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Block questions McGladrey strategy; More news
7/23/2009

H&R BLOCK QUESTIONS McGLADREY LEADERSHIP’S STRATEGY

H&R Block’s senior management wasted little time in striking back at leaders of McGladrey & Pullen. Just two days ago, the Bloomington, Minn.-based audit firm said it was breaking off its 10-year alternative business structure with the Kansas City, Mo.-based tax and consulting services provider. HRB’s strong response questioned the strategy while appearing to attempt a split among M&P partners and threaten the firm’s future business.

"We believe the path proposed by certain of M&P's leaders is fraught with significant business and financial risk and is not in the best interest of M&P partners, employees or clients,” Russ Smyth, HRB’s president-CEO, said in a limited-distribution press release. “Whether the full M&P partnership is willing to assume these immense risks remains to be seen. We would prefer to continue working cooperatively to build better client service capabilities and to capitalize on opportunities for future mutually beneficial growth. However, if necessary, we are fully prepared to replace M&P in the overall business, and to make the necessary arrangements to assist clients transitioning their attest work."

According to a trusted source, there was no dissension during a 90-minute conference call among M&P partners and led by Dave Scudder, the firm’s MP, this past Tuesday. Partners are either behind Scudder’s strategy or unwilling to question the plan before the partner group.

Smyth’s admonition that HRB may find a replacement for M&P attest services may be more bombastic than...

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LEGAL DOCKET…

ERNST & YOUNG – A Fort Lauderdale , Fla., jury rejected a request for a $400 million judgment Wednesday and ordered the firm to pay $10.2 million on a negligent audit claim. The verdict eliminates the possibility of a punitive damage award. Alan Schein, a Dania Beach businessman, sought damages for himself and a mortgage marketing company he sold to Superior Bank, Hinsdale , Ill. , before the bank failed in 2001. Although Schein accused E&Y of “some real nasty stuff,” according to...

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