PANCHIM OOD Proposal for audit services May 2014

PANCHIM OOD

Proposal for audit services

May 2014

RPV Partners OOD22-24 Mayor Parvan Toshev str.

Sofia 1408+359 2 468 72 58

Mr. Jerry SchleiderGeneral ManagerPanchim OOD

Proposal for audit services

Dear Mr. Schlieder,

I am delighted to submit to you our proposal for external audit services to Panchim OOD. We offer you a combination of deep knowledge of the Bulgarian business environment combined with an innovatory approach. We set out the details on the following pages which explain:

our strong and experienced team who will share knowledge, independent and informed guidance on complex issues;

an audit philosophy which is business-led and ensures that the risks you face are fully identified;

an audit service which ensures that our work is efficient and well managed, and results in proactive business advice;

industry - specific, solutions - oriented, and account - centric advisory services.

In this way we believe that we will provide enhanced constructive feedback and identification of opportunities for performance improvement.

We have a strong track record in assisting and advising companies of all sizes, both international and local, which have operations in Bulgaria. We look forward to using this to make a contribution to your future business success.

We look forward to discussing this proposal with you and your colleagues. Meanwhile, if you have any questions, please do not hesitate to contact me.

Kind regards

Rositsa Panyotova

Partner


Sofia 1408+359 2 468 72 58


Sofia 1408+359 2 468 72 58

Contents

Disclaimer

This proposal is made by RPV Partners and is in all respects subject to the negotiation, agreement and signing of specific contracts.

This proposal was prepared exclusively for your benefit and internal use and does not carry any right of publication or disclosure to any other party. Neither this proposal, nor its content may be used for any other purpose without prior written consent of RPV Partners.

The information in the proposal reflects prevailing conditions and our views as of May 2014, all of which are accordingly subject to change. In preparing the proposal, we have relied upon and assumed, without independent verification, the accuracy and completeness of the information received in the conversation with the management of PanchimOOD, as well as the public sources.

Audit approach

The teamSection 4

Background

Scope of work

Section 1

Section 2

Section 3

Timing and feesSection 5

1. Background

RPV Partners is a consulting company, specialized in the provision of consulting services for the small, medium and large businesses in different parts of the world and in different branches. Our company has gained a rich experience from the broad range of requirements to the projects throughout the years.

By taking advantage of working in a pleasant environment, plus the availability of highly qualified professionals and advanced technologies, our services provide high results on these mutually beneficial factors to our customers.

Advantages: Unique approach to the competitive prices Provision of complex services to customers Saving your financial and accounting operating costs


Sofia 1408+359 2 468 72 58

2 Scope of workWe have always regarded it as part of our role as auditor to act as a source of practical assistance and advice in helping you to find solutions to the challenges created by the changing environment. Our primary responsibility is to issue an audit opinion on your financial statements.

Our work will comprise:

The RPV audit methodology shows our commitment to provide added value to our client.

The RPV audit methodology shows our commitment to provide added value to our client.

Review of financial informationReview of financial information

Added value

Business adviceBusiness advice

Review of strategyReview of strategy

Comments on internal controlsComments on internal controls

Audit of AccountsAudit of AccountsExpected

Critical sounding board

All of our audits are conducted in accordance with International Standards on Auditing.

In addition to our Auditors’ Reports, we will also provide you with a management letter on any findings, recommended improvements in internal accounting controls, etc. This will bring to your attention key operational issues arising during our audit, where we have identified a business or internal control risk. Recommendations will be made to the management of the Company to modify or change procedures to mitigate the weaknesses identified.

• Audit of the individual Panchim OOD Financial statments, prepared in accordance with the International Accounting Standards

Within the framework of the audit of the financial statements, a review of compliance with the requirements of the tax legislation will be performed by our tax experts in order to identify any significant risks, omissions or errors that might have a material effect on the financial statements.


Sofia 1408+359 2 468 72 58

3 Audit approach

A tailored approach

To deliver precise and clear opinions, audit approach is tailored to your specific circumstances. We believe that the most important factor to achieving a successful audit is our thorough understanding of your business, risks and controls which ensures that audit issues are identified and resolved early to avoid surprises.

Audit process

The foundation of an audit which combines a clear audit opinion and commercial feedback is an in-depth understanding of your business, your operations and your performance. To do this we combine the extensive experience of our team and an audit approach which is focused on business risk and the key operating issues which really affect your performance - not just the financial reporting issues. An overview of each phase of the audit is set out on the diagram.

3

1

2

4 Completion

Planning

Control Evaluation

Substantive Testing

• Perform risk assessment procedures and

• Determine audit strategy and identify critical accounting matters

• Determine planned audit approach

• Understand accounting & reporting activities

• Evaluate design & implementation of selected controls

• Test operating effectiveness of selected controls

• Assess control risk and risk of significant misstatement • Plan substantive procedures • Perform substantive procedure • Consider if audit evidence is sufficient and appropriate • Conclude on critical accounting matters

• Perform completion procedures • Perform overall evaluation of the financial statement and disclosures •

1

2

1 2 Confirm decision on controls or substantive approach for each audit objective

Preliminary decision on controls or substantive approach for each audit objective

Form an audit opinion


Sofia 1408+359 2 468 72 58

4 The team

Other audit team members

The senior members of the audit team will be supported by assistants both qualified and undertaking professional training. In RPV Partners we regard it as most important to effectively train our staff and encourage them to obtain recognized professional qualifications.

We adopt a team approach to client service which recognises the importance of working with key members of your management team, and therefore of building lasting relationships.

Senior audit team members

For detailed presentation of the professional qualifications of the senior team members please refer to page 9.

THE TEAMTHE TEAM

Plamen SpasovLead Auditor

Teodora StoykovaAssistant Auditor

Peter MirchevAssistant Auditor

Rositsa PanayotovaCoordinator

Plamen SpasovLead Auditor

Teodora StoykovaAssistant Auditor

Peter MirchevAssistant Auditor

Rositsa PanayotovaCoordinator

OTHER SPECIALISTS(if required)

OTHER SPECIALISTS(if required)

Other specialists

When necessary, we will call upon the services of other specialists from our Juridical and Tax departments.


Sofia 1408+359 2 468 72 58

9

4 The Team (continued)We adopt a team approach to client service which recognizes the importance of working with key members of your management team, and therefore of building lasting relationships.

Our team will be structured as follows:

Plamen SpasovLeading AuditorPlamen Spasov is Certified Public Accountant from 1998 with a degree number 444. In 2000 he has specialized in "Audit of pension funds" by ICPA / USAID, and "International Standards on Auditing-USAID". In 2001 also he graduated audit rate at OEC and CNCC in France. Plamen Spasov has 16 years of experience.

Teodora StoykovaAssistant auditorTeodora Stoykova has 15 years experience as a Chief Accountant and 6 years experience as an Assistant Auditor, Teodora Stoykova has been working in variety of companies with different activity.


Sofia 1408+359 2 468 72 58

Assistant auditorPeter Mirchev is co-founder of RPV Partners.Peter Mirchev has master degree in “Finance” from Bulgarian Academy of Science, and currently is jurist in department “Law” at New Bulgarian University. Peter Mirchev has extensive experience as a Chief Accountant, Tax consultant and Assistant Auditor. He has experience at budgeting big investment projects and international funding planning.

CoordinatorRositsa Panayotova is co-founder of RPV Partners. Rositsa Panayotova has Bachelor degree in majors “Economy of Transport” and “Marketing”, Master degree in “Economy of Transport” and is taking her PhD in “Economy of Infrastructure” in UNWE. She has experience in Project management and financing at different projects from European and other donor funds. She is also certified internal auditor at Quality Management System ISO 9001: 2008.


Sofia 1408+359 2 468 72 58

4 The Team (continued)

5 Timing and fees

October 2014Optional : Interim audit for period 01.01.2014 – 30.09.2014

January – February 2015Full audit 01.01.2014 – 31.12.2014

CALENDARCALENDAR

Timing and submitting of the reports is dependent on your preparation of the information necessary for the audit.

This information will include a final trial balance, a balance-sheet and a profit and loss account as at

31.12.2014, as well as any information required by us in our Prepared-by-client (PBC) list. It should be presented to us no later than two weeks before the submission of the

draft audit reports.

Timing and submitting of the reports is dependent on your preparation of the information necessary for the audit.

This information will include a final trial balance, a balance-sheet and a profit and loss account as at

31.12.2014, as well as any information required by us in our Prepared-by-client (PBC) list. It should be presented to us no later than two weeks before the submission of the

draft audit reports.

FeesIt is our normal practice to charge fees by reference to the time spent and the hourly charge-out rates of the staff involved. The charge-out rates reflect the seniority of the staff involved in the work. Our total proposed fee for the services to be provided to Panchim OOD, as specified in Scope of work, is allocated as follows:

Timing

The fees above are based on the estimated time required to complete the work as specified in Scope of work. These rates reflect the seniority and experience of the staff involved.Out-of-pocket expenses, if any, arising from the engagement, will be recharged at cost. VAT currently at 20% will be added to our fees and expenses. With regard to the payment of our fees, we will require:

First option: for the audit of the financial statements as at 31 December 2014 with interim audit in October : 6 700 EUR

Second option: for the audit of the financial statements as at 31 December 2014 without interim audit : 5 900 EUR

We are in a position to adjust the timing above, should your activities so require.


Sofia 1408+359 2 468 72 58

Some of the companies with whom our team has working with:


Sofia 1408+359 2 468 72 58

Documents

PANCHIM OOD Proposal for audit services May 2014