HR Block 2005 Annual Report Download - page 146

(c) CHANGES IN INTERNAL CONTROL OVER FINANCIAL 쐍Increased the formality and rigor around the operation of
REPORTING ⬎⬎⬎ As disclosed most recently in our Quarterly key controls.
Report on Form 10-Q for the quarter ended January 31, 2005, Other than the changes outlined above, there were no changes
management had identified an internal control deficiency in our that materially affected, or are reasonably likely to materially
accounting for income taxes. We have dedicated substantial affect, our internal control over financial reporting.
resources to the review of our control processes and procedures In order to remediate the material weakness identified by
specifically related to accounting for income taxes. Based on the management as of April 30, 2005, and continuing thereafter,
results of this review, during the fourth quarter, management management completed the requisite historical analysis including
completed numerous enhancements to improve our internal creation of the necessary tax basis balance sheets and current
controls over financial reporting, specifically those related to and deferred reconciliations required and related internal control
accounting for income taxes, including the following actions: testing to ensure propriety of all tax related financial statement
쐍Implemented a comprehensive set of policies and account balances as of this Form 10-K filing date. The Company
procedures related to accounting for income taxes. believes it has established appropriate controls and procedures
쐍Filled senior-level positions in the corporate tax department and created the appropriate tax account analysis and support
with experienced individuals focusing on corporate tax, subsequent to April 30, 2005. In addition to the above actions,
state/local tax, and mortgage accounting. management will conduct a comprehensive evaluation of the
쐍Engaged a qualified third-party firm to provide corporate tax function, including resource requirements, during
supplementary assistance, REMIC transaction tax expertise, the current fiscal year to identify and implement additional
and to assess the tax implications of select historical and improvements to ensure compliance with the controls and
future securitizations and the adequacy of the model used by procedures that have been put in place to remediate deficiencies
Mortgage Services to track the related book/tax basis previously identified.
adjustments.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following information appearing in our definitive proxy We have adopted a code of business ethics and conduct that
statement, to be filed no later than 120 days after April 30, 2005, is applies to our directors, officers and employees, including our
incorporated herein by reference: chief executive officer, chief financial officer, principal
쐍Information appearing under the heading ‘‘Election of accounting officer and persons performing similar functions. A
Directors’’ copy of the code of business ethics and conduct is available on
쐍Information appearing under the heading ‘‘Section 16(a) our website at www.hrblock.com. We intend to provide
Beneficial Ownership Reporting Compliance’’ information on our website regarding amendments to, or waivers
쐍Information appearing under the heading ‘‘Board of from, the code of business ethics and conduct.
Directors’ Meetings and Committees’’ regarding
identification of the Audit Committee and Audit Committee
financial experts.
H&R BLOCK 2005 Form 10K
84