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Liberty Tax Signs New Auditor

John Hewitt, Liberty Tax Liberty Tax has engaged Carr Riggs & Ingram as its outside auditor. The tax services company also said it has been notified that owing to appointments of two independent directors to its audit committee it is now in compliance with one Nasdaq Listing Rule, although it still needs to issue overdue quarter reports to be in compliance with another Nasdaq requirement.

Liberty has previously said once it had a new auditor on board, it would file its reports for the second quarter ended October 31 and third quarter ended January 31 as soon as practicable. Its failures to file those reports with the SEC drew separate delisting warnings from Nasdaq.

Based in Enterprise, Ala., the new firm replaces KPMG, which resigned in December. The Big Four firm cited what it called “an inappropriate tone at the top which leads to ineffective entity level controls over the organization” caused by the actions of founder and former CEO John Hewitt.

Hewitt was fired on September 5 after an investigation by the audit committee and an outside law firm found complaints about Hewitt’s behavior, including that he allegedly favored a number of female employees with whom he had romantic relationship and had been heard having sex in his office.

However, Hewitt, who remains as chairman, controls the company through the ownership of its Class B stock and replaced two directors and named new appointees to replace others who resigned. The board fired Hewitt’s replacement, Edward Brunot. The new management is pictured as allied with Hewitt. 

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