<DOCUMENT>
<TYPE>EX-99.77B ACCT LTTR
<SEQUENCE>2
<FILENAME>item77b.txt
<DESCRIPTION>AUDIT LETTER
<TEXT>
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
Aberdeen Australia Equity Fund, Inc.:

In planning and performing our audits of the financial statements of the
Aberdeen Australia Equity Fund, Inc. (the "Fund") as of and for the year ended
October 31, 2010, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), we considered the Fund's internal
control over financial reporting, including controls over safeguarding
securities, as a basis for designing our auditing procedures for the purpose
of expressing our opinion on the financial statements and to comply
with the requirements of Form N-SAR, but not for the purpose of expressing
an opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion.

Management of the Fund is responsible for establishing and maintaining
effective internal control over financial reporting. In fulfilling this
responsibility, estimates and judgments by management are required
to assess the expected benefits and related costs of controls. A company's
internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the Fund;
and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company's assets that
could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with policies or procedures may deteriorate.

A deficiency in internal control over financial reporting 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 material weakness is a deficiency, or a
combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of
the Fund's annual or interim financial statements will not be prevented or
detected on a timely basis.

Our consideration of the Fund's internal control over financial reporting
was for the limited purpose described in the first paragraph and would not
necessarily disclose all deficiencies in internal control that
might be material weaknesses under standards established by the Public
Company Accounting Oversight Board (United States). However, we noted no
deficiencies in the Fund's internal control over financial reporting and
its operations, including controls over safeguarding securities that we
consider to be a material weakness as defined above as of October 31, 2010.

This report is intended solely for the information and use of management
and the Board of Directors of Aberdeen Australia Equity Fund, Inc. and the
Securities and Exchange Commission and is not intended to
be and should not be used by anyone other than these specified parties.


/s/ KPMG LLP



December 28, 2010
Philadelphia, PA


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</DOCUMENT>
