CORRESP

            DLA Piper US LLP  

        1775 Wiehle Avenue, Suite 400  

        Reston, VA  20190              

      www.dlapiper.com              

DLA Piper US LLP  

        1775 Wiehle Avenue, Suite 400  

        Reston, VA  20190              

      www.dlapiper.com              

October 4, 2007 FOIA Confidential Treatment of Limited Portions Requested by Audible, Inc., pursuant to Rule 83 (17 C.F.R. § 200.83)

Yolanda Crittendon, Staff Accountant

Division of Corporation Finance

Securities and Exchange Commission

100 F Street N.E.

Washington, D.C. 20549

Re:      Audible, Inc.

Form 8-K, Filed September 20, 2007

File No. 000-26529

Dear Ms. Crittendon:

On behalf of Audible, Inc. (the “Company”), we hereby submit to you responses to the Company’s above-referenced Form 8-K reflecting changes made in response to the Staff’s comment letter dated September 21, 2007.

All responses to the comments set forth in this letter are submitted on behalf of the Company at its request, and unless otherwise noted, are based upon information provided to us by the Company.  Each numbered paragraph corresponds to the numbered paragraphs of the September 21, 2007 comment letter, followed by the Company’s responses to the Staff’s comments.

1.We note the disclosure of material weaknesses in your internal controls.  Tell us whether or not you intend to restate any prior period for any adjustment resulting from such weaknesses; and if not, why not.  Tell us in detail the steps you plan to take and procedures you plan to implement to correct each material weakness.

Response: The Company does not intend to restate any prior period financial statements for any adjustments resulting from the material weaknesses as such adjustments have already been recorded in the consolidated financial statements (see “Summary of Recorded Audit Adjustments for the year ended December 31, 2006” attached as Exhibit 1 hereto). The Company recorded 14 adjustments in connection with the year end audit for the financial year ended December 31, 2006, of which 12 adjustments arose in the fourth quarter and were appropriately recorded in the fourth quarter (the period in which they arose).

For those adjustments related to prior periods the Company evaluated the materiality of such adjustments in relation to the prior period financial statements following the guidance set forth in Staff Accounting Bulletin (SAB) No. 99 “Materiality”.  The principal adjustment related to prior years related to the tax consequences of the international non-income tax related matter (value added tax) that was adjusted in the 2006 financial statements upon the adoption of SAB 108 and disclosed in footnote 18 to the consolidated financial statements as follows:

“(18)     Adoption of SAB 108

Staff Accounting Bulletin 108 (“SAB 108”) was issued by the Securities and Exchange Commission in September 2006. This bulletin addresses how the effects of prior-year uncorrected misstatements should be considered when quantifying misstatements in current-year financial statements. SAB 108 requires registrants to quantify misstatements using both the balance-sheet and income-statement approaches (“dual” method) and to evaluate whether each approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. Historically, the Company used the income-statement (“rollover”) approach to quantify misstatements. Upon adoption, SAB 108 permits the Company to adjust for the cumulative effect of errors that were previously considered immaterial under the rollover method that are now considered material under the dual method.  Effective January 1, 2006, the Company changed its method of quantifying misstatements to the dual method in accordance with SAB 108 and adjusted its opening accumulated deficit for the items described below. These errors were considered immaterial to the Company’s historical consolidated financial statements using the rollover method.

.....

Value Added Tax

In early 2007, the Company discovered that it was required to assess a sales tax for sales made in European Union countries effective as of July 2003. Sales to individuals outside of the U.S. in countries subject to this tax have comprised approximately 3% of total revenue over the past three years. Accordingly, the Company is required to record a liability for estimated past liabilities. The amount due for past liabilities for the period from July 2003 to December 2005 was $0.5 million which was not recorded by the Company as of December 31, 2005. The $0.5 million, therefore, has been recorded as a cumulative effect adjustment to beginning of the year accumulated deficit as of January 1, 2006.”

The actual prior year amounts related to the value added tax matter described above which were considered immaterial to the Company’s historical consolidated financial statements using the rollover method, by year, are as follow:

Year	Amount
2003	$ 49,000
2004	$162,000
2005	$275,000
Total	$486,000

The following four material weaknesses in internal control over financial reporting as of December 31, 2006 were reported in the Company’s 2006 Annual Report on Form 10-K:

·   ineffective execution of non-routine contracts;

·   inadequate financial information and communication;

·   ineffective review of account analysis; and

·   ineffective identification and analysis of international non-income tax related matters.

As the Company has reported in its Form 10-Q for the period ended June 30, 2007, (the “Second Quarter 10-Q”), the Company has taken, and continues to take, a number of corrective actions to remediate the material weaknesses that existed at December 31, 2006.  By their nature, such actions require a period of time to become fully effective.  The Company disclosed the following in Item 4 of the Second Quarter 10-Q:

Ineffective Execution of Non-Routine Contract

We have improved our contract review procedures to provide a more detailed legal and financial review of new contracts in order to identify potential financial reporting risks and implementation issues.

Inadequate Information and Communication

We have implemented change control procedures requiring review and signoff on modifications to existing system-generated financial reports used in financial reporting.

We began a process of reviewing, classifying and reconciling individual gift transactions to properly categorize and support remaining gift deferral balances.

Ineffective Review of Account Analyses

We have implemented additional reconciliation roll-forwards and review procedures to provide greater accuracy over account analysis used as a basis to record journal entries.

We have engaged more participation in the review of account activities by initiating periodic circulation of interim financial information.

Inadequate Identification and Analysis of International Non-Income Tax Related Matters

We have modified our web site to collect value added tax (“VAT”) from customers in foreign jurisdictions.

We have implemented a periodic formal tax review process intended to identify and address potential non-income tax related matters.”

In addition to the actions listed above, the Company has taken additional steps and has implemented other controls in continuing to remediate the material weaknesses identified as of December 31, 2006. After the Company has concluded that these steps and controls are functioning as designed it will be able to report the results of their substantive testing in subsequent filings.

2            Please provide us with a schedule of your fiscal year end forth quarter adjustments (for both 2006 and 2007) to close the books, or adjustments recorded in connection with or as a result of the audit.  Clearly explain the reason for each adjustment.  For each adjustment, show us the impact on pre-tax net loss.  Quantify the net effect of all adjustments on a pre-tax net income (loss).  Also, tell us why none of the adjustments relate to any prior period.  Explain in detail why you believe the timing of each adjustment is appropriate.

Response:  The Company delivered the initial draft of its 2006 financial statements to its Independent Registered Public Accounting Firm, KPMG LLP (“KPMG”) on January 30, 2007. KPMG proposed 21 audit adjustments, of which 14 were recorded by the Company and were reflected in the 2006 audited consolidated financial statements.  The 14 recorded adjustments are shown in the Summary of Recorded Audit Adjustments attached as Exhibit 1 hereto, which includes a description of the reason for each adjustment, the impact on pre-tax net loss, the period to which the adjustment related, an explanation as to why the Company believes the timing of the adjustment is appropriate and the net effect of all adjustments on pre-tax net loss.  The net effect of all the recorded audit adjustments on the Company’s results of operations was to increase the pre-tax net loss for the fourth quarter of 2006 by $490,362.

3.            Provide us with any letter or written communication to and from the former accountants regarding any disagreements or reportable events to management or the Audit Committee.

Response:  To the best of the Company’s knowledge there has been no written communication to or from KPMG regarding any disagreements with management or the Company’s audit committee.

Management and the audit committee received the following written communications regarding reportable events from KPMG:

·   Letter of Internal Control Deficiencies to Audit Committee dated April 2, 2007

·   Letter of Internal Control Deficiencies to Management dated April 2, 2007

These letters are attached as Exhibits 2 and 3 hereto.  Certain portions of the letters have been redacted pursuant to a separate confidential treatment request made to the Commission’s Office of Freedom of Information and Privacy Act Operations under the Commission’s Rule 83.

4.            To the extent that you make changes to the Form 8-K to comply with our comments, please obtain and file an updated Exhibit 16 letter from the former accountants stating whether the accountant agrees with the statements made in your revised Form 8-K.

Response:  The Company hereby respectfully submits that as set forth in the responses to Comments 1-3 above, it will not be necessary to make changes to its prior disclosure on Form 8-K.

If you have any additional comments or questions, please feel free to contact the undersigned at (703) 773-4021.

Very truly yours,

/s/ Nancy A. Spangler

Nancy A. Spangler

CORRESP

Exhibit 1

Audible, Inc.
Summary of Recorded Audit Adjustments
For year ended 12/31/2006
Adj #	Accounts and Description	Debit	Credit	Impact on Pre-Tax Net Loss  Debit (Credit)	Period in which Activity Related	Explanation of Timing of Adjustment
1,2,& 3	Stock Compensation Expense - G&A	58,653		58,653
	APIC		58,653
	This adjustment is the net effect of three adjustments recorded to correct errors made in the calculation of SFAS 123R expense for Q4 2006.				Q4 2006	Errors primarily related to modification of a former employee's stock grants whose modification date was November 17, 2006.
4	Accrued Vacation	31,264
	Payroll Expense		31,264	(31,264)
	This adjustment was recorded to correct the vacation accrual for unused vacation days as of 12/31/06. (There was a spreadsheet formula error).				Q4 2006	Error occurred in the Q4 2006 calculation.
5	Accrued retail promotion	35,400
	Retail Promotion Expense - Cost of Sales		35,400	(35,400)
	This adjustment was recorded to correct the accrual for retail promotions based on a subsequent vendor billing.				Q4 2006	The subsequent vendor billing related to Q4 2006.
6	Deferred Revenue	27,000
	Content Revenue		27,000	(27,000)
	This adjustment was recorded to reverse a duplicate journal entry booked in error related to the deferral for complimentary audio credits.				Q4 2006	Error occurred while recording the Q4 2006 deferral.
7	Rent Expense	263,000		263,000
	Deferred Rent		263,000
	This adjustment was recorded to correct rent expense related to the Company's new office lease effective September 26, 2006. While the Company did not move into the space until March 1, 2007, the Company was provided access to the space when the lease was signed for purposes of construction build-out.  The Company initially concluded that a systematic and rational method to match expenses with benefits was to commence rent expense for new facility on March 1, 2007 when occupancy began. However, the period prior to move-in was a rent holiday that needed to be accounted for.				Q4 2006	Access to the new office was given on September 26, 2006, however, impact on Q3 2006 was immaterial.
8	General Accrual	41,650
	Insurance Expense - G&A		41,650	(41,650)
	This adjustment was recorded as a change in estimate to reverse an accrual for Workers' Compensation insurance as the Company anticipated additional billing from its insurance Company.				Q4 2006	Change of estimate occurred in Q4 2006 resulting in reversing of accrual.
9	Deferred Revenue	54,300
	General Accruals		54,300	-
	This balance sheet reclassification was recorded to correct the classification of a reserve for refunds to general accruals from deferred revenue.				Q4 2006	Balance Sheet reclassification only. No Income Statement Impact
10	Utilities Expense - G&A	57,047		57,047
	General Accrual		(57,047)
	This adjustment was recorded to reflect claims for utility expense by the Company's former landlord that were deemed probable under SFAS 5.				Q4 2006	Additional claims by landlord not made until after we served notice to vacate, Q4 2006 event.
11	Content Revenue	44,976		44,976
	Deferred Revenue		44,976
	This adjustment was recorded to correct deferred revenue for outstanding complimentary audio credits and reinstated audio credits. Original calculation was not prepared correctly.				Q4 2006	Additional deferred revenue based on audio credits outstanding as of December 31, 2006.
12	Prepaid Expenses	20,000
	Marketing Expense		20,000	(20,000)
	This adjustment was recorded to correct marketing expense to account for a refund received by the Company subsequent to year-end.				Q4 2006	Advertising program refund was received in Q1 2007 related to payment and expense recorded in Q4 2006
13	Content Revenue	222,000		222,000
	Accrued Expenses - VAT Payable		222,000
	This adjustment was recorded to reflect the proper amount of Value-added-tax ("VAT") related to sales made to customers residing in the European Union (EU) for all of 2006. Prior to early 2007, the Company was not aware that VAT was required to be assessed and remitted on EU sales.				Q1,Q2,Q3,Q4 2006	Effect of error spread over three (3) prior quarters deemed immaterial to prior quarter results.
14	Accumulated Deficit	486,000
	Accrued Expenses - VAT Payable		486,000	-
	This adjustment was recorded to reflect the proper amount of VAT payable related to sales made to customers residing in the EU for 2003-2005. The amount due for past liabilities for the period July 2003 to December 2005 was $486,0000 which was not recorded by the Company as of December 31, 2005. The $486,000 was therefore recorded as a cumulative effect adjustment to beginning of the year accumulated deficit as of January 1, 2006 in accordance with Staff Accounting Bulletin 108 (SAB 108). This error was considered immaterial to the Company's historical consolidated financial statements using the rollover method. The Company disclosed this adjustment in Footnote 18 of its 2006 Consolidated Financial Statements.				2003,2004,2005	See SAB 108 Footnote and Explanation
	Total increase in pre-tax net loss			490,362

CORRESP

Exhibit 2 -- redacted KPMG letter

	Telephone 973 467 9650
	Fax   973 467 7930
	Internet www.us.kpmg.com

April 2, 2007 

Confidential Treatment of Limited Portions

Requested by Audible, Inc., pursuant to Rule 83

The Audit Committee of the Board of Directors

Audible, Inc.

1 Washington Park

Newark, New Jersey 07102

Gentlemen:

In planning and performing our audit of the consolidated financial statements of Audible, Inc. and subsidiary (collectively referred to as the “Company” or “Audible”) as of December 31, 2006, and for the year then ended, we considered internal control in order to determine our auditing procedures for the purpose of expressing our opinion on the consolidated financial statements.  In conjunction with our audit of the consolidated financial statements, we also performed an audit of internal control over financial reporting in accordance with PCAOB Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements.

Pursuant to the standards of the Public Company Accounting Oversight Board (United States), we are required to communicate all control deficiencies, significant deficiencies, and material weaknesses in internal control over financial reporting, identified during the audit of internal control over financial reporting, to management.  In addition, we are required to communicate all such significant deficiencies and material weaknesses to the audit committee.

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.  A deficiency in design exists when (a) a control necessary to meet the control objective is missing or (b) an existing control is not properly designed so that, even if the control operates as designed, the control objective is not always met.  A deficiency in operation exists when a properly designed control does not operate as designed, or when the person performing the control does not possess the necessary authority or qualifications to perform the control effectively.

A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected by the entity’s internal control.  In connection with our audit of internal control over financial reporting of Audible, we noted the following control deficiencies that we consider to be significant deficiencies in internal control:

^{[* * *]} CONFIDENTIAL TREATMENT REQUESTED BY AUDIBLE, INC., PURSUANT TO RULE 83

1

Accounting for Retail Promotion Codes

The Company’s policies and procedures associated with retail promotion codes did not provide for a proper reconciliation of customer codes to certain vendor invoices and did not address the accounting for expiration of retail codes.  In addition, the review of the reconciliation relied upon to record the journal entry was not operating effectively, as an error from the third quarter reconciliation was not detected prior to the journal entry being recorded in the general ledger.

Accounting for Royalties

^{[* * *]}

Accounting for and Monitoring of Significant  Non – Routine Contracts

The Company’s policies and procedures did not provide for an adequate review of significant non-routine contracts to ensure proper accounting under U.S. GAAP.  Specifically, the Company did not properly account for rent holidays under the new operating lease agreement for the office space in Newark, NJ.  Additionally, while the Company did put in place a contract database in response to the material weakness on monitoring of contracts in the prior year, the review of the contract listing and sign-off of contract compliance and monitoring by responsible parties was not fully operational as of December 31, 2006.

Insufficient Accounting Personnel

While the Company did hire a new CFO near the end of fiscal 2006 in response to the material weakness noted during the prior year, the Company lacked sufficient accounting resources to address, communicate and remediate certain prior year material weaknesses and significant deficiencies on a timely basis. Further, the accounting personnel were not able to prevent new material weaknesses and significant deficiencies from occurring in fiscal 2006.

^{[* * *]} CONFIDENTIAL TREATMENT REQUESTED BY AUDIBLE, INC., PURSUANT TO RULE 83

2

Accounting for Income Tax Provision

The Company’s policies and procedures did not provide for an adequate review of the SFAS 109 income tax provision, including the required disclosures.

Identification and Analysis of Withholding Tax

[* * *]

Information Technology General Controls

^{[* * *]}

**********

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected by the entity’s internal control.  In connection with our audit of internal control over financial reporting of the Company, we noted the following control deficiencies that we consider to be material weaknesses:

Ineffective Execution of Non-Routine Contracts

The Company had inadequate policies and procedures to ensure that financial reporting risks associated with significant non-routine contracts were addressed at a sufficient level of detail so that financial and operating implications could be identified and appropriate actions could be taken to comply with the contracts on a timely basis. This deficiency resulted in the Company’s inability to determine revenue in accordance with the terms of a significant revenue contract.  As a result of this deficiency, there was more than a remote likelihood that a material misstatement of the Company’s annual or interim consolidated financial statements would not be prevented or detected.

Inadequate Financial Information and Communication

The Company did not have effective policies and procedures in place for finance personnel to adequately develop, validate and formally accept certain system-generated reports used in financial reporting. Such system-generated reports did not properly reflect certain customer concessions that were provided by customer service and other customer activities.  As a result of this deficiency, there were errors in consumer content revenue and deferred revenue in the Company’s 2006 consolidated financial statements and more than a remote likelihood that a material misstatement of the Company’s annual or interim consolidated financial statements would not be prevented or detected.

^{[* * *]} CONFIDENTIAL TREATMENT REQUESTED BY AUDIBLE, INC., PURSUANT TO RULE 83

3

Ineffective Review of Account Analyses

The Company did not have policies and procedures to ensure adequate review of all significant account analyses and spreadsheets used to record journal entries. As a result of this deficiency, there were errors in operating expenses, accrued expenses and additional paid-in capital in the Company’s 2006 consolidated financial statements, on an interim and annual basis.  Also as a result of this deficiency, there was more than a remote likelihood that a material misstatement of the Company’s annual or interim consolidated financial statements would not be prevented or detected.

Inadequate Identification and Analysis of International Non-Income Tax Related Matters

The Company did not have adequate policies and procedures to identify and analyze the financial reporting implications associated with international non-income tax related matters.  This deficiency resulted in the Company’s inability to properly account for value-added tax liabilities in foreign jurisdictions.  As a result of this deficiency, there were errors in content revenue, current liabilities and accumulated deficit, which resulted in a material misstatement in the Company’s 2006 consolidated financial statements and more than a remote likelihood that a material misstatement of the Company’s annual or interim consolidated financial statements would not be prevented or detected.

**********

We also have identified other control deficiencies, which have been communicated to management in a report dated April 2, 2007.

This communication is intended solely for the information and use of the board of directors, audit committee, management, and others within the organization, and is not intended to be and should not be used by anyone other than these specified parties.

Very truly yours,

cc: William H. Mitchell, CFO

4

CORRESP

Exhibit 3 -- redacted KPMG letter + excel spreadsheet that was attached to original

	Telephone 973 467 9650
	Fax   973 467 7930
	Internetwww.us.kpmg.com

April 2, 2007 

Confidential Treatment of Limited Portions

Requested by Audible, Inc., pursuant to Rule 83

Mr. Don Katz

Audible, Inc.

1 Washington Park

Newark, New Jersey 07102

Dear Mr. Katz:

In planning and performing our audit of the consolidated financial statements of Audible, Inc. and subsidiary (collectively referred to as the “Company” or “Audible”) as of December 31, 2006, and for the year then ended, we considered internal control in order to determine our auditing procedures for the purpose of expressing our opinion on the consolidated financial statements.  In conjunction with our audit of the consolidated financial statements, we also performed an audit of internal control over financial reporting in accordance with PCAOB Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements.

Pursuant to the standards of the Public Company Accounting Oversight Board (United States), we are required to communicate to management all control deficiencies, significant deficiencies, and material weaknesses in internal control over financial reporting, identified during the audit of internal control over financial reporting.

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.  A deficiency in design exists when (a) a control necessary to meet the control objective is missing or (b) an existing control is not properly designed so that, even if the control operates as designed, the control objective is not always met.  A deficiency in operation exists when a properly designed control does not operate as designed, or when the person performing the control does not possess the necessary authority or qualifications to perform the control effectively.

A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Company’s ability to initiate, authorize, record, process, or report external financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Company’s annual or interim financial statements that is more than inconsequential will not be prevented or detected by the entity’s internal control.  In connection with our audit of internal control over financial reporting of Audible, we noted the following control deficiencies that we consider to be significant deficiencies in internal control:

Accounting for Retail Promotion Codes

The Company’s policies and procedures associated with retail promotion codes did not provide for a proper reconciliation of customer codes to certain vendor invoices and did not address the accounting for expiration of retail codes.  In addition, the review of the reconciliation relied upon to record the journal entry was not operating effectively, as an error from the third quarter reconciliation was not detected prior to the journal entry being recorded in the general ledger.

Accounting for Royalties

^{[* * *]}

Accounting for and Monitoring of Significant  Non – Routine Contracts

The Company’s policies and procedures did not provide for an adequate review of significant non-routine contracts to ensure proper accounting under U.S. GAAP.  Specifically, the Company did not properly account for rent holidays under the new operating lease agreement for the office space in Newark, NJ.  Additionally, while the Company did put in place a contract database in response to the material weakness on monitoring of contracts in the prior year, the review of the contract listing and sign-off of contract compliance and monitoring by responsible parties was not fully operational as of December 31, 2006.

Insufficient Accounting Personnel

While the Company did hire a new CFO near the end of fiscal 2006 in response to the material weakness noted during the prior year, the Company lacked sufficient accounting resources to address, communicate and remediate certain prior year material weaknesses and significant deficiencies on a timely basis. Further, the accounting personnel were not able to prevent new material weaknesses and significant deficiencies from occurring in fiscal 2006.

^{[* * *]} CONFIDENTIAL TREATMENT REQUESTED BY AUDIBLE, INC., PURSUANT TO RULE 83

Accounting for Income Tax Provision

The Company’s policies and procedures did not provide for an adequate review of the SFAS 109 income tax provision, including the required disclosures.

Identification and Analysis of Withholding Tax

^{[* * *]}

Information Technology General Controls

[* * *]

**********

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected by the entity’s internal control.  In connection with our audit of the Company’s internal control over financial reporting, we noted the following control deficiencies that we consider to be material weaknesses:

Ineffective Execution of Non-Routine Contracts

The Company had inadequate policies and procedures to ensure that financial reporting risks associated with significant non-routine contracts were addressed at a sufficient level of detail so that financial and operating implications could be identified and appropriate actions could be taken to comply with the contracts on a timely basis. This deficiency resulted in the Company’s inability to determine revenue in accordance with the terms of a significant revenue contract.  As a result of this deficiency, there was more than a remote likelihood that a material misstatement of the Company’s annual or interim consolidated financial statements would not be prevented or detected.

^{[* * *]} CONFIDENTIAL TREATMENT REQUESTED BY AUDIBLE, INC., PURSUANT TO RULE 83

Inadequate Financial Information and Communication

The Company did not have effective policies and procedures in place for finance personnel to adequately develop, validate and formally accept certain system-generated reports used in financial reporting. Such system-generated reports did not properly reflect certain customer concessions that were provided by customer service and other customer activities.  As a result of this deficiency, there were errors in consumer content revenue and deferred revenue in the Company’s 2006 consolidated financial statements and more than a remote likelihood that a material misstatement of the Company’s annual or interim consolidated financial statements would not be prevented or detected.

Ineffective Review of Account Analyses

The Company did not have policies and procedures to ensure adequate review of all significant account analyses and spreadsheets used to record journal entries. As a result of this deficiency, there were errors in operating expenses, accrued expenses and additional paid-in capital in the Company’s 2006 consolidated financial statements, on an interim and annual basis.  Also as a result of this deficiency, there was more than a remote likelihood that a material misstatement of the Company’s annual or interim consolidated financial statements would not be prevented or detected.

Inadequate Identification and Analysis of International Non-Income Tax Related Matters

The Company did not have adequate policies and procedures to identify and analyze the financial reporting implications associated with international non-income tax related matters.  This deficiency resulted in the Company’s inability to properly account for value-added tax liabilities in foreign jurisdictions.  As a result of this deficiency, there were errors in content revenue, current liabilities and accumulated deficit, which resulted in a material misstatement in the Company’s 2006 consolidated financial statements and more than a remote likelihood that a material misstatement of the Company’s annual or interim consolidated financial statements would not be prevented or detected.

**********

In connection with our audit of internal control over financial reporting of the Company, we have also identified control deficiencies which remained uncorrected as of December 31, 2006.  A listing and description of these deficiencies are attached to this letter.

**********

This communication is intended solely for the information and use of the board of directors, audit committee, management, and others within the organization, and is not intended to be and should not be used by anyone other than these specified parties.

Very truly yours,

cc: William H. Mitchell – CFO,  Audit Committee Members

II.	Deficiencies in Internal Control Over Financial Reporting
Audible, Inc.
12/31/06 Integrated Audit
Def #	Deficiency Type	Description of control	Description of deficiency	Significant account balance or disclosure	Relevant Assertion	Related Application	COSO Component	Exists at period-end	Likelihood of potential misstatement	Magnitude of potential misstatement (Inconsequential / more than incons.)	Significance of deficiency
2	Management's Assessment Process	None Identified	During the Walkthrough procedures, KPMG noted that management does not have a control in place whereby a reconciliation is performed by comparing the amounts per the Lehman Brothers Complimentary report (preliminary statement) versus the monthly official broker statement.  Based on our audit procedures on such reconciliations, no amount of error was noted.	Short-Term Investments	CEAV	N/A	CA	Yes	More than Remote	Inconsequential - no errors noted during our audit testwork, compensating control in place	Deficiency
5	Transaction Level	N4-12  The Company has a list of all obligations and commitments (maintained by the Finance Department) in which the Company is financially committed.  All contracts are required to be submitted to the Company's legal department to ensure that they are properly reviewed and approved.	The Finance Department does not provide a schedule to the Legal Department of the obligations and commitments currently held by the Company.  Per discussion with Helene Godin, VP and General Counsel, the only review performed is of new and updated contracts.  Furthermore, the list is not maintained in a timely manner.  The last update for the list of commitments occurred on 3/2/06.	Accrued Liabilities, Operating Expenses	CEAVOP	N/A	CA	Yes	More than Remote	Inconsequential	Deficiency
6	Transaction Level	N7-17 The Manager of Financial Reporting and Planning distributes a version of the 10Q/10K and accompanying footnotes to the Vice President and Controller and the CFO for a preliminary review.  As part of this review, the Vice President and Controller will tie all balances back to QuickBooks / NetSuite trial balance and will proof the 10Q/10K.	The control relating to the review of the 10-K is not operating effectively.  During the tie-out of the Form 10-K, KPMG noted several omissions and errors from the report.  The following were noted: 1) incorrect captions in the statement of stockholders' equity statement, 2) the rollforward of deferred revenue for annual membership plans was incorrect, 3) the rollforward of stock options did not include the break-out of forfeitures, 4) the schedule of cash commitments and obligations did not include a further break-out of year five from the then after total.	All	P	N/A	CA	Yes	More than Remote	Inconsequential	Deficiency
9	Transaction Level	Rev. Everest.5  Cash received is reconciled from the FIN01 Report to the Everest Summary Report.  This reconciliation is performed by the Manager of Financial Reporting and Planning.	During our walkthrough procedures, we noted that the control related to the reconciliation of cash from the Everest summary report to the FIN 01 was not designed appropriately.  The reconciliation selected for walkthrough procedures (September 2006) noted an un-reconciled amount greater than $20K.  This deficiency was remediated during Q4 2006, KPMG performed audit procedures on the Everest Revenue Summary as part of our year end procedures and noted such reconciliation was operating effectively.  Since this control has a high risk of failure as this was not tested in the prior year, three quarterly reconciliations need to be tested.  KPMG notes that there is not an adequate sample of reconciliations in order to perform and conclude.	Everest Revenue	CEA	N/A	CA	Yes	Remote	Inconsequential	Deficiency
15	Management's Assessment Process	None Identified	During our audit procedures, KPMG noted that the Company does not have controls in place to properly review and reconcile transactions between the Company and Audible Germany.	A/R - Related Party, A/P - Related Party, Operating Expenses	CEA	N/A	CA	Yes	More than Remote	Inconsequential	Deficiency
16	Company Level	CE-5  In the first quarter of the year, the Company establishes a forecast for the full year.  The plan contains forecasts for revenues, cost of revenues and other operating expenses. The employees develop their annual goal and discussed with the development supervisor to ensure the goal is consistent with the company’s objectives and realistic.	During control testwork, KPMG noted that a number of employees had not completed their goal setting forms for 2006.	N/A	N/A	N/A	IC	Yes	Remote	Inconsequential	Deficiency
20	Transaction Level	N5-2.2  The invoice is signed to indicate receipt of the asset after the item is compared to the packing slip, receiving document, and purchase order.	During our control testwork, it was noted that the control relating to the three way match was not designed appropriately.  When the invoice is paid, there is no review of the packing slip by finance to ensure that the item was received.	Fixed Assets	CEA	N/A	CA	Yes	More than Remote	Inconsequential	Deficiency
21	Company Level	CE-21  The Company has a standard assessment form which is used to interview potential candidates.  In addition, the Company engages background checks on newly hired employees.	Background checks are not being performed for every employee hired by Audible.	N/A	N/A	N/A	CE	Yes	Remote	Inconsequential	Deficiency
28	Transaction Level	N5-2.1  All purchases of website and server equipment, studio equipment, office computers, furniture, and leasehold improvements with a value greater than $1,000 must be reviewed and approved by the CFO or COO prior to purchase.  Purchases over $1,000, but are part of a particular project that, in aggregate, is over $1,000, will be capitalized.	KPMG notes that the Company has a non-GAAP policy in place to expense all items under the $1,000 threshold.  As the aggregate of the fixed assets which should have been capitalized is material, KPMG deems this control to not be designed appropriately.	Fixed Assets, depreciation expense	CEA	N/A	CA	Yes	More than Remote	Inconsequential - total proposed audit adjustment was $21K which is deemed to be the maximum magnitude	Deficiency
43	Transaction Level	N7-24 This UK conversion analysis is prepared by the Manager of Financial Reporting and Planning by using excel spreadsheets and is reviewed and approved (evidenced by signature) by the Vice President and Controller.	During our audit procedures, we noted that the Company was treating all transactions and activities between the US and the UK as long term in nature, resulting in all FX losses/gains being recorded as a component of OCI.  However, based upon our review of the activities within the intercompany accounts, we noted that a number of transactions should be treated as short term.  This control was not operating effectively.	Other Income/Loss, OCI	CEA	N/A	CA	Yes	More than Remote	Inconsequential - KPMG quantified the impact on the consolidated financial statements noting that such FX gains/losses that should have been recorded in the P&L was deemed to be immaterial (less than $20K).	Deficiency