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Barrett warned by auditor

November 10, 2015

Barrett Business Services Inc. (NASD: BBSI) reported its audit committee received a letter from its independent registered public accounting firm, Moss Adams LLP, stating Barrett’s unaudited interim consolidated financial statements as of June 30, 2014, and for the periods then ended, can no longer be relied upon. Additionally, Moss Adams said it will not be in a position to complete its required review of Barrett’s financial statements for the quarter ended Sept. 30, 2015, by the filing due date.

Barrett, a Vancouver, Wash.-based provider of staffing and PEO services, received the letter Nov. 4, according to a filing with the US Securities and Exchange Commission.

In connection with receipt of the letter, Barrett’s audit committee engaged Stoll Berne as independent legal counsel to conduct an independent investigation regarding Barrett’s workers’ compensation reserve for the quarter ended June 30, 2014.

The audit committee believes the notice from Moss Adams was triggered by Moss Adams’ recently becoming aware of an actuarial analysis prepared by a consultant engaged by Barrett to, among other things, work with its independent actuary of record at the time. In October 2014, the company engaged the actuarial side of the consulting firm as its independent actuary to replace its previous actuary of record.

Moss Adams states in its letter that it has become aware of information indicating that an illegal act may have occurred with respect to Barrett's workers’ compensation expense reserve as reported in the Form 10-Q filing as of June 30, 2014.

"The Moss Adams letter relates to the quarter ended June 30, 2014, which was the quarter immediately preceding the company's decision to record an $80 million charge to strengthen its workers' compensation reserves in the 2014 third quarter,” said Thomas J. Carley, chairman of BBSI's audit committee. “At the July 28, 2014 audit committee meeting, the audit committee concluded that sufficiently reliable actuarial data was not available to support a higher reserve for the quarter ended June 30, 2014."

In May, the San Francisco office of the Securities and Exchange Commission’s Division of Enforcement obtained a Formal Order of Investigation in connection with its review of the company’s accounting practices with regard to its workers’ compensation reserves.