| | KPMG LLP (“KPMG”) was previously the principal accountant for Frozen Food Express Industries, Inc. (the "Company"). On June 11, 2007, KPMG was dismissed as the Company’s principal accountants. The Audit Committee of the Company’s Board of Directors participated in and approved the decision to dismiss KPMG as the Company’s principal accountants. During the two fiscal years ended December 31, 2006 and the subsequent interim period through June 11, 2007, there have been no disagreements, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K, with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference in connection with their opinion to the subject matter of the disagreement. During the two fiscal years ended December 31, 2006 and the subsequent interim period through June 11, 2007, there were no reportable events within the meaning of Item 304(a)(1)(v), except that KPMG advised the Company of the following material weaknesses: In its Annual Report on Form 10-K as of and for the fiscal year ended December 31, 2005 and in its Quarterly Reports on Form 10-Q as of and for the quarters ended March 31, 2006, June 30, 2006 and September 30, 2006, the Company reported it had material weaknesses in the following areas of the Company's internal control over financial reporting: (i) the control environment resulting from the lack of personnel with adequate experience to identify and account for complex or non-routine transactions; (ii) the completeness and accuracy in accounting for the reserve for cargo claims; (iii) the accuracy in the accounting for accrued revenues; (iv) the accuracy of the allowance for doubtful accounts; and (v) inadequate procedures to ensure manually billed revenues were properly reported. In its Annual Report on Form 10-K as of and for the fiscal year ended December 31, 2006 and its Quarterly Report on Form 10-Q as of and for the quarter ended March 31, 2007, the Company reported it had material weaknesses in its internal control over financial reporting related to the completeness and accuracy in the accounting for the reserve for cargo claims. The audit reports of KPMG on the consolidated financial statements of the Company as of and for the years ended December 31, 2005 and 2006, did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principle, except as follows: KPMG’s report on the consolidated financial statements of the Company as of and for the year ended December 31, 2006, contained a separate paragraph stating that "As discussed in Note 1 to the Consolidated Financial Statements, effective January 1, 2006, the Company adopted 1) Statement of Financial Accounting Standard 123 (revised 2004), Share Based Payment, and 2) the provisions of Securities and Exchange Commission Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements.” KPMG’s report on the consolidated financial statements of the Company as of and for the year ended December 31, 2005, contained a separate paragraph stating that “As discussed in Note 2 to the consolidated financial statements, the consolidated financial statements for the year ended December 31, 2004 have been restated.” The audit reports of KPMG on management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2005 and 2006 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles, except as follows: KPMG's report on management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2005 and 2006 indicates that the Company did not maintain effective internal control over financial reporting as of December 31, 2005 and 2006 because of the effect of a material weakness in the achievement of the objectives of the control criteria and contains an explanatory paragraph identifying the material weaknesses described below: |
