HR Block 2013 Annual Report Download - page 21

14 H&R Block 2013 Form 10-K
with the consumer laws by their primary bank regulators. HRB Bank does not currently have assets in excess of $10
billion.
Although the CFPB has extensive rulemaking and enforcement powers that may impact our business operations,
the potential reach of the CFPB's authority on the operations of banks and financial services companies offering consumer
financial services or products, including our bank and financial services subsidiaries, is currently unknown. The CFPB
may examine, and take enforcement actions against, our non-bank subsidiaries that provide consumer financial services
and products. The Dodd-Frank Act also expanded the role of state regulators in enforcing and promulgating consumer
protection laws, the results of which could be states issuing new and broader consumer protection laws, some of which
could be more comprehensive than U.S. federal regulations. New CFPB and state regulations may require changes to
our financial products, services and contracts, the effects of which cannot be predicted.
The nature of our tax service and product offerings requires timely product launches. Any significant
delays in launching our tax service and product offerings, changes in government regulations or
processes that affect how we provide such offerings to our clients, or significant problems with such
offerings may harm our revenue, results of operations and reputation.
Tax laws and tax forms are subject to change each year, and the nature and timing of any such changes are unpredictable.
As a part of our business, we must incorporate any changes to tax laws and tax forms into our tax service and product
offerings, including our H&R Block At Home® online tax services and tax preparation software. The unpredictable
nature of changes to tax laws and tax forms can result in condensed development cycles for our tax service and product
offerings because our clients expect high levels of accuracy and a timely launch of such offerings to prepare and file
their taxes by the tax filing deadline and, in turn, receive any tax refund amounts on a timely basis. In addition,
governmental authorities continually change their processes for accepting tax filings and related tax forms. Any changes
in governmental regulations and processes that affect how we provide services and products to our clients may require
us to make corresponding changes to our client service systems and procedures. Furthermore, any unanticipated changes
in governmental processes for accepting tax filings and related forms, or the ability of taxing authorities to accept
electronic tax return filings, may result in delays in processing our clients' tax filings, or delays in tax authorities
accepting electronic tax return filings, and, in turn, delay any tax refund amounts to which such clients may be entitled.
From time to time, we review and enhance our quality controls for assuring accurate tax returns that we prepare, but
there can be no assurance that we will be able to prevent all inaccuracies.
If we encounter development challenges or discover errors in our services and products late in our development
cycle it may cause us to delay the launch dates of our offerings. Any major defects or launch delays, or failure to
anticipate changes in governmental processes accepting tax filings and related forms, may lead to loss of clients and
revenue, negative publicity, client and employee dissatisfaction, a deterioration in our business relationships with our
franchisees, reduced retailer shelf space and promotions, exposure to litigation and increased operating expenses.
We rely on a single vendor or a limited number of vendors to provide certain key services or products,
and the inability of these key vendors to meet our needs could have a material adverse effect on our
business and our consolidated financial position, results of operations and cash flows.
Historically we have contracted, and in the future will likely continue to contract, with a single vendor or a limited
number of vendors to provide support for our tax, financial and other services and products. In certain instances, we
are vulnerable to vendor error, service inefficiencies, service interruptions or service delays; however, our sensitivity
to any of these issues may be heightened (1) due to the seasonality of our business, (2) with respect to any vendor that
we utilize for the provision of any such product or service that has specialized expertise, (3) with respect to any vendor
which is a sole provider, or (4) with respect to any vendor whose indemnification obligations are limited or who does
not have the financial capacity to satisfy its indemnification obligations. If such a vendor is unable to meet our needs
in a timely manner or if the services or products provided by such a vendor are terminated or otherwise delayed because
the vendor fails to perform adequately, is no longer in business, experiences shortages, or discontinues a certain product
or service that we utilize, or if we are not able to develop alternative sources for these services and products quickly
and cost-effectively, it could result in a material and adverse impact on our business and our consolidated financial
position, results of operations and cash flows.