HR Block 2009 Annual Report Download - page 10

implemented appropriate changes in the relationship. Such a discussion is currently underway, which could lead
to additional changes in the relationship.
SEASONALITY OF BUSINESS –Revenues for this segment are largely seasonal in nature, with peak revenues
occurring during January through April.
COMPETITIVE CONDITIONS –The accounting, tax and consulting business is highly competitive. The principal
methods of competition are price, service and reputation for quality. There are a substantial number of accounting
firms offering similar services at the international, national, regional and local levels. As our focus is on middle-
market businesses, our principal competition is with national and regional accounting firms.
GOVERNMENT REGULATION –Many of the same federal and state regulations relating to tax preparers and the
information concerning tax reform discussed previously in Tax Services apply to the Business Services segment as
well. RSM is not, and is not eligible to be, a licensed public accounting firm and takes measures to ensure that it
does not provide services prohibited by regulation, such as attest services. RSM, through its subsidiaries, provides
capital markets and wealth management services and is subject to state and federal regulations governing
investment advisors and securities brokers and dealers.
Auditor independence rules of the SEC, the Public Company Accounting Oversight Board (PCAOB) and various
states apply to the Attest Firms as public accounting firms. In applying its auditor independence rules, the SEC
views us and the Attest Firms as a single entity and requires that the SEC independence rules for the Attest Firms
apply to us and requires us to be independent of any SEC audit client of the Attest Firms. The SEC regards any
financial interest or prohibited business relationship we have with a client of the Attest Firms as a financial
interest or prohibited business relationship between the Attest Firms and the client for purposes of applying its
auditor independence rules.
We and the Attest Firms have jointly developed and implemented policies, procedures and controls designed to
ensure the Attest Firms’ independence as audit firms complying with applicable SEC regulations and professional
responsibilities. These policies, procedures and controls are designed to monitor and prevent violations of
applicable independence rules and include, among other things: (1) informing our officers, directors and other
members of senior management concerning auditor independence matters; (2) procedures for monitoring
securities ownership; (3) communicating with SEC audit clients regarding the SEC’s interpretation and
application of relevant independence rules and guidelines; and (4) requiring RSM employees to comply with
the Attest Firms’ independence and relationship policies (including the Attest Firms’ independence compliance
questionnaire procedures).
See discussion in Item 1A, “Risk Factors” for additional information.
CONSUMER FINANCIAL SERVICES
GENERAL –Our Consumer Financial Services segment is engaged in providing retail banking offerings through
HRB Bank, primarily to Tax Services clients in the U.S. HRB Bank offers the H&R Block Prepaid Emerald
MasterCard»and Emerald Advance lines of credit through our Tax Services segment. HRB Bank also offers
traditional banking services including prepaid debit card accounts, checking and savings accounts, individual
retirement accounts and certificates of deposit. Segment revenues constituted 3.5% of our consolidated revenues
from continuing operations for fiscal year 2009, 3.5% for 2008 and 2.1% for 2007. This segment previously included
HRBFA, which was sold to Ameriprise during fiscal year 2009 and has been presented as a discontinued operation
in the accompanying consolidated financial statements.
The operations of HRB Bank are primarily focused on providing limited retail banking services to tax clients of
H&R Block. In fiscal years 2008 and 2007, HRB Bank purchased mortgage loans, primarily from former affiliates.
Although HRB Bank no longer intends to purchase mortgage loans, it continues to hold mortgage loans for
investment purposes. HRB Bank had mortgage loans held for investment of $744.9 million and $966.3 million at
April 30, 2009 and 2008, respectively.
HRB Bank earns interest income on mortgage loans held for investment and other investments, bank card
transaction fees on the use of debit cards, fees from the use of ATM networks and interest and fees related to
Emerald Advance lines of credit. H&R Block and its affiliates provide certain administrative services to HRB Bank.
A significant portion of HRB Bank’s deposit base includes deposits relating to the business of affiliates.
The information required by the SEC’s Industry Guide 3, “Statistical Disclosure by Bank Holding Companies,” is
included in Item 7.
SEASONALITY OF BUSINESS –HRB Bank’s operating results are subject to seasonal fluctuations primarily
related to the offering of the H&R Block Prepaid Emerald MasterCard»and Emerald Advance lines of credit. These
services are primarily offered to Tax Services clients, and therefore peak in January and February and taper off
through the remainder of the tax season.
6H&R BLOCK 2009 Form 10K