20-11133-mg Doc 1776 Filed 06/09/21 Entered 06/09/21 14:10 ...

Dennis F. Dunne Evan R. Fleck Benjamin Schak MILBANK LLP 55 Hudson Yards New York, New York 10001 Telephone: (212) 530-5000 Facsimile: (212) 530-5219 Counsel for Debtors and Debtors-In-Possession

Gregory A. Bray MILBANK LLP 2029 Century Park East, 33rd Floor Los Angeles, CA 90067 Telephone: (424) 386-4000 Facsimile: (213) 629-5063

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------------------------------------------x : In re: : : AVIANCA HOLDINGS S.A., et al.,1 : : Debtors. : : -----------------------------------------------------------------x

Chapter 11 Case No. 20-11133 (MG) (Jointly Administered)

NOTICE OF PROPOSED ADDITIONAL AUDIT SERVICES

TO BE PERFORMED FOR DEBTORS BY KPMG S.A.S.

PLEASE TAKE NOTICE that, pursuant to the Order Authorizing and Approving

Retention and Employment of KPMG Latin American Affiliates to Provide Audit Services to the

Debtors Effective as of the Petition Date (the “Retention Order”) [Docket No. 1310], the above-

1 The Debtors in these chapter 11 cases, and each Debtor’s federal tax identification number (to the extent applicable), are as

follows: Avianca Holdings S.A. (N/A); Aero Transporte de Carga Unión, S.A. de C.V. (N/A); Aeroinversiones de Honduras, S.A. (N/A); Aerovías del Continente Americano S.A. Avianca (N/A); Airlease Holdings One Ltd. (N/A); America Central (Canada) Corp. (00-1071563); America Central Corp. (65-0444665); AV International Holdco S.A. (N/A); AV International Holdings S.A. (N/A); AV International Investments S.A. (N/A); AV International Ventures S.A. (N/A); AV Investments One Colombia S.A.S. (N/A); AV Investments Two Colombia S.A.S. (N/A); AV Taca International Holdco S.A. (N/A); Avianca Costa Rica S.A. (N/A); Avianca Leasing, LLC (47-2628716); Avianca, Inc. (13-1868573); Avianca-Ecuador S.A. (N/A); Aviaservicios, S.A. (N/A); Aviateca, S.A. (N/A); Avifreight Holding Mexico, S.A.P.I. de C.V. (N/A); C.R. Int’l Enterprises, Inc. (59-2240957); Grupo Taca Holdings Limited (N/A); International Trade Marks Agency Inc. (N/A); Inversiones del Caribe, S.A. (N/A); Isleña de Inversiones, S.A. de C.V. (N/A); Latin Airways Corp. (N/A); Latin Logistics, LLC (41-2187926); Nicaraguense de Aviación, Sociedad Anónima (Nica, S.A.) (N/A); Regional Express Américas S.A.S. (N/A); Ronair N.V. (N/A); Servicio Terrestre, Aereo y Rampa S.A. (N/A); Servicios Aeroportuarios Integrados SAI S.A.S. (92-4006439); Taca de Honduras, S.A. de C.V. (N/A); Taca de México, S.A. (N/A); Taca International Airlines S.A. (N/A); Taca S.A. (N/A); Tampa Cargo S.A.S. (N/A); Technical and Training Services, S.A. de C.V. (N/A); AV Loyalty Bermuda Ltd. (N/A); Aviacorp Enterprises S.A. (N/A). The Debtors’ principal offices are located at Avenida Calle 26 # 59 – 15 Bogotá, Colombia.

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2011133210609000000000001

Docket #1776 Date Filed: 06/09/2021

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captioned debtors and debtors in possession (collectively, the “Debtors”) have requested that

KPMG S.A.S. (“KPMG Colombia”) perform certain additional services not otherwise specifically

provided for in the Audit Engagement Agreement [Docket No. 1310, Exhibit 1], (the “Audit

Engagement Agreement”).

PLEASE TAKE FURTHER NOTICE that, in accordance with the procedures set forth

in the Retention Order, the Debtors hereby file KPMG Colombia’s Additional Engagement

Agreement and the Debtors’ acceptance, each attached hereto as Exhibit A (the “KPMG

Additional Agreement”).

Specifically, the Debtors have requested that KPMG Colombia perform such audit services

as KPMG Colombia and the Debtors shall deem appropriate and feasible in order to advise the

Debtors, including, but not limited to the following: (i) statutory audit services for Avianca

Holdings S.A., Aerovías del Continente Americano S.A., Tampa Cargo S.A.S, Taca International

Airlines S.A. Sucursal Colombia, Avianca Costa Rica S.A. Sucursal Colombia, Avianca Ecuador

S.A. Sucursal Colombia, Regional Express Americas S.A.S and Aviateca S.A. Sucursal Colombia

for the year ending December 31, 2021; and (ii) audit of the consolidated financial statements of

Grupo Taca Holdings Limited and Taca International Airlines S.A. for the year ending December

31, 2021 (collectively, the “Proposed Additional Services”).2 The Debtors propose to pay KPMG

Colombia according to the procedures set forth in the Retention Order. Pursuant to the Retention

Order, and as described in greater detail in the KPMG Additional Agreement, KPMG Colombia

2 Please refer to the KPMG Additional Agreement for a complete description of the services to be provided by

KPMG Colombia to the Debtors.


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and the Debtors have agreed to a fixed fee of $1,831,3323 plus reimbursement of expenses and

value added tax.4

PLEASE TAKE FURTHER NOTICE that any objections or responses to the Proposed

Additional Services shall: (a) be in writing; (b) conform to the Federal Rules of Bankruptcy

Procedures, the Local Bankruptcy Rules for the Southern District of New York, all General Orders

applicable to chapter 11 cases in the United States Bankruptcy Court for the Southern District of

New York, and the Order Implementing Certain Notice and Case Management Procedures

[Docket No. 47] (the “Case Management Order”); (c) be filed electronically with this Court on the

docket of In re Avianca Holdings S.A., Case 20-11133 (MG) by registered users of this Court’s

electronic filing system and in accordance with the General Order M-399 (which is available on

this Court’s website at http://www.nysb.uscourts.gov) before June 23, 2021 (the “Objection

Deadline”); and (d) be promptly served on the following parties: (i) the Chambers of the Honorable

Martin Glenn, United States Bankruptcy Court for the Southern District of New York, One

Bowling Green, New York, NY 10004; (ii) the Debtors, c/o Richard Galindo

([email protected]); (iii) Milbank LLP (Attn: Evan R. Fleck, Esq., Gregory A. Bray,

Esq., and Benjamin Schak, Esq. ([email protected], [email protected], and

[email protected])), counsel for the Debtors; (iv) Willkie Farr & Gallagher LLP (Attn: Brett

H. Miller, Esq. and Todd M. Goren, Esq. ([email protected] and [email protected])),

counsel to the Committee; (v) William K. Harrington, U.S. Department of Justice, Office of the

3 The total amount due under the KPMG Additional Agreement is $1,867,332, of which $36,000 is attributable

to, and will be paid by, certain non-Debtor affiliates of the Debtors. 4 Pursuant to the KPMG Additional Agreement, hourly services may be charged by KPMG Colombia for certain

services. If the Debtors and KPMG Colombia determine that hourly services become necessary, a supplement to the KPMG Additional Agreement setting forth the proposed hourly rates will be filed with the Court pursuant to the procedures set forth in the Retention Order.


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U.S. Trustee, 201 Varick Street, Room 1006, New York, NY 10014 (Attn: Brian Masumoto, Esq.

and Greg Zipes, Esq.); (vi) the Securities and Exchange Commission, 100 F Street, N.E.,

Washington, DC 20549; (vii) the Federal Aviation Administration, 800 Independence Avenue,

S.W., Washington, DC 20591 (Attn: Office of the Chief Counsel); and (viii) Baker Botts L.L.P.

(Attn: Jacob R. Herz, Esq. and Robin Spigel, Esq. ([email protected] and

[email protected])), counsel for KPMG Colombia.

PLEASE TAKE FURTHER NOTICE that, if no objections are received by the

Objection Deadline, the Proposed Additional Services will be deemed approved without further

notice or order of the Court.

Dated: New York, New York June 9, 2021 /s/ Evan R. Fleck

Dennis F. Dunne Evan R. Fleck Benjamin Schak MILBANK LLP 55 Hudson Yards New York, New York 10001 Telephone: (212) 530-5000 Facsimile: (212) 530-5219 - and – Gregory A. Bray MILBANK LLP 2029 Century Park East, 33rd Floor Los Angeles, CA 90067 Telephone: (424) 386-4000 Facsimile: (213) 629-5063 Counsel for Debtors and Debtors-in-Possession


Exhibit A

Additional Audit Engagement Agreement


Bogotá, D.C., May 14, 2021

Mr. José Sanabria C. Legal Representative KPMG S.A.S. Calle 90 No. 19C - 74 Bogotá D.C.

Asunto: Acceptance of your professional services proposals identified with the code AUDM&SBOG-PRO2021-P-360

Dear Mr. Sanabria:

We confirm our understanding of and accept in full expressly and unconditionally, the contents of your professional services proposals identified with the code AUDM&SBOG-PRO2021-P-360 dated April 14, 2021, and their terms and conditions (Appendix I) that are an integral part of them, all of which I have read and fully understand.

Please note that Avianca does not accept to grant a license to the name, logo and registered trademarks of the companies of Avianca Holdings, S.A. indicated in the first paragraph of the trademark use and intellectual property section in the aforementioned KPMG´s proposals.

Very truly yours,

Richard Galindo Sanchez Legal Representative


OFFICIAL AND COMPLETE TRANSLATION from an Original SPANISH document “Proposal of Statutory Audit Professional Services in Colombia for Avianca Holding S.A.”, bearing my signature and official seal on this 20th day of May, 2021; I am authorized as official translator by Resolution No. 5996 of Ministry of Justice. The translator does not assume any responsibility for the content of the original text.

___________________________________________________________________________________________________

TRADUCIENTIFICAS Carrera 83 No. 24B-20 Of. 402 Teléfono: 3118998844 Bogotá D.C. E-mail: [email protected]

Avianca Holdings S.A.

Proposal of Statutory Audit Professional Services in Colombia

Abril 14, 2021

KPMG.com.co

Proposal of Statutory Audit Professional Services in Colombia

April 14, 2021



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Proposal of Statutory Audit Professional Services Avianca Holdings S.A.

Content Page

Cover Letter 3

Economic Proposal - Fees for Services 4

Our Approach to the Statutory Audit Service 7 1. Audit according to your needs

1.1. Objective 1.2. Scope 1.3. Methodology

2. Work plan and service period Work plan

3. Work team Team with experience

4. Deliverables 4.1. Reports to be issued

• Report as statutory auditors • External audit report for Avianca Holdings S.A. • ISAE report on internal control and acts of administrators • Report on Money Laundering and Terrorism Financing Self-Control and Risk Management

System • Interim financial information review report

4.2. Other reports or certifications 4.3. Recommendation letters

5. Ethics and independence – Free of conflicts of interest 6. Warning of relevant matters 7. Efficiency in audit 8. Service quality 9. Comprehensive support

Other Considerations 18 • Service rendering • Client commitment • Prevention of money-laundering and terrorism-financing • Anti-bribery and anti-corruption • Use of electronic mail and technological resources • Trademark use and intellectual property • Conflicts of interest • Outsourcing • Data protection and confidentiality

Appendices 1. Terms and conditions 2. Model of acceptance letter to the proposal 3. Technical Appendix. Using technological resources 4. Source of Funds Declaration of Clients and Third Party (Legal Entity)



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April 14, 2021

Mr. Adrian Neuhauser Chief Financial Officer Avianca Holdings S.A. Avenida Calle 26 No. 59 - 15 Bogotá D.C.

Subject: Proposal of Statutory Audit Professional Services in Colombia

Dear Mr. Neuhauser:

Shortly we will complete our activities in connection with the Statutory Audit services for the companies of the Group Avianca Holdings S.A. in Colombia and Statotory Audit of Avianca Holdings S.A., which you represent, as of and for the period ended December 31, 2020. We take this opportunity to thank you and, through you, to the companies of the Group’s maximum authority and the other executives of the companies of the Group, for the trust placed in the service that we have been rendering continuously.

On that basis, we express our desire to continue with the provision of the Statutory Audit service of Avianca Holdings S.A. and the consolidated financial statements audit of Grupo TACA Holdings Limited and Taca International Airlines S.A. , for the year 2021, under the recapitulation of the service that we present below so that it is subject to approval by the maximum authority.

This proposal is presented to formalize the Statutory Audit service in Colombia for the year 2021 for the companies of Group Avianca Holdings S.A.

If we are reelected or reappointed as statutory auditors for the 2021 term, we will continue to provide the service on a continuous basis.

The terms and conditions of our integrated audit service for F 20 purposes will be formalized in a separate letter issued to the Audit Committee, once we have completed our interim service evaluation process.

Very truly yours,

[Signed]

José Sanabria C. Legal Representative

Copy: Mr. Edwin Novoa Duarte – Director of Financial Statements

AUDM&SBOG-PRO2021-P-360



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Proposal of Statutory Audit Professional Services in Colombia Avianca Holdings S.A.

Economic Proposal – Fees for

Services Our fees were calculated considering our proposal of February 5, 2018, detailed, as follows:

Company’s name Total 2021

Avianca Holdings S.A. 1) US$ 180.000 Aerovías del Continente Americano S.A. 1.281.666 Tampa Cargo S.A.S. 130.000 Grupo Taca Holdings Limited 2) 158.866 Taca International Airlines S.A., Sucursal Colombia 20.000 Avianca Costa Rica S.A., Sucursal Colombia 20.000 Avianca Perú S.A., Sucursal Colombia 16.000 Avianca Ecuador S.A. (Aerogal), Sucursal Colombia 30.000 Latin Logistic S.A.S. 20.000 Regional Express Americas S.A.S. 5.000 Aviateca S.A., Sucursal Colombia (*) 5.800

US$ 1.867.332

Our fees will be estimated in pesos at the exchange rate on the day of billing.

The fees for Statutory Audit Professional services for the year ending on December 31, 2021, will be indeterminate but determinable by Avianca Holdings S.A.’s Audit Committee who will approve the scope of the work and the fees to be paid for the provision of the service.

1) These fees include the review of the interim consolidated financial statements of Avianca Holdings S.A. for the periods ended on March 31, June 30, and September 30, 2021 and in accordance with IAS 34 and the International Standards on Review Engagement (ISRE) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”issued by the International Auditing and Assurance Standards Board.

2) Includes the fees for the audit of the consolidated financial statements of Taca International Airlines S.A.

We propose that such fees be billed and paid in the first five days of each month, since the date of acceptance of our proposal by the Companies of the Group, or by whoever has been delegated by them, until December 2021. We are willing to review any other form of payment that is convenient for the parties.

Our audit fees do not include VAT, nor any of the expenses required to perform our work, including the payment of fees and expenses of lawyers in relation with our retention and matters related to our fees in the cases of Chapter 11, KPMG LLP in the United States expenses, assisting us in matters related to the



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hour details required by Court in the cases of Chapter 11, transport, airplane tickets, accommodation, food, allowances, etc., all of which will be billed separatedly.

The following events, which should not be considered restrictive but enumerative, could involve

additional service hours not estimated in the above fees and, consequently, the Companies of the

Group’s maximum authority understands and recognizes that are therefore billable to you:

a. Significant weaknesses in internal control or delays in the delivery of information or its quality that make us spend extra time to conclude our tests, or that require us to perform additional procedures or modify the audit work team.

b. Additional reviews of an investigative nature concerning fraud identification or follow up.

c. Significant increase of operations or audit requirements for new accounting closings during the year.

d. Increase by duplication of audit tests on internal control, as consequence of changes made by the Companies of the Group during the period to adjust to the Accounting and Financial Reporting Standards accepted in Colombia.

e. Attention to requirements from courts, judges or the office of the prosecutor to testify on legal processes involving the Companies of the Group.

f. Any additional work not required as part of this proposal, for instance, opinions on interim closings required for some purposes or additional audit requirements made by a third party.

g. Issuance of reports for their incorporation in prospects for issuing securities abroad and/or interim reviews for the same purpose, for which the purpose, scope and activities will be agreed with the Companies of the Group.

h. During the execution of our services, we will answer any questions about routine accounting, auditing or regulatory matters. Special works related to audit or queries on matters that require investigation, will be billed separately from the aforementioned fees.

i. Any additional evaluation arising from acquisitions, business combinations or mergers.

j. Any certification not demanded by law that the Companies of the Group, your advisors or third parties request to be issued by the statutory auditor that is not defined or required to date.

k. Changes in current regulations at the time of presenting this proposal that involve additions to the work to be performed by the Statutory Auditor.

l. Requirements of special information or analysis demanded by the State authorities which are different from the subscription of certifications typical of the Statutory Auditor that are taken directly from your accounting records.

m. Additional requirements by the tax authorities, regarding the signing of tax returns. Our fees do not include the review or signing of tax returns and certifications corresponding to periods different to those engaged; if required, we will bill the hours invested, the rate per hour is indicated further.



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In order to determine the additional fees, the fee will be reviewed with the Financial Statements Director and approved by the Audit Committee. The average hourly rate wiil be applied depending on the team that will provide the service; in the event that the need arises to assign professionals with specific knowledge, we would apply the relevant rates per hour.

The fees are calculated on the basis of the estimated man/hours for each category of our professionals who will participate in the work.

If for any reason it is not possible to consider the continuity of our services for the new period, or facts beyond our control prevent the successor's possession, the Firm will continue performing the tasks for which it was engaged without solution of continuity, until the moment in which we are relieved in the functions of the Statutory Audit. Under these circumstances, at the end of each month we would bill minimum fees equivalent to the monthly quota determined for our fees for the fiscal preceding period, increased by the variation in the consumer price index.

This proposal accepted will serve as security to be collected, by this way, by the unpaid amounts during the commercial relationship term which refers this offer.

Our fees shall not be paid in cash, since they must only be paid through a bank transfer as instructed in the provisions contained on our corresponding invoices.



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Our Approach to the Statutory Audit and External

Audit Service



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1. Audit according to your needs

1.1. Objective

Statutory Audit

Provide the Statutory Audit services regulated by the norms in force in Colombia and those applicable to the Companies of the Group and in the Companies of the Group’s bylaws as long as they are compatible with duties and obligations provided for in the legal and professional regulations applicable to public accountants and do not oppose the principles that govern the accounting profession, for the year ending December 31, 2021.

Financial Statements Audit

We will perform the audit of the consolidated financial statements of Avianca Holdings S.A., Grupo Taca Limited and Taca International Airlines S.A., prepared in accordance with the International Financial Reporting Standards.

Quarterly reviews

We will perform quarterly reviews of the consolidated financial statements of Avianca Holdings S.A. to be presented to the Financial Superintendence of Colombia.

1.2. Scope

We confirm our understanding of the nature and scope of the Statutory Audit service in the following paragraphs:

• Financial Audit - KPMG will perform the Statutory Audit duties of the Companies of the Group that have obligations in Colombia in accordance with the International Standards on Auditing (ISA)in force in Colombia and will perform the audit of the consolidated financial statements of Avianca Holdings S.A., Grupo Taca Limited and Taca International Airlines S.A. in accordance with the International Audit Standards. Those standards require that we plan and perform the audit to obtain a reasonable assurance about whether the financial statements, taken as a whole, which comprise the statements of financial position, comprehensive income, the statements of changes in equity and cash flows and the notes including a summary of significant accounting policies and other explanatory notes, are free of significant errors; we will examine, on a test basis, the accounting records and the audit procedures that we consider necessary in the circumstances in order to obtain a reasonable assurance that let us sustain our report on the financial statements. Likewise, we will test the evidence supporting the amounts and related disclosures in the financial statements. Also, we will assess the accounting principles used, the significant accounting estimates made by management as well as the overall financial statement presentation.

• Internal Control Audit - As a base to define the audit tests, we will perform an analysis of the internal control structure, in particular with regards to the preparation and presentation of the financial information, in order to determine the nature, extent and opportunity of the audit procedures; such analysis will be the base for the statutory auditor to determine



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whether the Companies of the Group have observed internal control, conservation and custody of the Companies of the Group’s assets and those of third parties that are in its possession, to express it in his report to the owners and third parties interested in the Companies of the Group, considering if such internal control structure is based on the criteria in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, COSO, or other internal control system implemented by management.

• Compliance Audit – We will review compliance with legal and accounting regulations applicable to the Companies of the Group, the bylaws and the decisions made by the Companies of the Group’s maximum authority. As a result of our work, our report as Statutory Auditors will include our opinion as to whether the acts of management comply with the bylaws and the orders or instructions from the Companies of the Group’s maximum authority and on other legal requirements that apply to the Companies of the Group.

• Money Laundering and Terrorism Financing Self-Control and Risk Management System

The Audit scope includes the review of Money Laundering and Terrorism Financing risk as required by Transport superintendence. According to the results of our evaluations, we will decide the nature, timing and extent of other audit procedures that we consider necessary to apply according to the circumstances.

• Interim financial information review - In accordance with the requirement of the Financial Superintendence of Colombia, we will review the condensed interim consolidated financial statements of Avianca Holdings S.A. as of the quarterly periods ended on March 31, June 30 and September 30, 2021 prepared by management according to IAS 34.

Our review will be applied under the International Standard of Review Engagements (ISRE) 2410, “Review of Interim Financial Information Performed by the Independent Auditor”, contained in the current accounting regulations applicable in Colombia, with the objective of provide us with a base to inform whether something has come to our attention that make us believe the interim financial information is not prepared, in all material respects, in accordance with the Accounting and Financial Reporting Standards accepted in Colombia, including the requirements of International Accounting Standard 34 (IAS 34) - Intermediate Financial Information. This review consists of making inquiries, mainly to those responsible for the accounting and financial matters, as well as apply analytic and other review procedures and, ordinarily, it does not require the approval of the information obtained. The scope of an interim financial information review is substantially lower than the scope of an audit conducted under audit standards, which objective is to express an opinion on the financial statements and, therefore, we do not express such opinion.

The Companies of the Group’s management is responsible for the interim financial information, including the adequate disclosure. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the interim financial information, free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. As part of our review, we will request the administration representations in writing concerning assertions made in



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connection with the review. When any document that contains interim financial information indicate that it has been reviewed, our report also be included in the document.

An interim financial information review does not provide assurance that we will be aware of all the important matters that could be identified in an audit, moreover, we cannot depend on our work revealing if there is fraud or error, or illegal acts. However, we will inform you of any matter of material importance that draws our attention.

It is important to note that, for comparability purposes, the need could be generated to perform reviews to quarterly periods prior to those corresponding to the year ended 2021.

1.3. Methodology

The next graph shows the key activities selected that are carried out throughout KPMG’s audit:

These activities will be carried out under the following premises:

Approach

• Our audit focus centers on the knowledge of the client inside the industry and the factors that could affect it.

• Through an "up to down" focus we obtain a perception of the control, communication and ordering used by management to conduct the business of the Organization.

1.Engagement

set-up

2. Risk

assessment

3. Tests

4.Completion

1.1 Pre-engagement

1.2 Engagement scope and scaling

1.3 Timing and resources

2.1 Enter or update accounts and balances

2.2 Materiality

2.3 Significant accounts and disclosures

2.4 Planning analytics

2.5 General risk assessment procedures

2.6 Entity and its environment

2.7 Entity level controls

2.8 High level controls2.9 Processes

2.10 KPMG professionals

2.11 General IT controls

2.12 Risk assessment and planning

discussion

2.13 Partner summary

3.1 Test of operating effectiveness of controls

3.2 Substantive testing

3.3 Substantive procedures for material non-significant accounts

3.4 Other substantive procedures

4.1 Reassess materiality

4.2 Risk assessment update

4.3 Final analytics

4.4 Overall evaluation

4.5 Financial reporting process

4.6 Reporting



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Evaluations and tests

• The evaluations and tests of the accounting internal control systems, including information technology, legal compliance and taxes are carried out by professionals trained in processes and developed by public accountants, systems engineers, lawyers and tax professionals.

• The scope of these evaluations and figures assessment is sufficient for the statutory auditor to express an opinion about the reasonability of the financial statements figures and whether there are adequate internal control measures and of legal compliance performed by management, in order to report on these issues to the owners and third parties interested in the Companies of the Group’s management and results.

2. Work plan and service period

Work plan

• The statutory audit working plan will be agreed with you once our appointment is formalized.

• Our audit plan, structured according to the methodology designed by KPMG, emphasizes on the following:

- The evaluation of the accounting internal control associated with the risks of the areas that have significant impact on the financial statements.

- The evaluation of compliance with laws and regulations of an accounting nature.

- Tests and conclusions on the reasonability of figures in the financial statements.

Statutory audit according to your needs

We present an approach to the work plan that we propose for the performance of the statutory audit service, which will be adjusted with the Companies of the Group, after our appointment or designation:



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3. Work team

Team with experience

• The Leader in charge of the External Audit service will be Eliseo Llamazares and of the Statutory Audit for the Companies of the Group will be José Sanabria.They will act as contact persons with your Presidency, Board of Directors and Audit Committee. They have the authority and responsibility for the audit work and for the key conclusions reached by the work team with regards to all accounting and audit matters.

• Who will act as Managers of the audit team, will be Raúl Ruiz, Ángela Pachón and Julián Cobos. They will serve as the day to day liaison between the Companies of the Group and KPMG. They will identify, plan and supervise the professional staff in charge of carrying out the daily audit tasks for your Companies of the Group and they will report directly to the audit leader.

• The Information Technology (IT) and Tax and Legal Area professionals will assist us in the review of the different information technology controls that impact the work of the statutory auditor and the tax and legal matters that impact the statutory audit. These services neither include an IT audit, nor management, tax or legal assistance.

• KPMG assigns multidisciplinary teams with knowledge and experience in your industry.

One of our Firm’s highest cost is represented in training investment that we provide to our professionals. The coaching program called KPMG Business School supports our professionals’ potential, focusing on technical, business and leadership capabilities topics with emphasis in ethics and risk sensibility, headed to the market needs, of our clients and professionals, who receive permanent training through virtual coaching, on-line, on-site education, e-learning and coaching supported on the web.

• Two factors converge in the development of our professionals: the technical knowledge and the experience in the work field; these elements are carefully supervised in different levels in our organization.

• Our professional development programs give an opportunity to our associates to develop a full professional career (from assistant to partner) with motivation and sense of ownership.

• The formation and experience of our professionals benefit our clients, because their evaluations are compared to the best international practices.

• Our professionals maintain open and honest communication at different levels inside your organization.



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4. Deliverables

4.1 Reports to be issued

• Report as statutory auditors

As part of our legal requirements as statutory auditors, we will perform compliance review procedures with the legal and accounting standards that apply to the Companies of the Group. As a result of these procedures, we will include in our report on the Companies of the Group’s separated financial statements as of and for the year ending December 31, 2021, prepared in accordance with the Accounting and Financial Reporting Standards accepted in Colombia, our opinion on the following aspects:

i) If the Companies of the Group’s accounting has been carried out in accordance with the legal standards and the accounting techniques.

ii) If the operations recorded on the Companies of the Group’s books and management acts comply with the Companies of the Group’s bylaws and the decisions from the Companies of the Group’s General Shareholders Meeting.

iii) If the Companies of the Group’s correspondence, the accounting vouchers, and the books of minutes and the stocks registers are properly kept and maintained.

iv) If there are adequate internal control measures and custody and conservation measures of the Companies of the Group’s goods and assets and third parties’ assets under its custody or control (including a statement on the implementation of risk management systems that apply).

v) If there is agreement between the final management report prepared by the Company’s management and the Company’s financial statements and if this management report includes the proof on the free circulation of invoices issued by sellers or suppliers.

vi) If the information contained in the reports of contributions to the integral social security system, particularly that related to its affiliattes and their base income, which is the base for the contributions, was taken from the accounting records, and the Companies of the Group is up to date in such contribution payments, and

vii) Any other statement that the Statutory Auditor must issue, in accordance with other applicable legal or regulatory obligations.

• External Audit Report

As a result of our audit procedures we will issue our report on the consolidated financial stetements of Avianca Holdings S.A., Grupo Taca Limited and Taca International Airlines S.A. as of December 31, 2021, prepared in accordance with the International Financial Reporting Standards.



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The statutory auditor's report of Avianca Holdings S.A. on the financial statements will be prepared for the year 2021 considering the amendments to the International Standards on Auditing - (ISAs) 700, 705 and 706, which imply a significant change in the content and presentation of the report and also considering the new ISA 701, which requires the inclusion of a paragraph of Key Audit Matters, which refer to those matters of major importance to the auditor and therefore require significant attention and relate mainly to areas of significant risk, application of significant judgments by the preparer of the information and the auditor and significant events or transactions that have taken place during the period.

All report on financial statements that are incorporated into bid documents in the public securities market must be duly authorized by KPMG.

• ISAE report on internal control and acts of administrators

The statutory auditor will issue a report on the internal control (including a statement on the implementation of risk management systems that are applicable) of maintenance and custody of the Companies of the Group’s assets or of third parties in its power and management acts as of December 31, 2021 adjusted to the statutory standards and to the decisions of the Company’s Maximum Authority, in compliance with the regulations in force in Colombia that include the International Standard on Assurance Engagements 3000 accepted in Colombia – ISAE 3000, translated into Spanish and issued in April 2009 by the International Auditing and Assurance Standards Board – IAASB.

• Report on Money Laundering and Terrorism Financing Self-Control and Risk Management System

As a result of our evaluations will issue a report on the Money Laundering and Terrorism Financing Self-Control Risk Management System in accordance with the required by the Transport Superintendence.

• Interim financial information review report

We will issue a review report addressed to shareholders of Avianca Holdings S.A. on the condensed consolidated financial statements of Avianca Holdings S.A., as of and the quarters ended March 31, June 30 and September 30, 2021, prepared in accordance with IAS 34.

4.2 Other reports and certifications

• We will issue other reports or certifications requested to the statutory auditor by the State monitoring and control entities or by the competent authorities, which we will issue based on the accounting records. If we are requested to certify non-accounting information, which scope is within the Statutory Auditor’s competence, we will issue them with the adequate support of management quoting the source.

• Our signatures in the tax returns have the scope indicated in article 581 of the Tax Code and do not have the scope of a review or tax advice.



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4.3 Recommendation letters

We will issue letters to management, as opportunities arise for improvement in the internal control system. This is one of the most outstanding benefits that we provide to our clients, as a result of the evaluations we carry out.

Our letters to management will include matters regarding the strengthening of internal control, inherent to the financial statements. These letters will be discussed with those responsible for the aforementioned processes before their final issue; the comments and suggestions of the participating area will be considered when preparing the recommendation and will be addressed to the different levels of the Organization: operations, management and strategy.

The content of our reports will be known to the auditees prior to their issuance. In the reports in which improvement plans are included, we will request responses about their implementation that is the exclusive responsibility of management and we will follow up later before the issuance of our final report.

5. Ethics and independence - Free of conflicts of interest

• Our credibility in the market is our major asset; ethics, integrity and professional independence are the cornerstone.

• KPMG is specially careful in:

- Fulfill the standards on ethics and independence, free of conflicts of interest.

- Perform the due diligence for acceptance of our clients.

- Train in values – highly sensible to these risks.

6. Warning of relevant matters

• Our audit throughout the year allows us to alert management about material situations for making timely decisions.

Content

Operating

level

Tactical

level

Strategic

level

Deviations in compliance of policies,

standards and procedures

Improving opportunities in the

processes

Improvements in productivity and

efficiency

Area Manager

Managements

Board of Directors /

General

Management



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• The identification of fraud, mistakes or illegal acts does not depend on our work. However, we will inform you of any important matter that may come to our attention.

• As part of our work, we will require written representations from Management regarding assertions made on the information and our work.

• Our procedures include fraud risk assessment, mainly because of the impact it might bring when generating errors in the financial statements, when the fraud exceeds the materiality levels we work with. This assessment does not imply a forensic audit; if it is required, this would be an additional service with a different approach from the Statutory Audit, which must be agreed separately.

7. Efficiency in audit

• Our audit is more efficient by using technological tools at different statutory audit stages; using technology allow us to improve the information analysis.

• The integrated focus in our work lessens the risk of errors with significant impact on the financial reporting and disclosures.

8. Service quality

• For KPMG the service quality backs up our global trademark credibility.

• Our human resources, the adherence to professional policies, the approach of our work, the supervision, the structured methodology and the follow up of our practice makes that our service accomplishes high quality standards.

• The tasks in KPMG are subject to a rigorous inter – office review from another member firms of the KPMG International network.

• Certification for the Management Systems ISO 9001: 2015 Quality and ISO 27001: 2013 Information Security

We have the certification granted by ICONTEC for the Management Systems ISO 9001: 2015 Quality and ISO 27001: 2013 Information Security. This is the result of our continuous improvement of our administrative and business processes, which enable us to deliver support and satisfaction to our clients.

• “Client Insight” Program , KPMG in Colombia

For us it is of vital importance to get the perception of the quality of service that we render to our clients. Periodically KPMG S.A.S. chooses a sample of clients to which our Strategy and Markets area requests an evaluation at the end of the project. If the Companies of the Group are included in this sample, you will receive a requirement to provide us a quality of service evaluation. In case you have a question, complaint, suggestion, congratulation or comment -PQR-, you can make the request to [email protected]


mailto:[email protected]


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• International Service Line – Hotline

Our clients count with mechanisms to confidentially report matters regarding possible irregular or suspicious activities by KPMG member firms, its management team or employees.

In the international page https://home.kpmg.com/xx/en/home/campaigns/2018/01/kpmg-international-hotline.html you will find information about the matters to notify, the policies on information privacy, anonymity, confidentiality and not retaliation, as well as the mechanisms to

make the report, either through this link or by writing to www.clearviewconnects.com.

• Contact with KPMG’s CEO

One of our main priorities is rendering quality services to our clients and knowing your experiences about the work developed by our Firm in your Companies of the Group. For that reason and the significance of your opinion for us, we have set up a communication channel in order to receive your comments and/or suggestions about our services and people.

Please contact our direct line of contact with KPMG’s CEO in Colombia: (1) 618 80 04 in Bogotá.

We are committed to your satisfaction!

9. Comprehensive support

We are interested in integrating a growth strategy in our relationship with the Companies of the Group, for which we offer comprehensive support to the Companies of the Group in the following aspects:

• We supply relevant and timely information for your industry which you may access visiting our web page www.kpmg.com.co in the links “Tendencias e Industrias”; likewise, you will also find the periodical bulletin with the latest KPMG Global’s studies on various industries in which it provides its services.

• We are committed to make of the Statutory Audit a service that fulfills your expectations by providing you with useful information that leads to improve the control with impact on your business. Therefore:

- We will assign committed and competent professionals, knowledgeable of adequate topics of the industry.

- We will apply the international standards and regulations of an independent audit incorporated in the KPMG's global methodology.

- We will use information technology tools to select and analyze samples to make more efficient the time of our work.

- We will interact with your employees to gather information in a quick and efficient way.


https://home.kpmg.com/xx/en/home/campaigns/2018/01/kpmg-international-hotline.html

https://home.kpmg.com/xx/en/home/campaigns/2018/01/kpmg-international-hotline.html

http://www.clearviewconnects.com/

http://www.kpmg.com.co/


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- We will coordinate the evaluation activities with your Internal Audit Department and will rationalize our fees with them. However, such coordination does not impair the necessary independence of the service.

• Our goal is to provide value in exchange for the fees agreed. Our professional satisfaction will come from working together with your Organization to make your business more successful.



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Other Considerations

Service rendering

• Our services may include advisory and evidence improvements, but all decisions related to the implementation of such advisory and evidence are the responsibility of management.

• Some of the tests are oriented to evaluate the quality of the internal control system existing in the Companies of the Group; an unqualified opinion on internal control does not imply that deviations have not occurred.

• Our service as statutory auditors do not include activities resulting from changes introduced to the existing legal frame at the date of submitting this proposal, instructions given by the maximum authority of the Companies of the Group, increase in the operations of the Companies of the Group, any contractual agreement in which the Companies of the Group are a party or instructions from the owner, parent or controlling company. The statutory auditor is under the obligation to develop them if after becoming fully aware of the nature, scope and purpose, he indicates his/her consent through one of the legal representatives and the relevant remuneration is agreed previously and in writing.

• The result of our evaluations could be positive or negative, the matters identified in the course of our audit will be informed to Companies of the Group’s management, audit committee or board of directors, together with our recommendations; these reports will be previously discussed with the staff audited.

• The audit tests are performed on the basis of sampling to transactions and/or processes of specific periods. An evaluation of this nature cannot identify deviations of control different from those present in the sample and/or in the selected period.

• The materiality or the maximum level of deviation is that the statutory auditor, in accordance with his/her professional judgment, is willing to tolerate to be able to conclude on the reasonability of the financial statements in the audited entity in accordance with the standards applied. Any individual or accumulated difference, which is identified in the course of the audit exceeding the materiality levels, requires to be adjusted. This level will be adjusted if the Companies of the Group’s circumstances change during the period audited.

• In accordance with audit standards, we define a materiality measure and design our audit procedures, so that errors greater than such measure are identified, if they exist. A lower level implies additional tests and, consequently, additional time investment that we would negotiate previously with you.

• The legal compliance deviations are not framed inside the materiality concept.

• Our Statutory Audit tests are selective and, therefore, cannot assure the identification of each one of the deficiencies, omissions or irregularities in operations.



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• Our performance as statutory auditors is not focused to detect fraud, although this could be identified with our tests. In this connection, the audit procedures to be applied to investigate and go deep into the subject will be understood as an investigative audit that is not part of the scope of the Statutory Audit services and therefore, should be billed separately if the Companies of the Group’s management requests our services to make the fraud evident from an investigative perspective.

• As statutory auditors we will make sure that the base information for the preparation of the tax returns has been taken from the accounting records. The review of the KPMG team is supported in the Companies of the Group’s internal control, which should guarantee the quality of such tax returns.

• In accordance with article 59 of Law 43 of 1990, competition between public accountants or accounting companies will not be legitimate or fair when the award is due to reductions subsequent to the value originally quoted or to the free offer of additional services to those quoted.

Client commitment

• The Companies of the Group commits itself to provide KPMG with all the records and documentation and information that we request in connection with our work and to disclose to us all the significant information including the Companies of the Group’s strategic and business plans. The Companies of the Group also assure full cooperation of their staff during the development of our engagement.

• Reviews by the Public Company Accounting Oversight Board (PCAOB)

The Sarbanes-Oxley Law, in the section 104, named “Inspections of registered public accounting firms”, establishes that the PCAOB may conduct reviews of the public accounting firms registered before that entity, to assure the compliance with the laws and rules in force. For the above, in the case that the PCAOB requires to inspect the work papers prepared by KPMG and any other information printed and/or electronic related to the services rendered to the Companies of the Group, the Companies of the Group’s Management authorizes KPMG to display these. Likewise, the mentioned law requires that the work papers and any other information related to the audit report be kept for a minimum period of seven years.

For effects of the services covered by this proposal, you and we recognize that the Sarbanes- Oxley Law apply, in addition to the rules issued by the Colombian authorities.

• An effective improvement of the internal control requires, in addition to other measures, the Companies of the Group’s involvement in the implementation of the recommendations made by the Statutory Auditor. The Companies of the Group’s Management is responsible for the adoption of the internal control corrective measures.

• The information included in the tax book or in the differences registration system is the responsibility of the Management; therefore, it is necessary that the Management set the controls to support the tax returns, as well as to have the proper support before a possible visit by the tax authorities.

• The Companies of the Group’s Management is responsible for the adequate preparation and presentation of the financial statements and their explanatory notes, in accordance with the



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Accounting and Financial Reporting Standards accepted in Colombia and for the design, implementation and maintenance of the internal control relevant for the preparation and presentation of these financial statements, free from material misstatement, due to fraud or error.

• The responsibility for the preparation and debugging of the Companies of the Group’s information for submission to any body within the organization and control agencies (financial statements and accompanying notes) rests with Management.

• The Companies of the Group’s management is responsible for the interim financial information preparation and presentation, including the adequate disclosure. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the interim financial information, free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Any document that contains interim financial information should indicate that it has been reviewed. As part of our review, we will request the administration representations in writing concerning assertions made in connection with the review. When any document that contains interim financial information indicate that it has been reviewed, our report also be included in the document.

• With respect to all the reports issued, the administration will provide representation letters concerning the assertions made in relation to the information and our work.

• The responsibility for the preparation and timely filing of tax returns rests with Companies of the Group’s management. The Companies of the Group’s tax department or the tax counsel are in charge of identifying opportunities for tax optimization.

Prevention of money-laundering and terrorism-financing

By accepting this proposal, the Companies of the Group Avianca Holdings S.A. undertake to comply with all applicable laws and regulations related to the prevention of money-laundering and terrorism-financing and declares that all its assets, and, to the best of its knowledge and belief, their counterparts’ assets, do not originate from any illicit activity nor are they being used for any illicit activity (including activities related to money-laundering and terrorist-financing). Consequently, the Companies if the Group Avianca Holdings S.A. declare that all their assets to be used to pay for the services that are the object of this proposal, originate entirely from lawful activities. In any case, if during the course of the provision of the services object of this proposal, the Companies of the Group Avianca Holdings S.A. learn that any of their administrators, shareholders or partners have been included in a list of designated persons, related to economic, financial or commercial sanctions, maintained by the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury, by the US Department of State, the US Commerce Department, or by the Security Council of the United Nations, the European Union or any member state of the European Union the Companies of the Group Avianca Holdings S.A. must inform KPMG as soon as possible. In this case, KPMG, in compliance with its risk management policies, will be empowered to reevaluate the continuity of the services that are the object of this proposal, and may discontinue them if necessary.



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Anti-bribery and anti-corruption

By accepting this proposal and regarding the services object of this, both, the Companies of the Group Avianca Holdings S.A. and KPMG, jointly declare not to have given, and they undertake not to give any payment, disbursement or remuneration, past or future and of any kind, in favor of any of the officials, employees, agents or dependents of the other party. Additionally, the Companies of the Group Avianca Holdings S.A. undertake to comply with all anti-corruption and anti-bribery laws and policies to which they is subject, and declare, under oath, that as of the date of acceptance of this proposal the Companies of the Group Avianca Holdings S.A. are not involved in acts of bribery, corruption or any other illegal activity related to bribery and corruption, and that they have not been subject to sanction or sentence for acts of this nature. Likewise, the Companies of the Group Avianca Holdings S.A. undertake to report to the email [email protected] any act that they know about or that they reasonably suspect could be classified under applicable law as an act bribery or corruption and that arises in relation or in connection with the execution or receipt of the services object of this proposal. In this case, KPMG, in compliance with its risk management policies, will be empowered to reevaluate the continuity of the services object of this proposal and may discontinue them if necessary.

Use of electronic mail and technological resources

KPMG requires the Companies of the Group provide on their own a reasonable and safe workspace in their facilities and within it, a broadband internet connection that meets the requirements of technical annex 3 and / or alternatives agreed between the parties.

This connection should allow the KPMG staff computers to be connected to access technological tools necessary for the proper execution of our work. Once confirmed the availability of this requirement, our engineers will proceed to perform the necessary operational tests.

When it is required to connect the computers (KPMG’s computers or assigned in commodatum), to the Companies of the Group’s data network, the Companies of the Group’s management must obtain the formal authorizations and the security level permits required.

Your organization authorizes for the use of e-mail or other electronic methods to transmit and receive information, including confidential information between KPMG S.A.S. and you and between KPMG S.A.S. and outside specialists engaged by either KPMG S.A.S. or the Companies of the Group. You acknowledge that e-mail travels over the public internet, which is not a secure mean of communication and, thus, confidentiality of the transmitted information could be compromised although this is not the fault of KPMG.

If you are not in agreement with the use of electronic means to transmit confidential information, you must indicate so in your response to this letter.

Trademark use and intellectual property

Except as permitted by law or as further established in this paragraph, neither party will acquire under this agreement any right to use the name or logo of the other party or any part of it, and such use must require express consent of the owning party. For informative purposes only Avianca Holdings S.A. agrees that KPMG may list and display the Example Company name and logo in KPMG internal materials,


mailto:[email protected]


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including internal presentations and KPMG intranet sites, and on external marketing materials, including service proposals, external sites of KPMG internet and social networks, indicating the general services provided (for example: " Avianca Holdings S.A. is an audit client of KPMG SAS" accompanied by a visual reproduction of the Avianca Holdings S.A. logo. Therefore, Avianca Holdings S.A. hereby grants to KPMG a revocable, non-exclusive, non-transferable, paid and royalty-free license, without the right to sublicense, to use the logos, registered trademarks and service marks exclusively for the informative purposes mentioned in this paragraph and for presentations and reports to Avianca Holdings S.A.

This proposal has been prepared by KPMG S.A.S., a simplified Colombian joint stock company and a member firm of the global KPMG organization of independent member firms affiliated with KPMG International Limited, a private English company, limited by guarantee.

Conflicts of interest

The Parties shall exercise and take all reasonable and necessary steps to prevent and avoid any action or situation that could generate a conflict of interest.

KPMG is free of render services to companies in the same sector (competitors), except when the competitors’ interest conflict with the interests of the Companies of the Group Avianca Holdings S.A. specifically and directly regarding the purpose of the service of this proposal. In accordance with the foregoing, the work team will not render services to the competitor and other KPMG personnel, only may provide services to the competitor when appropriate, through safeguards designed to facilitate the protection of the interests of each client (separate teams, their geographical and operational separation and / or access controls to data, computer servers and email systems). The effective operation of such safeguards will constitute enough steps to avoid any real risk of breach of our duty of loyalty to the Companies of the Group Avianca Holdings S.A.

KPMG or another KPMG member firm may act in insolvency proceedings with respect to an entity or individual with which the Companies of the Group Avianca Holdings S.A. have an interest, subject to the law and KPMG's conflict of interest rules.

The Companies of the Group Avianca Holdings S.A. must report any case in which a representative or employee of the Companies of the Group Avianca Holdings S.A. is a spouse, partner or permanent partner, or some of their relatives, within the fourth degree of consanguinity, second of affinity or first civil, or is a partner or partners of fact or law or hold management or influence positions within KPMG.

When a conflict of interest arises or during the execution of the service, KPMG may at its discretion evaluate the continuity of the service.

Outsourcing

The Companies of the Group Avianca Holdings S.A. accept and authorize the participation of another Member Firm (Subcontracting Firm) with the acceptance of this proposal and agree to extend to this Subcontracting Firm the same agreements on responsibilities, indemnities and benefits granted to KPMG. Likewise, the Companies of the Group Avianca Holdings S.A. accept the hiring of third parties that KPMG requires for the development of the service.



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Data protection and confidentiality

According to the ethical standards of accounting profession, followed by KPMG, the work will be entirely independent and the Companies of the Group authorize KPMG to apply the following rules, when in occasion of rendering the Statutory Audit service object of this proposal it has the necessity to access, process, transfer, transmit and store information that the Companies of the Group provide as responsible of this:

(a) Definition of personal and confidential information

Personal information - The term “personal information” of the Companies of the Group means “any related information (linked or that may be associated with one or more persons) that the Companies of the Group or its affiliates own, whether they are employees, suppliers or customers”.

Confidential Information - All information that is not public and that is known by a person as a result of the relationship or association with any of the KPMG member firms (including private or reserved information, as defined by law).

(b) Protection of the information

• When you confirm your acceptance of the proposal by means an acceptance letter of the proposal to provide services of Statutory Audit, the Companies of the Group authorize KPMG to access, process, transfer, transmit and store the personal or confidential information that is in the name of the Companies of the Group, according to the definition established in paragraph a) of this clause to other jurisdictions outside the Colombian territory and to cloud services contracted privately by KPMG, only in compliance with the internal policies that KPMG has for the administration of the business and the quality standards of the work.

• At the time that the Companies of the Group make the personal information available to KPMG, the Companies of the Group confirm that they have complied with the laws applicable to the protection of personal information, especially Law 1581 of 2012, its regulatory decrees and the standards that modify it, on the request and conservation of the copy of the authorization granted by the owner of the personal data, being this the appropriate organizational and technical measure designed to protect it against unauthorized or illegal processing of personal information, as well as measures against accidental loss or destruction or damage of personal information.

• KPMG will limit access to personal information of the Companies of the Group to those of its collaborators who need to access said documents, in order to fulfill their functions within the service object of this proposal under strict conditions of confidentiality, and KPMG’s staff of other jurisdictions, with the purpose of facilitating the business administration and / or of supporting the maintenance of quality and work standards; likewise with the acceptance of this proposal, the Companies of the Group expressly authorize KPMG to make transfers and/or transmissions to other jurisdictions outside the Colombian territory and to cloud services contracted privately by KPMG of the information related to the provision of the service, including personal information.



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• The information on the contacts that KPMG has in the Companies of the Group may be used by the KPMG personnel in order to inform you of the services we render and occasionally communicate on marketing issues which KPMG considers of interest to the Companies of the Group. In accordance with the law, the Companies of the Group will be able to request and correct its personal information in custody at KPMG. Any request for correction must be made in writing to the manager in charge of the service or to the email [email protected]. If the Companies of the Group have a question about how we treat your personal data, you can enter https://home.kpmg/co/es/home/misc/politica-de-privacidad.html, where you will find the KPMG’s Privacy Policy.

(c) Confidentiality of information

• The KPMG personnel may have access to or know sensitive, private or reserved information concerning the business or the Companies of the Group’s internal matters during the rendering of the services (“Confidential Information”) In connection with the Confidential Information, it is required to comply with the confidentiality standards of the regulatory agency of the profession, that is the “Junta Central de Contadores” and KPMG will adhere to the confidentiality restrictions imposed to the Firm by any other authority in Colombia by virtue of its duties as statutory auditor; KPMG has the obligation to comply with these requirements as well as with any other obligations imposed to KPMG by the Colombian law.

Likewise, certain information that includes, but is not limited to the information that is

delivered to us for the realization of the service and work papers produced during the course of

the service, may be used, retained and / or stored outside of Colombia by KPMG International

member firms, suppliers or subcontractors that provide support services to KPMG, for

technological, administrative and organizational purposes, including internal procedures for

evaluating clients and services established by KPMG, maintaining profiles in relation to the

service rendered and compliance with the normative or professional legislation that apply

(including quality reviews).

• KPMG may share information related to the Companies of the Group, including that defined in paragraph a) of this clause and that regarding the services provided, including Confidential Information, in a confidential manner, with KPMG Personnel.

• The confidential information of the Companies of the Group Avianca Holdings S.A. that they

have provided to KPMG and all copies thereof, at the request of the Companies of the Group

Avianca Holdings S.A. may be returned or destroyed by KPMG, except for those documents

that support reports or opinions issued by KPMG, (working papers), which give support to

claims, complaints or legal requirements or those that cannot be returned due to document

retention issues and by requirement of regulators.

• The Parties are obliged to promptly report any security incident, violation of personal data or

operating failures that arise with their technological resources or in their facilities and that, as a

consequence, may generate operational alterations in the provision of their services or

compromise the confidentiality of the information.



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• The Parties agree to exchange electronic information using secure transfer means, which will

be defined according to their technological standards. If information is exchanged by physical

means, the appropriate physical security and secure messaging protocols must be defined. If

applicable, the Parties will agree on strong encryption mechanisms for sending and receiving

information, according to their level of confidentiality or sensitivity. Strong encryption is

understood as encryption techniques for information protection that use internationally

recognized algorithms, providing at least the security levels offered by 3DES or AES.

• The expression “KPMG Parties” must be understood as all and each one of the partners, members, directors, employees, agents, collaborators, practice or technological services reviewers of KPMG suppliers or subcontractors, in Colombia and in other jurisdictions other than the Colombian, who carry out administrative, technological, organizational support activities, or support our infrastructure in clouds operated by them or in private cloud operated by third parties. This proposal is confidential and is considered a single unit, therefore, it should be accepted or rejected entirely; any further modification should be made in writing, including the evidence of approval by the parties. This proposal is based on the information provided by the authorized staff and is subject to the condition of making it available in total to the Companies of the Group’s maximum authority, or of the management level in charge of the decision.

(d) Use of member firms and third-parties service providers, storage and / or use of information

When you confirm your acceptance of the proposal through a an acceptance letter of the proposal

for the provision of the services object of the same, the Companies of the Group understand and

accept that:

• KPMG may work with and use the services of other member firms of the KPMG International network of independent firms and entities controlled by, or under common control with, one or more KPMG member firms (in conjunction with KPMG, the “KPMG Firms”) to provide services to Avianca Holdings S.A. The KPMG Firms, together with the entities that integrate KPMG International, should be referred to herein as the “KPMG Parties”. In connection with the development of services under this Agreement Letter, KPMG firms may, at their discretion, use the services of third-party service providers within or outside of the United States to complete the services under this Agreement Letter. KPMG Parties and such third parties may have access to your confidential information from abroad locations. In addition, KPMG uses third-party service providers within or outside the United States to provide, at their discretion, clerical and administrative services, or analytical services to KPMG and these third-party service providers, may in development of these, have access to your confidential information. Particularly, KPMG's audit technologies, productivity software tools and certain technology infrastructures and, necessarily, your confidential information may be hosted in cloud environments operated by the KPMG Parties or such service providers. In addition, KPMG Parties may have access to certain information regarding acceptance of engagement and other professional responsibilities such as maintaining independence and executing conflicts of interest. KPMG states that it has technical, legal, and other safeguards and controls to protect your confidential information from unauthorized use or disclosure.



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• You also understand and agree that the KPMG Parties, with the assistance of the third parties

listed above, may use all of the Avianca Holdings S.A.information for other purposes consistent with our professional standards, such as quality improvement in the delivery of audit services and other services or technology to you and other clients, thought leadership projects, to enable you and other clients to evaluate various business transactions and opportunities and for use in presentations to you or other clients and non-clients. When your information is used outside of the KPMG Parties or such third parties that assist them as indicated above Avianca Holdings S.A. will not be identified as the source of that information.



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Appendix 1. Terms and Conditions

Our professional service is subject to the limitations of the liberal professions and in particular:

• The obligations derived from our professional service are not an end but a mean.

• This proposal is for the exclusive knowledge of the client, as long as the law allows it, and it conforms a unit; therefore, it must be accepted or rejected in its entirety, since it has been formulated based on the information provided by the staff members authorized by the Companies of the Group and with the condition that it will be made fully available to the maximum authority of the Companies of the Group.

• This proposal is valid for a period of ninety (90) days, from the date of its filing at your offices.

• If you find this proposal satisfactory, we propose that the commercial relationship, in accordance with your contracting processes, could be formalized with the confirmation of our service proposal AUDM&SBOG-PRO2021-P-360 and the terms and conditions, through an acceptance letter according to the model attached in Appendix 2.

• Our professional responsibility as statutory auditors does not replace or diminish the responsibility of the administrators of the Companies of the Group in relation to their decisions and actions regarding internal control associated with the financial statements; that is limited to their evaluation.

• The Legal Representative and the chief financial officer of the Companies of the Group will provide to the Statutory Auditor a letter (known as Representation Letter) in which they confirm, among other matters, whether to the best of their knowledge and belief the financial statements and its disclosures mentioned in the notes include all the operations carried out by the Companies of the Group, as well as all the possible contingencies that may affect it.

• Management is responsible for adjusting the financial statements to correct the material errors that may be contained in them and will confirm in the Representation Letter that the effects of uncorrected errors are immaterial both individually and taken as a whole.

• The Statutory Auditor is not liable for determining the value, the origin, review or opine on the legal or judicial management acts or of those transactions that fall within the area of management self-determination. Our responsibility is limited to their formal evaluation, except when there are effects resulting from the application of accounting principles, the indication of it will be recorded.

• The certifications that the statutory auditor is responsible for subscribing according to his/her functions, regardless of their nature, must be submitted for analysis and signature at least three business days in advance or immediately when requested by a regulator; if this minimum term is not met, the possibilities of identifying possible errors are limited and it exempts us from responsibility for its extemporaneous presentation before the authorities.



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• Management is liable for paying the KPMG S.A.S. bills within the thirty (30) days after its issuance. Failure to pay invoices will entitle KPMG to interrupt or terminate the services until the overdue invoices are paid.

• With the acceptance of the proposal by the Companies of the Group, the client's authorization to share said information of the client will be understood, its employees or directors within the KPMG network of firms (KPMG Network) for the purpose of developing internal procedures for evaluating clients and services - including, but not limiting itself, to the identification of potential conflicts of interest or compliance of independence requirements.

• In the event that KPMG S.A.S. is required by the administrative, judicial, police authorities, among others, to give testimony or answer legal requirements of information supply regarding the Companies of the Group, the Companies of the Group agree to reimburse KPMG S.A.S. the costs that KPMG S.A.S. and its staff incur in connection with such requirements when the performance of KPMG S.A.S. have not been the purpose of such requests.

• Either party may terminate the contract at any time, giving thirty (30) days written notice to the other party of its determination to terminate the business relationship, without the other party being entitled to compensation some by this fact. When there has been a change in law, standard, regulation or professional standard, or a change that causes continuity in the provision of the agreed services violates said law, norm, regulation or professional standard or, in another way, in reasonable opinion of KPMG SAS impair the ability of KPMG S.A.S. to fulfill with any requirement of auditor independence, KPMG will notify of the immediate termination by any means and this will not imply compensation in favor of the other party.

• Neither the Companies of the Group or KPMG S.A.S. are liable for any breach of the obligations assumed, when such breach, in whole or in part, are produced by any cause or circumstance which, according to the law, constitute major force or fortuitous event. In case of breach of obligations under the agreement by major force or fortuitous event, shall be permitted only failure that is proportional to the same event.

• The laws that govern the commitment of Statutory Audit are the laws of the Republic of Colombia, especially those related to the functions of the statutory auditor.

• Disputes and differences that may arise between KPMG and the Companies of the Group due to the celebration, interpretation, execution or termination of the provision of the service object of this service proposal, the acceptance letter, service order, or contract, as applicable, will be subjected to alternative dispute resolution mechanisms, such as direct settlement, the decision of an amicable compositor, or conciliation. Failure to reach an agreement within thirty (30) days after the controversy known, it will be understood that the documents that are part of the commercial relationship will be governed and interpreted in accordance with the laws of the Republic of Colombia, submitting the parts to the competent courts of this country, resigning to any other jurisdiction that by reason of its domicile, present or future, could correspond to them.

• If any provision contained herein is considered null, ineffective, non-existent, unenforceable or in any way not executable by any competent judicial authority, such sanction will not affect the other terms and conditions and, consequently, the other provisions not affected by the sanction will continue in



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full effect and force; the omission by the Companies of the Group or KPMG S.A.S. if at any given time the fulfillment of any of the provisions of this proposal is required, it cannot be interpreted as a waiver to demand the subsequent fulfillment of said provision.

• The present proposal regulates in its entirety the legal relations between the parties included the terms and conditions contained here and, consequently, revokes any other agreement or stipulation previously agreed. Any subsequent modification will not be valid, unless an agreement regarding it is recorded in a document signed by the legal representatives of the parties.

• This proposal accepted and any of its annexes and appendices thereto, and the modifications to it agreed in writing by the parties, will constitute the entire agreement between KPMG and Avianca Holdings S.A. with regard the subject matter of this proposal accepted, and replace all oral or written statements, understandings or agreements related to the subject matter of the same. Any modification to the terms of the proposal accepted must be formally made in writing to be executed by KPMG and by Avianca Holdings S.A.

• COVID19

1. During the Engagement, each Party shall keep the other Party reasonably informed of any events which:

i. relates to the notifying Party and the COVID19 situation;

ii. are not existing or reasonably foreseeable at the date of this agreement; AND

iii. which will materially and adversely affect the notifying Party’s ability to perform its obligations under the Engagement.

2. Each Party will implement mitigation measures to enable the Services to be performed so far as reasonably practicable in the circumstances, including:

i. reducing travel (particularly international travel) and in-person meetings to the minimum necessary level;

ii. at the Party’s premises, implementing such infection control procedures as are recommended or required by official bodies in the applicable location;

iii. implementing internal corporate policies which permit and encourage individual remote working, and technical systems to enable individual remote working; and

iv. implementing telepresence, audio conference, videoconference, and other systems for collaborative working.

3. If, as a result of the global COVID19 virus situation, performance by a Party of its obligations under the Engagement are rendered impossible or impracticable, the time for performance of such obligations shall be extended by such period as is reasonable in the circumstances, PROVIDED THAT the Party in question is complying, and continues to comply, with its obligations pursuant to paragraph 2 above.



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Appendix 2 –Acceptance Letter to the Proposal

(Letter in the Letterhead of the Companies of the Group)

xxxx xx, 2021

Mr. José Sanabria C. Legal Representative KPMG S.A.S. Calle 90 No. 19C – 74 Bogotá D.C.

Subject: Acceptance of the Proposal of Statutory Audit and External Audit Professional Services

Dear Mr. Sanabria:

We confirm our understanding of the Statutory Audit and External Audit services and we accept in full expressly and unconditionally, the content of your professional services proposal of April 14, 2021, identified with the code AUDM&SBOG-PRO2021-P-360, as an agreement of wills between Avianca Holdings S.A. and KPMG S.A.S., which I have read and understand fully accepting the terms and conditions (Appendix 1) that are an integral part of it.

Very truly yours,

_____________________________________________ Name Legal Representative



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Technical Appendix 3. Using Technological Resources

KPMG requires that the Companies of the Group supply by their own account, independent of their data network, a wide band internet connection and a hub or switch (network connection device) or an equivalent solution where KPMG personnel computers can be connected; the solution must have the availability and capacity necessary to provide the services and must not have security restrictions such as Firewall or Proxy that prevent access to the resources required for the development of the functions covered by the service; once the availability of this requirement is informed, the KPMG technical and functional team, together with the one designated by the Companies of the Group, will carry out the necessary tests to verify the correct operation of the solution implemented.

In the event that KPMG requires to have access to the data network and / or technological services of the Companies of the Group, the Companies of the Group will manage the required permits and / or authorizations in a timely manner and ensure that said resources comply with the necessary regulations and terms and conditions to be used by KPMG.

The Companies of the Group authorize the use of e-mail or other electronic methods to transmit and receive information, including confidential information between KPMG S.A.S. and the Companies of the Group and between KPMG S.A.S. and outside specialists engaged by either KPMG S.A.S. or the Companies of the Group for the service; likewise, the Companies of the Group recognize that e-mail travels over the public internet, which is not a secure mean of communication and, thus, confidentiality of the information transmitted could be compromised although this is not fault of KPMG S.A.S.

If KPMG provides and / or gives access to technological resources to the Companies of the Group as part of the scope of the provision of services, the Companies of the Group will ensure compliance with security policies and appropriate use of KPMG resources.

If more information or clarify any subject of this annex is required, the Companies of the Group will notify KPMG in writing through whom is attending it.



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Appendix 4 - Source of Funds Declaration of Clients and Third Party (SGL-F-01-10)

(Legal Persons) 10-JUL-2020/ Version 07

I, (signer’s full name) identified with ID. number___________________ issued in (place of issuance of ID) , acting as legal representative, director, authorized party (or by virtue of a power of attorney) of (name of company or autonomous trust ) identified with tax ID number ___________________ (henceforth, “The Declaring Party”), hereby, voluntarily and assuring that all assertions contained herein are truthful, provide this legitimate origin-of-funds declaration to (KPMG Firm name) (henceforth, “KPMG” or “Firm”), in order to comply with KPMG’s requirement under the Firm’s Money-laundering/Terrorism-financing Self-Control Risk Management System (SAGRLAFT by its Spanish acronym), and contribute to the prevention and control of such risk, while following the recommendations established by the Financial Action Task Force on Money Laundering – FATF, international norms and standards on Money-laundering/Terrorism-financing and national norms contained in Chapter X of Basic Legal Circular Letter No.100 – 000005 issued by the Superintendence of Companies1. Thus, I Declare:

1. All assets The Declaring Party uses to conduct its business activities, do not originate from any illegal activity pertaining to any of the source crimes of money-laundering or terrorism-financing, bribery, transnational bribery or corruption.

2. The Declaring Party has implemented (as applicable under national and international norms) appropriate mechanisms and controls to mitigate the risk of money-laundering, terrorism-financing, bribery, transnational bribery or corruption, from occurring as part of its business activities.

3. None of The Declaring Party directors and employees is currently listed in any lists of sanctioned persons related to narcotrafficking, money-laundering, subversion, terrorism, arms trafficking, or any related crimes. Likewise, and to the best of my knowledge, none of The Declaring Party’s directors or employees has, to this date, been sanctioned or convicted for any of the aforementioned criminal activities.

4. The assertions contained in this document are truthful, and I commit to report to KPMG, as soon as possible, any situations that cause the above assertions to no longer remain truthful.

The breach of any of the above numerals will cause KPMG to reevaluate the contractual and commercial relationship with The Declaring Party, in which case The Declaring Party shall indemnify and hold

1 In Spanish: El Capítulo X de la Circular Básica Jurídica 100 – 000005 de la Superintendencia de Sociedades.



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harmless the Firm, its partners, directors and employees, from any liability derived from any erroneous, false, or inaccurate information provided by The Declaring Party.

This document is being signed the _______________ day, of the month of _________________, of __________.

Signature and I.D.

Having read, understood and freely accepted this document, I declare that all information provided herein is accurate in all its parts, and thus, I proceed to sign this document:

__________________________________ Name of legal representative / Director By virtue of power of attorney / Authorized.

According to Law 1581 of 2012 and Decree 1377 de 2013, as owner and subject of the personal contained in this document, I freely authorize KPMG to process my personal data, and other personal data obtained through my contractual relationship with KPMG, and by KPMG, including any sensitive data, or through third parties authorized to do so, according to the conditions indicated in the Personal Data Processing Policy from KPMG Colombia.



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© 2021 KPMG S.A.S., Colombian entity, simplified stock corporation and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


20-11133-mg Doc 1776 Filed 06/09/21 Entered 06/09/21 14:10 ...

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Transcript of 20-11133-mg Doc 1776 Filed 06/09/21 Entered 06/09/21 14:10 ...