HR Block 2006 Annual Report Download - page 144

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES –Executive Officer and Chief Financial Officer have concluded that our
We have established disclosure controls and procedures (Disclosure Disclosure Controls were effective as of the end of the period covered
Controls) to ensure that information required to be disclosed in the by this Annual Report on Form 10-K.
Company’s reports filed under the Securities Exchange Act of 1934, as (b) MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER
amended, is recorded, processed, summarized and reported within the FINANCIAL REPORTING –Management is responsible for establishing
time periods specified in the U.S. Securities and Exchange and maintaining adequate internal control over financial reporting, as
Commission’s rules and forms. Disclosure Controls are also designed to such term is defined in Exchange Act Rules 13a-15(f). Under the
ensure that such information is accumulated and communicated to supervision and with the participation of management, including our
management, including the CEO and CFO, as appropriate to allow Chief Executive Officer and Chief Financial Officer, we conducted an
timely decisions regarding required disclosure. Our Disclosure Controls evaluation of the effectiveness of our internal control over financial
were designed to provide reasonable assurance that the controls and reporting based on the framework in ‘‘Internal Control – Integrated
procedures would meet their objectives. Our management, including the Framework’’ issued by the Committee of Sponsoring Organizations of
Chief Executive Officer and Chief Financial Officer, does not expect the Treadway Commission (COSO) as of April 30, 2006.
that our Disclosure Controls will prevent all error and all fraud. A Based on our assessment, management concluded that, as of April 30,
control system, no matter how well designed and operated, can provide 2006, the Company’s internal control over financial reporting was
only reasonable assurance of achieving the designed control objectives effective based on the criteria set forth by COSO.
and management is required to apply its judgment in evaluating the The Company’s external auditors, KPMG LLP, an independent
cost-benefit relationship of possible controls and procedures. Because registered public accounting firm, have issued an audit report on our
of the inherent limitations in all control systems, no evaluation of assessment of the Company’s internal control over financial reporting.
controls can provide absolute assurance that all control issues and This report appears in Item 8.
instances of fraud, if any, within the Company have been detected. (c) CHANGES IN INTERNAL CONTROL OVER FINANCIAL
These inherent limitations include the realities that judgments in REPORTING –During the fourth quarter of fiscal year 2006, we
decision-making can be faulty, and that breakdowns can occur because completed remediation efforts relating to a material weakness in our
of simple error or mistake. Additionally, controls can be circumvented controls over accounting for income taxes that was reported as of
by the individual acts of some persons, by collusions of two or more April 30, 2005. In addition to control enhancements identified in our
people, or by management override of the control. Because of the previously filed reports on Form 10-Q, management implemented
inherent limitations in a cost-effective, maturing control system, additional improvements to controls in the state income tax rate
misstatements due to error or fraud may occur and not be detected. calculation process to incorporate the use of current period pro forma
As of the end of the period covered by this Form 10-K, we evaluated federal and state taxable income calculations and the use of current and
the effectiveness of the design and operation of our Disclosure projected state apportionment factors, among other data inputs.
Controls. The controls evaluation was done under the supervision and Other than the changes outlined above, there were no changes that
with the participation of management, including our Chief Executive materially affected, or are reasonably likely to materially affect, our
Officer and Chief Financial Officer. Based on this evaluation, our Chief internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
74
H&R BLOCK 2006 Form 10K