H&R Block Inc., which prepares tax returns on behalf of millions of Americans, has reportedly made a number of accounting errors of its own. The errors caused the company to overstate earnings for the 2003 and 2004 fiscal years by $91.1 million, according to Bloomberg.
As a result, Block must restate earnings by about 50 cents per share, according to the news service. That’s a huge increase from the 2 cents per share that the company estimated when it announced its accounting review in early June.
For 2003, Block cut earnings by $102.4 million, to $477.6 million, Bloomberg noted. But for 2004, it revised earnings upward by $11.4 million, to $709.2 million.
Most of the changes are the result of errors made when the company accounted for its $850 million acquisition of Olde Financial Corp. in late 1999, according to Bloomberg.
In its 10-K, which was issued today, Block noted that an error in calculating the gain on sale of residual interests in fiscal year 2003 resulted in an overstatement in gain on sales of mortgage assets of $37.6 million.
Further, an error in calculating incentive-compensation accrual in its Mortgage Services segment resulted in a $12.1 million understatement of compensation expense in fiscal 2004.
The company also noted that interest income from accretion increased by $1.2 million in fiscal 2003 and by $18.4 million in fiscal 2004.