Proposal for audit services for the accounting period ending 31 August 2008

Czech British School, s.r.o.
KPMG ČESKÁ REPUBLIKA

Introduction

The management of Czech British School, s.r.o. (further Czech British School) has requested a proposal for the provision of audit services for the accounting period ending 31 August 2008 as follows :

an audit of your statutory financial statements for the 19 month period ending 31 August 2008 in accordance with the Act on Auditors and International Standards on Auditing and the relevant guidance of the Chamber of Auditors of the Czech Republic a limited review of your financial statements for the 7 month period ending 31 August 2007 in accordance with the Act on Auditors and International Standards for Review Engagement and the relevant guidance of the Chamber of Auditors of the Czech Republic

This proposal is made by KPMG Česká republika, s.r.o. and is in all respects subject to the negotiation, agreement and signing of specific contracts.

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r. preparing marketing and comparative studies etc.o. 3 . and is in all respects subject to the negotiation. national legislation of parent companies. financial risk management and information risk management professionals. • • Comprehensive services • • KPMG has extensive experience in reviewing financial statements. Our team includes professionals from various areas – auditors.o. the information obtained during our audit of the financial statements can be used for other related services.Boarding school. prepared under Czech and other accounting standards (IFRS. US GAAP.g. EU Directives. agreement and signing of specific contracts. due diligence. If you choose KPMG. s.o. etc. etc. implementation of new information technologies. osmileté gymnázium v Babicích. review of the internal management system. s. The knowledge and deep understanding of our client‘s business is fundamental to the KPMG audit approach. The results of our audit work bring a consistent approach to dealing with issues in individual companies. tax advisory services.Why KPMG Czech Republic? • Knowledge of the Czech British School.). s. assessing information system risks. – see an overview of KPMG clients. This proposal is made by KPMG Česká republika.r. e. • Experienced and stable multi-disciplinary team • KPMG has a team of top professionals who have extensive experience in auditing major companies in various industrial and commercial sectors. tax advisors.r. line of business • • KPMG provides audit and advisory services to companies in the same or similar line of business as International School of Prague or OPEN GATE .

• • • This proposal is made by KPMG Česká republika. KPMG International provides no client services. We recognize that major global companies with operations in diverse countries have complex needs – whether they are addressing strategic and risk management issues. KPMG assists its clients in focusing on the identification of opportunities to improve performance and shareholders‘ or member’s value. we keep up-to-date with the developments in International Accounting Standards.KPMG worldwide • KPMG is a global network of professional firms providing Audit. KPMG member firms are committed to being the business adviser of choice to the world’s most admired global organizations. We operate in 144 countries and have more than 104. We believe that this knowledge enables us to help our clients to achieve the best results in their respective industries. Tax. s.000 professionals working in member firms around the world. cross-border mergers or acquisitions. 4 . using our global network. Fundamental to KPMG’s approach is the thorough knowledge and deep understanding of our clients’ industries.o. KPMG member firms serve many of these global companies. The independent member firms of the KPMG network are affiliated with KPMG International. This is why we invest in continuously improving our knowledge of the industries we serve. agreement and signing of specific contracts. organizational and infrastructure change.r. Through our global network of linked practices. foreign investments and other issues. a Swiss cooperative. professional skills and the very latest in knowledge-sharing tools and communications. Thanks to a thorough knowledge of the risks and limits of individual lines of business. accounting and tax legislation of EU member states and have access to information that can be used for effective economic management. and Advisory services. and is in all respects subject to the negotiation.

In addition to audit we provide tax services. Currently. a total of 28 qualified foreign practitioners are employed.r. KPMG Czech Republic was awarded 1st place in the category named “Services For Companies” in the announcement of the 100 most admired companies in the Czech Republic in 2006 and 2007 (the CZECH TOP 100). Our services are tailored to the needs of both local and foreign clients. with offices in Prague. 23 are partners. Of our 528 professionals. At KPMG Czech Republic. risk advisory services and financial advisory services. agreement and signing of specific contracts. • • • • This proposal is made by KPMG Česká republika. Brno. 24 certified auditors. s. KPMG Czech Republic employs 650 people. 5 . KPMG Czech Republic offers a wide range of advisory services aimed at improving your business. when the first office in Prague was opened. České Budějovice. 68 certified accountants and 42 tax advisors.o.KPMG in the Czech Republic • KPMG has been active in the Czech Republic since 1990. Jablonec nad Nisou and Ostrava. and is in all respects subject to the negotiation.

o. osmileté gymnázium v Babicích This proposal is made by KPMG Česká republika. and is in all respects subject to the negotiation.r. s.r. s. (in alphabetical order): • • • • • EuroManagers Institut environmentálních služeb International School of Prague New York University OPEN GATE – boarding school.Our clients I • Our teams’ knowledge in various lines of business enables us to provide the best services to a large number of clients. agreement and signing of specific contracts.o. 6 . Our experience includes cooperation with the following clients whose business activities are similar to those of Czech British School.

and is in all respects subject to the negotiation. pojišťovna Nationale-Nederlanden životní pojišťovna OKD (group) Plus Discount PPF (group) První novinová společnost Siemens (group) Skanska (group) Telenor Česká republika Toyota Peugeot Citroën Automobile Czech Živnostenská banka This proposal is made by KPMG Česká republika.r. agreement and signing of specific contracts.o.Our clients II Our major clients in other lines of business (in alphabetical order): • • • • • • • • • • • • • Allianz pojišťovna Barum Continental BAWAG Bank CZ Celestica Ráječko Citibank Česká pojišťovna (group) ČEZ ČSOB Pojišťovna DHL Information Services (Europe) ECM Real Estate Investments EUROPHARM GE Money Bank HVB Bank Czech Republic • • • • • • • • • • • • • • IMMOEAST Corporate Finance Consulting J & T BANKA K & K Capital Group Kooperativa. s. 7 .

agreement and signing of specific contracts. our Ethics and Compliance Group generates a conflict report from this database.Independence. Our Conflicts Check System is based on a database that contains up-to-date information on current and prohibited relationships. All information received during engagements is treated as confidential. • • • This proposal is made by KPMG Česká republika. including other KPMG personnel. s. A KPMG internal application (called Sentinel) enables an engagement team and the lead audit engagement partner to review and approve KPMG’s service relationships with business entities worldwide. 8 . support. including administrative. and the engagement partner reviews the report and acts on its findings. Conflicts. helping to ensure that no KPMG engagement team anywhere in the world unknowingly performs a prohibited service for an audit client or its affiliates in another country. and technical staff involved in the engagement. Conflict Checks and Confidentiality • Independence – KPMG has a web-based tracking application (KPMG’s Independence Compliance System (KICS)) which monitors KPMG’s investments and other financial interests. At the request of the engagement team.o. Permitted Services. and is in all respects subject to the negotiation.r. Confidentiality. (except for members of their relevant client service team and authorized personnel of the applicable client or that client's representatives). All KPMG personnel. KPMG has clear internal directives with respect to the confidentiality of client-related issues. as well as partners’ and managers’ personal investments that could compromise independence. sign an agreement not to discuss matters relating to the engagement with anyone.

o. and is in all respects subject to the negotiation. Reflecting our traditional commitment to leadership in audit quality. We have long pursued this objective through the continuous assessment of our audit procedures. their investors and the regulatory authorities. it meets KPMG’s goal of continuing to provide independent. rigorous and high quality audits. 9 . KAM is an acknowledgement of and response to the need for listed companies in particular to demonstrate maximum credibility and transparency in their reporting. agreement and signing of specific contracts.r. making sure that they remain as robust as possible and that they keep pace with the latest requirements. our new approach goes beyond the rules developed to rebuild confidence in financial reporting. The most recent evolution of our audit process is KAM – the KPMG Audit Methodology. • This proposal is made by KPMG Česká republika. At the same time. s.KPMG Audit Methodology (KAM) I • KPMG is always looking to strengthen audit quality in line with the changing expectations of our clients.

This means that. the American Institute of Certified Public Accountants and the Public Company Accounting Oversight Board. where the risks of potential misstatement are greatest and the effectiveness of internal controls in mitigating these risks. those adopted by the Institute of Chartered Accountants in England & Wales. accounting policies and controls. 10 . for example. By emphasizing the critical nature of substantive procedures. s. and is in all respects subject to the negotiation. risks and controls • Every aspect of KAM involves the clearest possible focus on the client’s financial statements. in any location where audit work needs to be carried out. • Understanding the business by using industry-experienced professionals • The quality of our audit work depends on deploying professionals with precisely the right combination of technical skills and relevant industry experience. Global audit consistency is further reinforced through sophisticated technology and rigorous oversight. the audit procedures to address those risks. These include. our firms’ clients can be sure it will be performed by professionals working to the same methodology. Using multi-disciplinary teams. • A critical emphasis on the key procedures. This proposal is made by KPMG Česká republika. together with the financial reporting issues specific to each organization’s industry and operations. reinforced through rigorous co-ordination and continuity • KAM is used by KPMG’s auditors across all the countries in which KPMG firms operate worldwide. processes and documentation.KPMG Audit Methodology (KAM) II There are four key principles that underpin KAM: • Full adherence to national and international accounting standards • Our audits are planned and designed to be performed in accordance with International Standards on Auditing. KAM is designed to identify the risks that affect key captions.r. effective risk assessment and control testing activities. • Global consistency. we develop a strong understanding of our clients’ business processes. International Financial Reporting Standards and relevant national standards.o. agreement and signing of specific contracts.

s. agreement and signing of specific contracts. and is in all respects subject to the negotiation. .KPMG Audit Methodology (KAM) III A clear focus on your financial statements • These are the key phases that KAM defines for delivering the sharpest focus on the integrity and accuracy of our firms’ clients’ financial statements: KPMG Audit Methodology Perform risk assessment procedures and identify risks Determine audit strategy and identify critical accounting matter Determine planned audit approach s 1 Planning 1 2 Control Evaluation 2 Understand accounting and reporting activities Evaluated design and implementation of selected controls Test operating effectiveness of selected controls Assess control risk and risk of significant misstatement Plan substantive procedures Perform substantive procedures 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 Form an audit opinion option Confirm decision on controls or substantive approach for each audit objective 11 3 Substantive Testing 4 Completion 1 Preliminary decision on controls or substantive approach for each audit objective 2 This proposal is made by KPMG Česká republika.r.o.

s. observation and inspection. analytical procedures. Our starting point will be to identify the areas where the risk of material misstatement in your financial statements is greatest through structured interviews with your management. and is in all respects subject to the negotiation.Planning • We will use a risk-based approach to understand Czech British School’s business. industry and environment. This will involve considering Czech British School’s: • • • • • Financial reporting framework Business and industry Accounting policies and practices Financial performance Internal controls.r. agreement and signing of specific contracts. 12 . Timelines: Interim audit This proposal is made by KPMG Česká republika.o.

Control evaluation • Using a structured approach. 13 . agreement and signing of specific contracts. our control evaluation may include: • • • • The design and implementation of company-wide controls Understanding the relevant accounting and reporting activities ‘Walk-through’ tests of selected transactions to confirm our understanding of how your accounting and controls work Testing the operating effectiveness of selected controls. s. timing and extent of our substantive procedures. Timelines: Interim audit This proposal is made by KPMG Česká republika. we can evaluate Czech British School’s controls to assess the risk of significant misstatement for each audit objective. and is in all respects subject to the negotiation.o. For audit objectives where we plan to rely on controls to modify the nature.r.

Timelines: Interim and final audit This proposal is made by KPMG Česká republika. account balance or disclosure Our assessment of the risks of material misstatement identified during planning The effectiveness of controls over these risks.Substantive testing • We will test selected audit objectives using substantive analytical procedures. s. tests of details or a combination of the two. In designing our substantive procedures. as well as substantive procedures directed towards any fraud risk we have identified. and is in all respects subject to the negotiation.o.r. 14 . agreement and signing of specific contracts. we will consider: • • • The characteristics of the class of transaction.

such as litigation and claims.Completion • • • We will review Czech British School’s financial statements and determine whether the audit evidence obtained for each audit objective reduces the risk of material misstatements to an acceptably low level. We will form conclusions on specific topics. Timelines: final audit This proposal is made by KPMG Česká republika. agreement and signing of specific contracts. and prepare a final evaluation of any fraud-related matters. and is in all respects subject to the negotiation.r. 15 . s. Our audit opinion will be based on a review of the final financial statements and an evaluation of all audit evidence in accordance with applicable auditing standards.o.

agreement and signing of specific contracts.r. hands-on approach that aims to anticipate issues and provides practical support in resolving them A robust audit opinion. and is in all respects subject to the negotiation. • Our audit includes in particular: • • • • Identification of the company’s strategic and business risks in order to focus our work on the most significant areas of the financial statements Cooperation with other professional KPMG Czech Republic departments – including tax and information risk management. risk management and corporate governance framework A clear and consistent focus on key issues across all your worldwide operations No-surprises reporting which meets your deadlines A year-round. s. 16 . Cooperation with employees in the accounting department in order to achieve a joint approach to the audit and therefore reduce the time between closing the accounting books and issuing the audit report Effective communication of results to the management of the Czech British School. Exact dates of deadlines will be discussed with the management of the Czech British School later on. a true and fair record of the Company‘s assets and liabilities.o. in all material respects. we expect to map the internal control systems during the autumn and complete the audit in the spring of next year. financial position and results of operations for the given period in accordance with the Act on Accounting and relevant legislation in the Czech Republic. This proposal is made by KPMG Česká republika. etc. controls. • The scope of an audit • The scope of the audit work performed is designed to ensure that the financial statements of Czech British School present. equity.KPMG audit approach • Our audit of Czech British School will be designed to give you: • • • • • Fresh perspectives on opportunities to help secure continuous improvement in your financial processes. • Timelines • According to the audit plan.

and is in all respects subject to the negotiation. s. skills or tools. This proposal is made by KPMG Česká republika.Our team I • A team of professionals possessing the necessary knowledge. skills and experience is assigned to every KPMG engagement.o. accounting procedures. agreement and signing of specific contracts. The audit team may also include: • • • • • • • Tax professionals. internal controls and financial reporting issues specific to your industry and your company.r. including investment incentive specialists Information risk management professionals Forensic specialists Valuation specialists Financial instrument valuation specialists. The team’s ability to carry out a quality audit depends on a thorough understanding of the business processes. 17 . Our team therefore consists of individuals experienced in carrying out audits within the relevant industry and professionals with detailed knowledge of specific issues who would be pleased to provide assistance in those areas requiring specific knowledge.

She will identify.cz Position Partner in charge of the engagement . Short curriculum vitae of the team leaders is also included as part of this proposal. reporting directly to the lead partner.audit Lenka Sedláčková Manager . schedule.o. Petr Škoda.r.Our team II A table summarizing the names of key team leaders is presented below. and is in all respects subject to the negotiation. 18 . 222 123 548 pskoda@kpmg.audit • Partner in charge of the engagement Your lead audit engagement partner. agreement and signing of specific contracts. Name Petr Škoda Contact information tel. will serve as the primary contact for your management. and supervise the professionals who perform the day-to-day audit work for your organization. He has the overall authority and responsibility for the audit engagement and key conclusions reached by the engagement team on all accounting and auditing matters. • This proposal is made by KPMG Česká republika. Engagement Manager Lenka Sedláčková will serve as the day-to-day audit liaison between Czech British School and KPMG Czech Republic. s. 222 123 635 lsedlackova@kpmg.cz tel.

Of course. during which we will review our independence. internal control systems.r. • • This proposal is made by KPMG Česká republika. agreement and signing of specific contracts. Knowledge sharing is one of the major additional benefits of our services. or the preparation of the financial statements. you will be granted free access to key members of our audit team and meetings will be planned in advance. we will promptly agree on the dates of regular meetings or conference calls with the representatives of your company. discuss the progress of our audit work and answer any questions you may have concerning your industry.Client communication • Once appointed the auditor of your company. the audit team will also present you with any issues discovered during the audit at the earliest opportunity. Our team will be in regular contact with your Company throughout the year. s. We will be continuously sharing our experience of accounting. Our goal is to provide sufficient. 19 . your company’s business activities. We trust that you will be satisfied with the level and method of communication. and is in all respects subject to the negotiation.o. Irrespective of the subject. but not overburdening information. tax and information technology related issues with your employees. operations and accounting.

s. and is in all respects subject to the negotiation.o. agreement and signing of specific contracts. 20 . We expect to discuss any significant audit findings at the end of the individual audit phases. we will provide the companies with a detailed list of the supporting documentation required for the audit.r.review of the functionality of the internal control system for audit purposes Audit of statutory financial statements in accordance with the Act on Auditors A management letter setting out our recommendations September 2007 – 1 week August 2008 – 1 week Report on findings 31 October 2007 Management letter in English 31 August 2008 September 2008 – 1 week An audit report on the statutory financial statements in Czech and English Management letter in English 31 October 2008 n/a 31 November 2008 • Three weeks before we start our work.Schedule Provided service Proposed scheduling Deliverable Deadline A limited review in accordance with the Act on Auditors Interim audit . This proposal is made by KPMG Česká republika.

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