HR Block 2005 Annual Report Download - page 106

Financial Accounting Standards No. 148, ‘‘Accounting for Stock- Committee of Sponsoring Organizations of the Treadway
Based Compensation – Transition and Disclosure’’ during the year Commission (‘‘COSO’’), and our report dated July 29, 2005
ended April 30, 2004. expressed an unqualified opinion on management’s assessment
As discussed in Note 2 to the consolidated financial statements, of, and an adverse opinion on the effective operation of, internal
the Company restated its financial statements for its fiscal year control over financial reporting.
ended April 30, 2004.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
effectiveness of the Company’s internal control over financial Kansas City, Missouri
reporting as of April 30, 2005, based on criteria established in July 29, 2005, except as to note 19,
Internal Control – Integrated Framework issued by the which is as of August 4, 2005
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ⬎⬎⬎
The Board of Directors and Stockholders of H&R Block, Inc.: that (1) pertain to the maintenance of records that, in reasonable
We have audited management’s assessment, included in the detail, accurately and fairly reflect the transactions and
accompanying Management’s Report On Internal Control Over dispositions of the assets of the company; (2) provide reasonable
Financial Reporting (Item 9A(b)),that H&R Block, Inc. and assurance that transactions are recorded as necessary to permit
subsidiaries (the Company) did not maintain effective internal preparation of financial statements in accordance with generally
control over financial reporting as of April 30, 2005, because of accepted accounting principles, and that receipts and
the effect of the material weakness identified in management’s expenditures of the company are being made only in accordance
assessment that the Company’s controls and procedures over with authorizations of management and directors of the
accounting for income taxes were ineffective, based on criteria company; and (3) provide reasonable assurance regarding
established in Internal Control – Integrated Framework issued prevention or timely detection of unauthorized acquisition, use,
by the Committee of Sponsoring Organizations of the Treadway or disposition of the company’s assets that could have a material
Commission (‘‘COSO’’). The Company’s management is effect on the financial statements.
responsible for maintaining effective internal control over Because of its inherent limitations, internal control over
financial reporting and for its assessment of the effectiveness of financial reporting may not prevent or detect misstatements.
internal control over financial reporting. Our responsibility is to Also, projections of any evaluation of effectiveness to future
express an opinion on management’s assessment and an opinion periods are subject to the risk that controls may become
on the effectiveness of the Company’s internal control over inadequate because of changes in conditions, or that the degree
financial reporting based on our audit. of compliance with the policies or procedures may deteriorate.
A material weakness is a control deficiency, or combination of
We conducted our audit in accordance with the standards of
control deficiencies, that results in more than a remote likelihood
the Public Company Accounting Oversight Board (United States).
that a material misstatement of the annual or interim financial
Those standards require that we plan and perform the audit to statements will not be prevented or detected. The following
obtain reasonable assurance about whether effective internal material weakness has been identified and included in
control over financial reporting was maintained in all material management’s assessment: The Company did not maintain
respects. Our audit included obtaining an understanding of sufficient resources in the corporate tax function to accurately
internal control over financial reporting, evaluating identify, evaluate and report, in a timely manner, nonroutine and
management’s assessment, testing and evaluating the design and complex transactions. In addition, the Company had not
operating effectiveness of internal control, and performing such completed the requisite historical analysis and related
other procedures as we considered necessary in the reconciliations to ensure tax balances were appropriately stated
circumstances. We believe that our audit provides a reasonable prior to the completion of the Company’s internal control
basis for our opinion. activities. These deficiencies resulted in errors in the Company’s
A company’s internal control over financial reporting is a accounting for income taxes. Because of these deficiencies, there
process designed to provide reasonable assurance regarding the is more than a remote likelihood that a material misstatement in
reliability of financial reporting and the preparation of financial the Company’s annual or interim financial statements due to
statements for external purposes in accordance with generally errors in accounting for income taxes could occur and not be
accepted accounting principles. A company’s internal control prevented or detected by its internal control over financial
over financial reporting includes those policies and procedures reporting.
H&R BLOCK 2005 Form 10K
44