This excerpt taken from the KRNY 10-K filed Sep 13, 2007.
Report of Independent Registered Public Accounting Firm
To the Board of Directors
Kearny Financial Corp.
Kearny, New Jersey
We have audited the accompanying consolidated statements of financial condition of Kearny Financial Corp. (the “Company”) and Subsidiaries as of June 30, 2007 and 2006, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended June 30, 2007. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to present fairly, in all material respects, the consolidated financial position of Kearny Financial Corp. and Subsidiaries as of June 30, 2007 and 2006, and the consolidated results of their operations and cash flows for each of the years in the three-year period ended June 30, 2007, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the consolidated financial statements, management decided, during the quarter ended March 31, 2006, to sell its entire portfolio of U.S. Government securities, which were classified as held-to-maturity. As a result of a misapplication of accounting principles, the Company’s remaining investment portfolio was not reclassified as available for sale and recorded at fair value as of June 30, 2006. This error was discovered during the year ended June 30, 2007 and accordingly, the 2006 consolidated financial statements have been restated to correct the error.
As also discussed in Note 1, the Company changed its method of accounting for Defined Benefit Pension and Other Portretirement Plans in 2007.
Kearny Financial Corp.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Kearny Financial Corp.'s internal control over financial reporting as of June 30, 2007, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated September 11, 2007 expressed an adverse opinion on the effectiveness of the Company's internal control over financial reporting because of the effects of a material weakness identified in management’s assessment process.
Beard Miller Company LLP
Pine Brook, New Jersey
September 11, 2007
Kearny Financial Corp. and Subsidiaries