 2011 regarding the write off of a loan. For audit perspective, the staff
would be going through the detailed substantive procedures to ensure that this receivable
is really irrecoverable and the company can proceed towards writing it off.
3. Another stronger point which is inconsistent with the corporate practices is advance made
to the employee which is discussed in the meeting held on June 30, 2011. The issue
pertains to reimbursement of legal expenses of one of board members personal secretary
in respect of previous employer. Board is considering to reflect it as other receivables
whereas its nature is advance to employees however, the company currently not having
any such policy for issuing advances to employees.
4. In a meeting held on January 03, 2012, the BOD discussed the matter of a legal notice on
violation of merchantability warranty. The chances that if the company could not win this
lawsuit, it might have to pay off a legal claim of nearly $12 million.
5. Another important area of concern in BODs meeting on January 03, 2012 is companys

anticipation to reduce employee benefits as in the previous year, the company increased
its contribution by more than 10% to soothe employees dissatisfaction.