Your firm, WWW LLP, is the auditor of Walnut Ltd. The auditors report below was drafted by Beanie Junior, a staff accountant at the firm. Walnut Ltd. is a publicly-held company (incorporated under the Canada Business Corporations Act and traded on the Toronto Stock Exchange) with a year end of December 31, 2019. The report was submitted to the engagement partner who reviewed the audit working papers and properly concluded that an unmodified opinion should be issued. In drafting the report, Beanie considered the following:

The 2019 statements are affected by an uncertainty concerning a lawsuit, the outcome of which is material and properly disclosed and recorded in the financial statements. The company also has a significant number of derivatives which required extensive audit work to conclude there were no significant misstatements in these accounts.

Walnut Ltd. has two subsidiaries that are consolidated into the Canadian parent companys financial statements.

The audit work was fully completed and the audit report was accepted by Management and the Audit Committee of Walnut Ltd. on May 5, 2020.

____________________________________________________________________________________

The Independent Auditors Report on a Complete Set of General Purpose Financial Statements

To the Board of Directors of Walnut Ltd.

Report on the Financial Statements

We have audited the accompanying financial statements of ABC Company, which comprise the statement of financial position as at December 31, 2020, and the statement of comprehensive income, statement of changes in equity, and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2019, and of its financial performance and its cash flows for the year then ended in accordance with the applicable financial reporting framework).

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement.

In preparing the financial statements, management 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 intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Management is responsible for overseeing the Companys financial reporting process.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Provincial Ethics Standards Board for Accountants Code of Ethics for Professional Accountants together with the ethical requirements that are relevant to our audit of the financial statements in Hamilton, and we have fulfilled our ethical responsibilities in accordance with these requirements and the Code. We believe that the audit evidence we have obtained is appropriate to provide a basis for our opinion.

Auditors Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain limited assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Limited assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with CASs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

May 26, 2020

Required

Identify the deficiencies in the order in which they appear in the auditors report drafted by Beanie. Do not redraft the report.

Source CAS 700, 701, 706 and 710.