10:05     WEALTHMARK INTL<00039> - Announcement (3)                           

    staff.                                                                    
                                                                              
    Recommendations for Rectification of Deficiency                           
                                                                              
    HLB recommends that proper stock in and out records should be properly    
    maintained by the staff in the warehouse and that separate security       
    guard be employed to check on all stock moving in and out of the          
    warehouse.                                                                
                                                                              
    V.   Inventory Obsolescence                                               
                                                                              
    Establishment of policy for inventory obsolescence                        
                                                                              
    There was no formal policy implemented for evaluating inventory,          
    material, component parts, and finished goods for obsolescence.           
                                                                              
    Recommendations for Rectification of Deficiency                           
                                                                              
    During regular stock takings, the management should identify all slow     
    moving stocks being recorded. Provision for impairment and obsolescence   
    on stock should be made with the approval of the financial controller     
    upon identification of the obsolete stocks.                               
                                                                              
    VI.   Purchase Cycle                                                      
                                                                              
    Placement of Orders                                                       
                                                                              
    Inadequate control in authorisation                                       
                                                                              
    Inadequate authorisation and insufficient supervision by appropriate      
    personnel on purchase of raw material were noted. Purchase orders         
    require the sole initiation and execution by the Purchase Officer.        
                                                                              
    Recommendations for Rectification of Deficiency                           
                                                                              
    HLB suggests that a more senior level of personnel should authorise the   
    purchase transactions instead of relying solely on the Purchase Officer.  
     The senior personnel should also review the details on each purchase     
    transaction as to whether or not the purchase quotation price is fair     
    and on an arms' length basis; whether or not the purchase quality is      
    adequate and whether or not the purchase quantities are accurate as per   
    the purchase order.                                                       
                                                                              
    VII.   Management Letter Point for the Year ended 31 December 2003        
                                                                              
    Apart from all the cycles mentioned above, HLB also noted that the        
    Company has not formally documented the written personnel polices and     
    procedures. The Company's auditors have stated this weakness in their     
    Management letter for the year ended 31 December 2003, details of which   
    are shown as follows:                                                     
                                                                              
    Personnel Policies and Procedures                                         
                                                                              
    Observation                                                               
                                                                              
    The Group has no formally documented, written personnel policies and      
    procedures. Such policies help eliminate potential conflicts between      
    employers and employees.                                                  
                                                                              
    Recommendation                                                            
                                                                              
    It is recommended that a personnel policy manual be established that is   
    tailored to fit the Group's staff and operational requirements.           
                                                                              
    The main purpose of a personnel policy manual is to present an            
    employer's requirements for standards, ethics and policies in the         
    workplace. It is useful to both the employer and employees by providing:  
                                                                              
                                                                              
    *   A standard for fair and consistent treatment for all employees;       
                                                                              
    *   Advising employees of corporate guidelines, benefits and              
    administrative procedures;                                                
                                                                              
    *   Defining management expectations of employee responsibilities; and    
                                                                              
    *   Detailing expectations of equality, privacy, safety and security.     
                                                                              
    It is strongly recommended that the Company should implement the          
    recommended procedures as suggested by the Company's auditors for its     
    internal control system on personnel and employees.                       
                                                                              
    Apart from the aforementioned, there was one more weakness.               
                                                                              
    Budgeting