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EPICOR: OOPS ON TAX REPORTING Featured

Kathy Crusco, EpicorEpicor has discovered "material" errors regarding reporting for income taxes in the financial statements for two years and three quarters of another. This is at least embarrassing as Epicor's audit committee found financial statements for the years ended Sept. 30, 2012 and 2013 and first, second and third quarters fiscal 2014 cannot be relied on because of those errors.

The committee found the mistakes related to the "reconciliation of income tax payable balances, accounting for uncertain tax positions and the impact of amending pre-acquisition legacy Epicor Software Corporation tax returns for our post-acquisition periods." Legacy refers to the company that operated before its acquisition by Apax Partners in 2011 and the combination of the former Epicor and former Activant. However, the committee in consultation with its auditor, KPMG, found the errors "do not impact previously reported revenues, pre-tax income or EBITDA." [Well, those are pre-tax, right?] CFO Kathy Crusco said the finding "will result in about $9 million that can be applied against future taxes."  The report also said the committee identified a material weakness in internal controls over reporting for income taxes. It said the controls were not "effective to ensure that amounts related to current taxes payable, certain deferred tax assets and liabilities, reserves for uncertain tax positions, the current and deferred income tax expense and related footnote disclosures were accurate." The committee hopes to complete a report by year's end.

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