Huron Consulting Group (HURN)

Note 1 Organization and Significant Accounting Policies

Wellspring Partners Ltd. and Subsidiary (the “Firm”) was incorporated on January 10, 2000 and is engaged in the business of providing consulting related services to assist hospitals and health care organizations with improving their performance. Operations are conducted primarily from a leased facility located in Chicago, Illinois.

On October 5, 2001, the Firm formed Wellspring Valuation Ltd. in exchange for a 75 percent ownership interest. The subsidiary is engaged in the business of providing valuation and financial consulting services throughout the United States.

Revenue Recognition—The Firm performs various performance improvement related services for health care organizations, valuation services and other financial consulting services and recognizes revenue as the services are performed. Commitment fees are deferred and recognized as revenue over the expected period that fees are earned.

Principles of Consolidation—All significant intercompany transactions and balances have been eliminated. The 25 percent ownership of Wellspring Valuation Ltd. not owned by Wellspring Partners Ltd has been removed from income and equity and reflected as minority interest. The minority interest is included with trade payables and other liabilities and in other operating and administrative expenses in the accompanying financial statements.

Equipment—Equipment is recorded at cost. The provision for depreciation and amortization has been computed using accelerated methods over an estimated life of five, seven and ten years.

Intangible Assets—See Note 9 to the financial statements.

Estimates—In preparing financial statements in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents—The Firm considers all highly liquid debt instruments, acquired with a maturity of three months or less, to be cash equivalents.

Accounts Receivable—The Firm grants trade credit to its clients located throughout the United States. Receivables are valued at management’s estimate of the amount that will ultimately be collected. The allowance for doubtful accounts is based on specific identification of uncollectible accounts and the Firm’s historical collection experience.

Income Taxes—The Firm utilizes the asset and liability method of accounting for income taxes whereby it recognizes deferred tax assets and liabilities for the future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements.

Accrued Rent—Rental expense is recognized over the term of the lease, inclusive of the portion of the term for which a rental concession has been granted, with the amount of the concession being reflected in trade payables and other liabilities on the accompanying balance sheets. Such amounts will be amortized over the term of the lease during which the actual payments of rent are made.

Wellspring Partners Ltd. and Subsidiary

Notes to the Consolidated Financial Statements

Years Ended December 31, 2005 and 2004

Note 1 Organization and Significant Accounting Policies, Continued

Concentration of Credit Risk—The Firm maintains funds in financial institutions that, from time to time, exceed the FDIC insured limit. The Firm has not experienced any losses in such accounts. Management believes that the Firm is not exposed to any significant credit risk on cash and cash equivalents.

Reclassification—Certain 2004 amounts have been reclassified to conform to the 2005 presentation. These reclassifications have not changed the 2004 results.

Stock Options—The Firm accounts for noncash stock-based compensation in accordance with the provisions of Accounting Principles Board Opinion No. 25 (Accounting for Stock Issued to Employees), and its related interpretations, which states that no compensation expense is recognized for stock options or other stock-based awards to employees that are granted with an exercise price equal to or above the estimated fair value per share of the Firm’s common stock on the grant date.

The Firm has adopted the disclosure requirements of Statement of Financial Accounting Standards No. 123 (Accounting for Stock-Based Compensation), which requires certain pro forma disclosures as if compensation expense was determined based on the fair value of the options granted at the date of the grant.

Note 1 Organization and Significant Accounting Policies

Wellspring Partners Ltd. and Subsidiary (the “Firm”) was incorporated on January 10, 2000 and is engaged in the business of providing consulting related services to assist hospitals and health care organizations with improving their performance. Operations are conducted primarily from a leased facility located in Chicago, Illinois.

On October 5, 2001, the Firm formed Wellspring Valuation Ltd. in exchange for a 75 percent ownership interest. The subsidiary is engaged in the business of providing valuation and financial consulting services throughout the United States. On December, 29, 2006, the Firm acquired the remaining shares owned by employees for $1,536,000, which amount was owed as of December 31, 2006 (paid subsequent to balance sheet date). The excess price paid over book value has been reflected as goodwill after adjustments for related minority interest. On January 2, 2007, the Firm was sold to an unrelated party (See Note 11).

On January 9, 2006, the Firm formed Wellspring Advisors, LLC in exchange for a 65 percent ownership interest. The subsidiary was set up to engage in the business of providing financial restructuring for healthcare organizations under bankruptcy throughout the United States. No business was transacted in the subsidiary during the year. The Firm dissolved the partnership on December 28, 2006 and the Firm recorded a loss of $69 on the investment in 2006.

Revenue Recognition—The Firm performs various performance improvement related services for health care organizations, valuation services and other financial consulting services and recognizes revenue as the services are performed. Commitment fees are deferred and recognized as revenue over the expected period that fees are earned. Any unrecognized commitment fees are presented as unearned revenue on the balance sheet.

Principles of Consolidation—All significant intercompany transactions and balances have been eliminated. The 25 percent ownership of Wellspring Valuation Ltd. not owned by Wellspring Partners Ltd at December 31, 2005 has been removed from income and equity and reflected as minority interest at that date. The minority interest is included with trade payables and other liabilities and in other operating and administrative expenses in the accompanying 2005 financial statements. At December 31, 2006, Wellspring Valuation, Ltd. was a wholly owned subsidiary.

Equipment—Equipment is recorded at cost. The provision for depreciation and amortization has been computed using accelerated methods over an estimated life of five, seven and ten years.

Intangible Assets—See Note 10 to the financial statements.

Estimates—In preparing financial statements in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Wellspring Partners Ltd. and Subsidiary

Notes to the Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 1 Organization and Significant Accounting Policies, Continued

Cash and Cash Equivalents—The Firm considers all highly liquid debt instruments, acquired with a maturity of three months or less, to be cash equivalents.

Accounts Receivable—The Firm grants trade credit to its clients located throughout the United States. Receivables are valued at management’s estimate of the amount that will ultimately be collected. The allowance for doubtful accounts is based on specific identification of uncollectible accounts and the Firm’s historical collection experience.

Income Taxes—The Firm utilizes the asset and liability method of accounting for income taxes whereby it recognizes deferred tax assets and liabilities for the future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements.

In July 2006, the FASB issued FASB Interpretation (“FIN”) No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a comprehensive model for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to be taken on a tax return. FIN 48 is effective for fiscal years beginning after December 15, 2006. If there are changes in net assets as a result of application of FIN 48, these will be accounted for as an adjustment to retained earnings.

Accrued Rent—Rental expense is recognized over the term of the lease, inclusive of the portion of the term for which a rental concession has been granted, with the amount of the concession being reflected in trade `payables and other liabilities on the accompanying balance sheets. Such amounts will be amortized over the term of the lease during which the actual payments of rent are made.

Concentration of Credit Risk—The Firm maintains funds in financial institutions that, from time to time, exceed the FDIC insured limit. The Firm has not experienced any losses in such accounts. Management believes that the Firm is not exposed to any significant credit risk on cash and cash equivalents.

Reclassification—Certain 2005 amounts have been reclassified to conform to the 2006 presentation. These reclassifications have not changed the 2005 results.

Stock Based Compensation—On January 1, 2006, the Firm adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”) which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based payment awards made to employees and directors. SFAS 123(R) supersedes Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), for periods beginning in fiscal 2006. SFAS 123(R) requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Firm’s consolidated income statement.

Wellspring Partners Ltd. and Subsidiary

Notes to the Consolidated Financial Statements

Years Ended December 31, 2006 and 2005

Note 1 Organization and Significant Accounting Policies, Continued

Prior to January 1, 2006, the Firm accounted for equity-based awards to employees and directors using the intrinsic value method in accordance with APB 25 as allowed under Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). Compensation expense is equal to the excess, if any, of the market price of the stock over the exercise price on the grant date of the award. Pro forma information regarding net loss was required by SFAS 123 and was determined as if the Firm had accounted for its employee stock options under the minimum value method (which assumes an expected volatility of zero). Statement 123(R) requires nonpublic companies that used the minimum value method of measuring equity share options for pro forma disclosure purposes under SFAS 123 to adopt its requirements prospectively to new awards and to awards modified, repurchased, or cancelled after the required effective date. The Firm continues to account for any portion of awards outstanding at the date of initial application using the accounting principles originally applied to those awards, the provisions of Opinion 25 and its related interpretive guidance.

As discussed in Note 4, the Firm granted 425 options during the year ended December 31, 2006. These options were cancelled at the time of the subsequent event discussed in Note 12. The related compensation expense for the year ended December 31, 2006 was not material.