HR Block 2005 Annual Report Download - page 105

and non-audit services provided by the independent auditors. The KPMG LLP audited our 2005 and 2004 consolidated financial
independent auditors and the chief internal auditor have full statements and PricewaterhouseCoopers LLP audited our 2003
access to the Audit Committee and meet, both with and without consolidated financial statements. Their audits were conducted in
management present, to discuss the scope and results of their accordance with the standards of the Public Company
audits, including internal control, audit and financial matters. Accounting Oversight Board (U.S.).
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING ⬎⬎⬎
Management is responsible for establishing and maintaining historical analysis and related reconciliations to ensure tax
adequate internal control over financial reporting, as such term is balances were appropriately stated prior to the completion of the
defined in Exchange Act Rules 13a-15(f). Under the supervision Company’s internal control activities. These deficiencies resulted
and with the participation of management, including our Chief in errors in the Company’s accounting for income taxes. These
Executive Officer and Chief Financial Officer, we conducted an errors were corrected prior to issuance of the consolidated
evaluation of the effectiveness of our internal control over financial statements as of and for the year ended April 30, 2005. In
financial reporting based on the framework in ‘‘Internal Control – the aggregate, these deficiencies represent a material weakness
Integrated Framework’’ issued by the Committee of Sponsoring in internal control over financial reporting on the basis that there
Organizations of the Treadway Commission (‘‘COSO’’) as of is a more than remote likelihood that a material misstatement of
April 30, 2005. the Company’s annual or interim financial statements will not be
Based on our assessment, management determined that a prevented or detected by its internal control over financial
material weakness existed in the Company’s internal controls reporting. Because of this material weakness in internal control
over accounting for income taxes as of April 30, 2005. over financial reporting, management concluded that, as of
Specifically, the Company did not maintain sufficient resources in April 30, 2005, the Company’s internal control over financial
the corporate tax function to accurately identify, evaluate and reporting was not effective based on the criteria set forth by
report, in a timely manner, non-routine and complex transactions. COSO.
In addition, the Company had not completed the requisite
Mark A. Ernst William L. Trubeck
Chairman of the Board, President and Chief Executive Officer Executive Vice President and Chief Financial Officer
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ⬎⬎⬎
The Board of Directors and Stockholders of H&R Block, Inc.: disclosures in the financial statements. An audit also includes
We have audited the accompanying consolidated balance assessing the accounting principles used and significant
sheets of H&R Block, Inc. and its subsidiaries (the Company) as estimates made by management, as well as evaluating the overall
of April 30, 2005 and 2004, and the related consolidated financial statement presentation. We believe that our audits
statements of income and comprehensive income, stockholders’ provide a reasonable basis for our opinion.
equity, and cash flows for each of the years in the two-year period In our opinion, the consolidated financial statements referred
ended April 30, 2005. These consolidated financial statements are to above present fairly, in all material respects, the financial
the responsibility of the Company’s management. Our position of H&R Block, Inc. and its subsidiaries as of April 30,
responsibility is to express an opinion on these consolidated 2005 and 2004, and the results of their operations and their cash
financial statements based on our audits. flows for each of the years in the two-year period ended April 30,
We conducted our audits in accordance with the standards of 2005, in conformity with U.S. generally accepted accounting
the Public Company Accounting Oversight Board (United States). principles.
Those standards require that we plan and perform the audit to As discussed in Note 1 to the consolidated financial statements,
obtain reasonable assurance about whether the financial the Company changed its method of accounting to adopt
statements are free of material misstatement. An audit includes Emerging Issues Task Force Issue No. 00-21, ‘‘Revenue
examining, on a test basis, evidence supporting the amounts and Arrangements with Multiple Deliverables,’’ and Statement of
H&R BLOCK 2005 Form 10K
43