Ballarpur Industries Ltd Auditor Reports

To the members of BALLARPUR INDUSTRIES LIMITED

Report on the audit of the Standalone Financial Statements Disclaimer of opinion

We were engaged to audit the accompanying standalone financial statements ( SFS ) of Ballarpur Industries Limited { the Company), which comprise the standalone Balance Sheet as at March 31, 2023, and the standalone Statement of Profit and Loss (Including Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year ended March 31,2023, and notes to the Standalone Financial Statements including summary of significant accounting policies and other explanatory information (hereinafter referred to as the SFS).

In accordance with the Insolvency and Bankruptcy Code, 2016 ( the Code), the Honble National Company Law Tribunal, Mumbai bench ( NCLT) admitted a petition for corporate insolvency resolution process ( CIRP) filed by M/s, Finquest Financial Solutions private Limited against the Company. Mr. Divyesh Desai (1BBI/PA-001/IP-P00169/2017-2018/10338) was appointed as an Interim Resolution Professional ( IRP) to manage affairs of the Company in accordance with the provisions of the Code. Subsequently, Honble NCLT vide its Order dated 27 May, 2020 had appointed Mr. Anuj Jain (IBBI/IPA-0D1/1P-P00142/2017-2013/10306) as Resolution Professional (RP ) of the Company. Pursuant to the Insolvency Commencement Order and in line with the provisions of the Code, the powers of the Board of Directors were suspended and the same were exercised by IRP/RP, The resolution plan submitted by M/s. Finquest Financial Solutions Private Limited, the Resolution Applicant, was approved by the NCLT through an order dated March 31, 2023.

We do not express an opinion on the accompanying SFS of the Company. Because of the significance of the matters discussed in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the SFS

Basis for Disclaimer of Opinion

1. Even though the resolution plan has been approved by the Honble National Company Law Tribunal, Mumbai on March 31 2023, but still there exists a material uncertainty that casts significant doubt on the Companys ability to continue as a going concern as we are unable to obtain sufficient appropriate audit evidence to conclude on the appropriateness of the use of going concern assumption in the preparation of the SFS. (Refer note 31 and note 32 to the SFS)

2. We are appointed as auditors of the Company on September 10, 2024 and therefore we are unable to satisfy ourselves by performing alternative procedures regarding the inventory quantities held and its valuation as at March 31 2023, as per SA 501 Audit Evidence - Specific Consideration for Selected Items, Therefore, we are unable to conclude whether inventories of Rs. 1,668 lakhs are fairly stated as at March 31 2023, in the SFS. (refer note 8 to the SFS)

3. The Company has carried forwarded deferred tax assets (net) of Rs. 11,924 lakhs from earlier years. The company suffered continuous losses and there is no assessment by the management regarding reversal of deferred tax assets in the subsequent year. During the year, Company has not created any deferred tax asset or liability. As per Ind AS 12 Income Taxes an entity shall create deferred tax asset only if there will be sufficient taxable profits in the future years In the absence of the managements assessment, we are not able to satisfy ourselves about the future taxable profits of the

Company and hence we are unable to comment upon the carrying value of deferred tax assets in the SFS. (Refer note 6 to the SFS)

4 Input Tax Credit (ITC) of Goods and Services Tax available as per books of accounts for Corporate Office is Rs. 1,211 Lakhs, the new Management is under the process of reconciling the balance of ITC as per books and ITC as per electronic credit ledger. In absence of requisite information, we are also unable to comment on the appropriateness of balance of ITC in the books.

5. We have not been provided with the bank statements for 11 bank accounts maintained by the Company having a carrying amount of Rs. 9.07 Lakhs as at March 31, 2023. Also, the balance confirmation certificate has not been provided for any bank account maintained. Therefore, the consequential impact of balance confirmation and reconciliation, if any, on the SFS is not ascertainable, (refer note 10 to the SFS)

6. We have not been provided with the bank statements for 5 bank accounts maintained by the Company relating to unpaid dividend having a carrying amount of Rs. 27.59 Lakhs as at March 31, 2023. Also, the balance confirmation certificate has not been provided for any of the accounts maintained. Therefore, the consequential impact of balance confirmation and reconciliation, if any, on the SFS is not ascertainable. (Refer note 11(a) to the SFS)

7. We have not been provided with the details of bank deposits with original maturity exceeding 3 Months as at March 31, 2023. Also, neither the balance confirmation certificate nor Interest Certificate has been provided for any of the Bank Deposits Therefore, the consequential impact of balance confirmation and reconciliation, if any, on the SFS is not ascertainable, (refer note 11(b) to the SFS)

8. The Company has migrated its accounting system from previously used Oracle system to Tally accounting system during the current financial year. In the new accounting system, we have observed that the Company has not been able to identify and transfer the individual balances of its trade receivables and trade payables from Oracle system. Also, individual party ledgers are not available with the Company, as a result, details regarding MSME vendors have not been maintained. Consequently, disclosure regarding amounts payable to MSME vendors and amount of trade receivable has not been made, therefore we are unable to ascertain its impact on the SFS. (Refer note 9, 48, and 20 to the SFS).

9. The Company had paid Rs. 124 Lakhs as salary during the year, we were not provided with the relevant supporting and explanations so as to confirm the authenticity of these expenses.

10. Based on our review of the Annual Information System (AIS) of the Company for F.Y. 2022-23, we have observed interest income on Fixed Deposits of Rs. 2 lakhs but the corresponding Fixed Deposits are not recorded in the books of accounts. We have not been provided with the interest certificate nor with Fixed Deposit receipts. Also, we could not obtain the confirmation from the Banks. Due to non-availability of required details of FDs, we are unable to confirm the reliability and authenticity of these balances

11. The company has taken Office Building on rent from one of its subsidiary BGPPL The rent agreement is not available with the new Management. Hence, we are unable to verify compliance with the requirements of Ind AS 116 Leases 1 . (Refer note 38 (e) (iv) to the SFS)

12. The company didnt maintain Customer-wise accounting in the books of account due to data migration from Oracle to Tally, Based on the copies of ledger & communication received from one of its debtors, the company has reconciled and ascertained an amount of Rs 583 Lakhs receivable from them as on March 31, 2023 and accordingly accounted this amount under trade receivables. (Refer note 9 to the SFS)

13. Based on the information and explanation provided, due to Companys involvement in the Corporate Insolvency Resolution Plan Process (CIRP), disclosure in accordance with IND AS 108 Operating Segments poses significant challenges, Additionally, the absence of the Chief Financial Officer (CFO) further compounds these constraints. As a result, New Management of the company is not able to provide comprehensive disclosure regarding Operating Segments as required under IND AS 108. In absence of required information, we are unable to comment upon appropriateness of such disclosure. (Refer note 40 to the SFS)

14. The company has not filed Its Tax Audit Reports since Assessment Year 2016-17 and its Income Tax Returns (ITR) since Assessment Year 2021-22. Due to the absence of these tax filings, we were unable to obtain sufficient and appropriate audit evidence regarding the company s compliance with tax regulations, and any related financial impacts thereof.

15. The company has not filed its quarterly financial results with the stock exchanges for the current financial year as required under regulation 33 and 52 of SEBl (Listing Obligation and Disclosure Requirements) Regulations, 2015

Material Uncertainty Relating to Going Concern

We draw attention to Note 32 of the accompanying SFS which contains conditions along with other matters which indicate that a material uncertainty exists that may cast significant doubt on the Companys ability to continue as a going concern.

• Company s net worth is negative as on the reporting date and it continues to incur heavy losses. There is persistent severe strain on the working capital and this has resulted in considerable decline in the level of operations of the Company.

• As stated in note 31 to the SFS pursuant to commencement of CIRP, the Board of Directors of the Company stood suspended and the management of the Company vested with the Resolution Professional (RP). The RP was expected to make every endeavor to protect and preserve the value of the property of the Company and manage the operations of the Company as a going concern.

Even though the Resolution Plan has been approved by the Honble National Company Law Tribunal, Mumbai on the March 31,2023, but still there exists Material Uncertainty relating to Going concern of the company as we are unable to obtain sufficient and appropriate audit evidence to conclude on the appropriateness of use of going concern assumption in the preparation of the SFS,

Our opinion is not modified in respect of this Matter.

Management s and Board of Directors/Resolution Professional responsibility for the SFS

In accordance with the Insolvency & Bankruptcy Code, 2016 the Honble National Company Law Tribunal, Mumbai (NCLT) on January 17 2020, admitted Corporate Insolvency Resolution Process application against the Company and appointed an Interim Resolution Professional. Subsequently, Resolution Professional was appointed by the NCLT on May 27 2020 The Resolution Plan was approved by the Monble National Company Law Tribunal, Mumbai (NCLT) on March 31 2023. During the period from May 27 2020, till March 31 2023, the power and responsibilities of the Board of Directors were suspended and vested with the Resolution Professional ( RP ) under the provisions of the Code, Post approval and implementation of the Resolution Plan, new management has taken over the powers and responsibilities of the Board of Directors,

The Companys management & Board of Directors/RP are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these SFS that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other Irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the SFS, management and the Board of Directors/RP is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management/RP either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors/RP are also responsible for overseeing the Company s financial reporting process.

Auditors responsibility for the audit of the SFS

Our responsibility is to conduct an audit of the SFS in accordance with Standards on Auditing (SA) and to issue an auditors report thereon.

However, because of the matter described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these SFS.

We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ClCAl) together with the ethical requirements that are relevant to our audit of the SFS under the provisions of the Act and the Rules made thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI s Code of Ethics.

Report on the other legal and regulatory requirements

1) As required by the Companies (Auditors Report) Order, 2020 (the Order), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, and except for the possible effects, of the matter described in the Basis for Disclaimer of Opinion section, we give in Annexure A a statement on the matters specified in paragraph 3 and 4 of the said Order, to the extent applicable.

2) As required by section 143(3) of the Act, based on our audit we report to the extent applicable

that:

a) As described in Basis for Disclaimer of Opinion paragraph above, we are unable to obtain all the information and explanations which to the best of our knowledge and belief are necessary for the purposes of our audit.

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b) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion section of our report, we are unable to state whether proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) The standalone balance sheet, the standalone statement of profit and loss (including other comprehensive income), the standalone statement of changes in equity and the standalone statement of cash flows dealt with by this Report are in agreement with the books of account;

d) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion section of our report, we are unable to state whether the aforesaid SFS comply with the Indian Accounting Standards notified under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

e) The powers of the board of directors were suspended from May 27, 2020 to March 31,2023 pursuant to CIRP and accordingly, commenting on whether any of the director is disqualified from being appointed as a director under section 164(2) of the Act Is not applicable to the Company

f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure B ; Our report expresses disclaimer of opinion on the Companys internal financial controls over financial reporting for the reasons stated therein

g) with respect to the other matters to be included in the auditors report in accordance with the requirements of section 197(16) of the Act (as amended); in our opinion and to the best of our information and according to the explanations given to us, since the RP had superseded the Board of Directors, there were no Directors during the financial year 2022-23 and accordingly there Was no remuneration paid to its directors during the year; and

h) with respect to the other matters to be included in the auditors report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion section of our report, we are unable to state whether the Company has appropriately disclosed the impact of pending litigation on its financial position. (Refer note 35 to the SFS);

ii) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion section of our report, we are unable to state whether the Company have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii) We were not provided with the sufficient details regarding transfer of amount to Investor Education and Protection Fund (IEPF), therefore we are unable to satisfy ourself that whether there has been any delay in transferring amounts required to be transferred to the by the Company during the year.

iv)

a) The Management has represented that, to the best of its knowledge and belief, as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested { either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ( Intermediaries), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified In any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

b) The Management has represented, that, to the best of its knowledge and belief, as disclosed in the notes to accounts, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (Funding Parties), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

c) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion section of our report, we are unable to state whether the representation of the Company under sub clause (a) and (b) above, does not. contain any material misstatement.

v) Due to the possible effects of the matter described in the Basis for Disclaimer of Opinion section of our report, we are unable to state whether The Company has not declared any dividend during the current financial year ended March 31,2023.

Annexuro A referred to in Independent Auditors Report to the members of the company on the SFS for the year ended March 31. 2023 we report that:

(Refer para 1 of Report on other legal and regulatory requirements of our report of even date)

To the best of our information and according to the explanations provided to us by the Company and the books of accounts and the records examined by us in the normal course of audit and except for the possible effects, of the matter described in the basis for disclaimer of opinion section, we state that:

I,

a) A. The Company is not maintaining proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment.

B The Company has not maintained proper records showing full particulars of intangible assets.

b) The company has not physically verified fixed assets of the company during the year.

c) We were not provided with the required details of title deeds of immovable properties of the company; Therefore, we are unable to comment in accordance with the requirements of clause 3(i)(c) of the order.

d) The Company has not revalued its Property, Plant and Equipment and intangible assets during the year. However, the same was revalued in FY 2021-22.

e) Based on the information provided to us by the management and audit procedure performed by us, no proceedings have been initiated or are pending against the company as at the March 31, 2023 for holding any benami property under the Benami Transactions (Prohibition)Act, 1988(as amended in 2016) and rules made thereunder.

ii. The company has not physically verified inventories during the year

iii Because of the matters described in Basis for Disclaimer of Opinion section of our report and since we were not provided with the required details regarding the loans to related parties, we are unable to comment in accordance with the requirement of clause 3(iii) of the order.

iv Because of the matters described in Basis for Disclaimer of Opinion section of our report and since we were not provided with the required details regarding the loans, investments, guarantees and security, we are unable to comment in accordance with the requirements of clause 3(iv) of the order.

v Because of the matters described in the Basis for Disclaimer of Opinion section of our report and since we were not provided with the required details regarding deposits, we are unable to comment in accordance with the clause 3(v) of the order.

vi. The central government has specified maintenance of cost records under section 148(1) of the Act read with the Companies (Cost Records and Audit) Rules, 2014 (as amended) for the operations of the Company. However, we are not provided with cost records by the company, Therefore, we are unable to comment in accordance with the clause 3(vi) of the order.

vii.

(a) Based on the information provided, the company has not been consistent in depositing statutory dues As of March 31,2023, Because of the matters described in the basis for

disclaimer of opinion section of our report, we are unable to determine the exact amounts payable for PF, pension fund, labor welfare fund & TDS due to the unavailability of complete details and challans.

(b) Since the company was undergoing Corporate Insolvency Resolution Process (CIRP), it is not possible to accurately determine the details regarding income tax, goods & service tax, customs duty, excise duty, and value-added tax as of March 31,2023. This is because these amounts have not been deposited with the statutory authorities due to ongoing disputes. Additionally, since the National Company Law Tribunal (NCLT) supersedes all other acts in India, no further claims can be made beyond the CIRP costs.

viii. The Company has not filed its income tax return for the year; accordingly, we are unable to comment whether any transaction relating to previously unrecorded income have been surrendered or disclosed in the income tax assessments under the Income Tax Act, 1961 during the period.

ix, The Company has defaulted in repayment of loans and borrowing to banks, financial institutions and debenture holders, During the financial year 2020-21 the Company has been admitted into CIRP and the Company has accrued liability of Rs. 27,945 Lakhs representing the difference between the borrowings (including interest accrued) claims of the financial creditors admitted by the RP and the borrowings including interest accrued) in the books as at March 31 2023 (refer note 17(e) to the SFS). Details of loan wise period of default is not made available to us and accordingly we are unable to report on the requirements of paragraph 3(ix) of the Order (Refer note 17(d) to the SFS for the lender wise break up of borrowings outstanding as at March 31, 2023).

x Because of the matters described in the Basis for Disclaimer of Opinion section of our report, we are unable to state whether the Company has raised any money by way of initial public offer or further public offer (including debt instruments) however due to unavailability of data we are unable to comment whether the company has raised any money by way of term loans during the year.

xi,

a) During the course of our examination of the books & records of the company, carried out in accordance with generally accepted auditing practices in India and according to the information and explanation given to us, we have neither come across any instances of material Fraud by the Company or on the Company by its officers or employees noticed or reported during the year nor have we been informed of any such case by the Management,

b) As there are no frauds, hence sub para (b) of clause (xi) of the order is not applicable to the company.

c) Based on the management representations and information provided to us, the Company has not received any whistle-blower complaints during the year; accordingly, reporting under this clause is not applicable

xii. The Company is not a Nidhi Company, Accordingly, paragraph 3(xii) of the Order is not applicable to the Company.

xiii. We were not provided with the required details regarding the transactions with related parties; therefore, we are unable to comment in accordance with the clause 3(xiii) of the order.

xiv, The Company did not have any internal audit system for the period under audit

xv. The Company has not entered into any non-cash transactions with directors or persons connected with them during the year. Accordingly, paragraph 3(xv) of the order is not applicable to the company.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.Accordingly, the provisions of clause 3(xvi) of the order are not applicable to the company.

xvii. The Company has incurred a cash loss amounting to Rs. 49,172 lakhs (Rs. 48,879 lakhs during previous financial year) during the current financial year.

xviii. The Statutory Auditor was not appointed during the year since the company was not NCLT, hence the said clause (xviii) of the order is not applicable.

xix. According to the information and explanation given to us including the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements, and on the basis of Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that material uncertainty exists as on the date of the audit report indicating that the company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due,

xx. According to the explanation given to us and based on our scrutiny of the books of accounts, Section 135 of the Companies Act 2013 is not applicable for the financial year 2022-23 and hence the said clause of the order is not applicable to the Company.

Annexure - B to the Independent Auditors 1 Report on tho SFS of Ballarpur Industries Limited for the year ended March 31. 2023

Report on the Internal Financial Controls with reference to the aforesaid SFS under Clause (i) of Sub-section 3 of Section 143 of the Act

(Referred to in paragraph 2(i> under Report on Other Legal and Regulatory Requirements section of our report of even date)

We were engaged to audit the internal financial controls over financial reporting of Ballarpur Industries Limited (the Company 1 ) as at March 31, 2023 in conjunction with our audit of the SFS of the Company as of and for the year ended on that date.

Disclaimer of opinion

Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph above, we were unable to obtain sufficient and appropriate audit evidence to provide a basis for our opinion on whether the Company had adequate internal financial controls over financial reporting with reference to these ind AS financial statements as at March 31, 2023. Further, the system of internal financial controls over financial reporting was not made available to us, and hence we were unable to determine whether the Company had established adequate internal financial controls over financial reporting and whether such controls were operating effectively as at March 31, 2023.

Basis for Disclaimer of Opinion

Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in our main audit report, we are unable to obtain sufficient and appropriate evidence to provide a basis for our opinion on whether the company has adequate internal financial controls over financial reporting with reference to IND AS financial statements as at March 31,2023 & whether such internal financial controls were operating effectively,

Accordingly, we do not express an opinion on the internal financial controls over financial reporting with reference to the SFS of the company.

We have considered the disclaimer reported above in determining the nature, timing and extent of audit tests applied in our audit of the SFS of the Company, and the disclaimer has affected our opinion on the SFS of the Company and we have issued a disclaimer of opinion on the SFS (refer Basis for Disclaimer of Opinion paragraph in our audit report of even date).

Managements/ Resolution Professionals responsibility for internal financial controls

The Companys Management & Board of Directors/ Resolution Professional is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting ( the Guidance Note) issued by the Institute of Chartered Accountants of India ( ICAI), These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor s responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit in accordance with the Guidance Note and the Standards on Auditing prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements. Those Standards and the Guidance note require that

We comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements were established and maintained and whether such controls operated effectively in all material respects.

Because of the matter described in disclaimer of opinion paragraph above, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on internal financial control over financial reporting of the Company.

Meaning of internal financial controls over financial reporting

A companys internal financial controls 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 companys internal financial controls 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 the companys assets that could have a material effect on the financial statements.