KFORCE INC - Annual Report 2021 | FinancialReports.eu

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

ý ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

¨ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-26058

A. Full title of the plan and the address of the plan, if different from that of the issuer named below:

KFORCE 401(k) RETIREMENT SAVINGS PLAN

B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

KFORCE INC.

1001 EAST PALM AVENUE

TAMPA, FL 33605

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KFORCE 401(k) RETIREMENT SAVINGS PLAN

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	3
FINANCIAL STATEMENTS:
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS	4
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS	5
NOTES TO FINANCIAL STATEMENTS	6
SUPPLEMENTAL SCHEDULES:
FORM 5500, SCHEDULE H, PART IV, LINE 4i—SCHEDULE OF ASSETS (HELD AT END OF YEAR)	10
SIGNATURE	11
EXHIBIT	12

All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 as amended ("ERISA") have been omitted because they are not applicable.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors, Participants, and Plan Administrator

Kforce 401(k) Retirement Savings Plan

Tampa, Florida

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for benefits of the Kforce 401(k) Retirement Savings Plan (the Pla n) as of December 31, 2020 and 2019 and the related statement of changes in net assets available for benefits for the year ended December 31, 2020, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2020 and 2019 and the changes in net assets available for benefits for the year ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Supplemental

The supplemental Form 5500, Schedule H, Part IV, Line 4i – Schedule of Assets (Held at End of Year) has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming an opinion on the supplemental information presented, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ Warren Averett, LLC

We have served as the Plan’s auditor since 2010.

Tampa, Florida

June 25, 2021

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KFORCE 401(k) RETIREMENT SAVINGS PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

	December 31, — 2020	2019
ASSETS
Investments:
At fair value	$ 182,720,499	$ 154,657,300
At contract value	22,643,693	17,626,691
Total investments	205,364,192	172,283,991
Receivables:
Participant contributions	523,236	650,442
Employer contributions	1,380,692	1,197,628
Notes receivable from participants	1,680,359	1,465,033
Total receivables	3,584,287	3,313,103
Total assets	$ 208,948,479	$ 175,597,094
LIABILITIES
Administrative expenses payable	$ 2,840	$ 27,399
Total liabilities	$ 2,840	$ 27,399
Net assets available for benefits	$ 208,945,639	$ 175,569,695

The accompanying notes are an integral part of these financial statements.

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KFORCE 401(k) RETIREMENT SAVINGS PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

	Year Ended December 31, 2020
Investment income:
Net appreciation in fair value of investments	$ 26,303,934
Interest and dividend income	2,387,713
Total investment income	28,691,647
Interest income on notes receivable from participants	77,603
Contributions:
Participant	20,479,471
Employer	1,380,692
Rollovers	4,358,521
Total contributions	26,218,684
Benefits paid to participants	(21,230,606)
Administrative expenses	(626,936)
Other income	245,552
Change in net assets	33,375,944
Net assets available for benefits:
Beginning of year	175,569,695
End of year	$ 208,945,639

The accompanying notes are an integral part of these financial statements.

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KFORCE 401(k) RETIREMENT SAVINGS PLAN

NOTES TO FINANCIAL STATEMENTS

Note 1 - Description of the Plan

General

The Kforce 401(k) Retirement Savings Plan (the “Plan”) is a defined contribution plan sponsored by Kforce Inc. (“Kforce”). Through December 31, 2020, substantially all employees of Kforce are eligible under the Plan, except employees that meet certain exceptions. Prudential Bank & Trust, FSB (“Prudential” or the “Trustee”) is the trustee of the Plan and The Prudential Insurance Company of America is the record-keeper.

The following description of the Plan is provided for general information purposes. Participants should refer to the Plan document for a more complete description of the Plan provisions. If there are any discrepancies between the terms of the Plan and this description, the terms of the Plan shall prevail. The Plan is subject to the provisions of the ERISA.

Eligibility

All employees of Kforce are eligible to participate in the Plan with the exception of employees who are:

• Leased employees under Section 414(n) of the Internal Revenue Code (the “Code”);

• Covered by a collective bargaining agreement that does not provide for participation in the Plan;

• Nonresident aliens with no U.S. source earned income;

• Not residents of the U.S.; or

• Not on the U.S. payroll of Kforce.

Additionally, individuals who are independent contractors, regardless of whether they are subsequently determined to be common law employees, are not eligible to participate.

Contributions

Employee contributions are recorded in the period in which the payroll deductions are withheld from the participant's earnings. Participants may contribute up to 75% of their compensation for the year subject to the limitations provided in the Code, which was $19,500 for those under age 50 and $26,000 for those age 50 and above for 2020. In addition, under the Plan, employee contribution rates are automatically increased by 1% annually (up to a maximum of 8%) for all participants who contribute less than 8% to the plan, excluding highly compensated employees. A participant may elect at any time to stop contributing or to change the contribution rate percentage.

Kforce provides a matching contribution at the discretion of the Board of Directors. Kforce matching contributions, if any, are funded annually in cash to the Plan for eligible participants who, as of the last day of the Plan year, are employed and have completed at least 1,000 hours. Employees are also considered eligible participants if their employment was terminated due to death, total disability or retirement after reaching age 55. For the year ended December 31, 2020, Kforce made matching contributions equal to 10% of each eligible participant’s contributions.

Rollovers

All employees who meet the Plan eligibility requirements are eligible to make cash rollover contributions to the Plan from a previous employer’s qualified retirement plan or a conduit IRA.

Participant Accounts

Participants direct the investment of their contributions into various investment options offered by the Plan. Each participant’s account is credited or charged with the participant’s contributions and allocations of Kforce’s matching contributions, Plan earnings or losses, rollovers and transfers into or withdrawals out of the Plan. In 2015, the Plan eliminated the participant's ability to make new investments in Kforce Inc. common stock.

Vesting

Participants are fully vested in their contributions plus actual earnings thereon, if any. Vesting in Kforce's matching contributions and earnings, if any, is based on years of continuous service. Participants vest at the rate of 20%, 40%, 60% and 100% after two, three, four and five years of service completed, respectively. A participant is 100% vested after five years of credited service or upon death, total disability, normal retirement age or Plan termination.

In-Service Withdrawals

Participants may request the following types of in-service withdrawals from the Plan during any given calendar month:

• Age 59-1/2,

• Financial hardship,

• Rollover contributions, or

• Qualified reservist distributions.

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Notes Receivable from Participants

Participants may borrow money from their vested account balance up to the lesser of $50,000 (reduced by the participant’s highest note receivable balance outstanding within the last 12 months, prior to the date of the note receivable), or 50% of the participant’s vested account balance. The notes receivable are collateralized by the balance in the participant’s account and bear interest at a reasonable fixed rate of interest as defined by the Plan. Principal and interest are generally paid ratably through payroll deductions, but may also be paid directly to the Trustee. Notes receivable must have a definite repayment period greater than 12 months, but not to exceed five years, unless the note receivable is for the purchase of a principal residence, in which case the repayment period must not exceed 15 years.

A participant who terminates employment with an outstanding note receivable has 90 days to pay off the outstanding balance of the note receivable. Upon expiration of the 90 days, the remaining outstanding balance of the note receivable is deemed to be a distribution to the participant. Notes receivable from participants, including interest thereon, are taxable to the participant and subject to applicable excise penalties upon default.

Pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted in March 2020, as amended in the Plan, Plan participants could elect to defer loan repayments that occurred between March 27, 2020 and December 31, 2020 for up to one year. The ability to request to defer loan repayments under the CARES Act ceased as of December 31, 2020.

Benefit Payments

The participant is entitled to receive the vested portion of his or her account upon termination of employment. If the vested amount is $1,000 or less, the account is automatically paid to the participant within a reasonable time frame through a distribution; if the vested amount is greater than $1,000 and less than $5,000, the account is automatically paid to the participant within a reasonable time frame through a rollover into an IRA. If the vested amount is more than $5,000, the participant is required to consent to the distribution. Withdrawals from the Plan are paid in cash or Kforce Inc. common stock to the extent that the vested balance is invested in Kforce Inc. common stock.

Pursuant to the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) enacted, effective January 1, 2020, as amended in the Plan, the age at which required minimum distributions must begin was increased from 70½ to 72.

Pursuant to the CARES Act, as amended in the Plan, Plan participants were permitted to take coronavirus-related distributions in an amount up to $100,000 of the participant's vested balance from the Plan, with repayment terms of up to three years, in accordance with the CARES Act. The ability to request special coronavirus-related distributions under the CARES Act ceased as of December 31, 2020.

At December 31, 2020 and 2019, there were no distribution payments that were processed and approved for payment by the Plan, but not yet paid to participants.

Forfeited Accounts

Non-vested balances resulting from Kforce contributions and earnings are forfeited upon distribution or the date the participant incurs five consecutive one-year breaks in service. A one-year break in service includes any year a participant works less than 500 hours. For terminated employees who receive a distribution but who are re-employed during the five consecutive years following termination, the forfeiture amount shall be restored to the participant’s account if the participant pays back the full amount of the distribution within five years of the re-employment date.

Forfeited non-vested balances are used first to fund any restorations. Any unallocated forfeitures shall be used to reduce administrative expenses payable by the Plan and/or employer matching contributions, if any, then to reduce employer qualified non-elective contributions, and/or to increase the employer matching contributions. Any remaining forfeitures shall be credited to a suspense account to be used for future restorations. During the year ended December 31, 2020, there was approximately $272,000 in matching contributions made using forfeited funds. Forfeited funds in the suspense account at December 31, 2020 and 2019 were approximately $309,000 and $303,000, respectively, which was maintained in the Guaranteed Income Fund.

Plan Termination

Although it has not expressed any intent to do so, Kforce has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts and the trust shall continue until all participants’ accounts have been completely distributed to each participant (or their designated beneficiary) in accordance with the Plan.

Note 2 - Summary of Significant Accounting Policies

Basis of Accounting

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Plan Administrator as defined in the Plan ("Plan Administrator") to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein. Actual results could differ from those estimates.

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Investment Valuation and Income Recognition

The Plan’s investments are stated at fair value, except for the fully benefit-responsive contract, which is recorded at contract value. The Plan’s self-directed accounts hold shares of mutual funds and common stock. Shares of common stock and mutual funds are valued at quoted market prices, which represent the net asset value of shares held by the Plan. The fully benefit-responsive investment contract value includes contributions plus earnings and participant transfers into the fund, less participant withdrawals, administrative expenses and participant transfers out of the fund. Refer to Note 4 - "Investment Contract with Insurance Company" for further discussion on the fully benefit-responsive investment contract.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

Valuation of Notes Receivable from Participants

Notes receivable from participants are measured at the unpaid principal balance plus any accrued and unpaid interest. Delinquent notes receivable are recorded as distributions in accordance with the terms of the Plan document.

Benefit Payments

Benefit payments and withdrawals are recorded when paid.

Administrative Expenses

The Plan's administrative expenses are paid by Kforce, the Plan and/or unallocated forfeitures.

Certain management fees and operating expenses charged to the Plan for investments in mutual funds and mutual funds held in the self-directed accounts are deducted from income or loss on a daily basis and are not separately reflected. These investment-related expenses are included as a reduction in the Net appreciation in fair value of investments in the accompanying Statement of Changes in Net Assets Available for Benefits.

Risks and Uncertainties

The Plan utilizes various investment instruments, including common stock, mutual funds and investment contracts. Investment securities, in general, are exposed to various risks, such as interest rate risk, credit risk and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities could occur in the near term and that such changes could materially affect the amounts reported in the financial statements.

In addition, the COVID-19 outbreak, which was declared a pandemic by the World Health Organization on March 11, 2020, has negatively impacted the world economy. The impact of COVID-19 on investment fund and common stock share prices, and the overall economy as a whole continue to evolve and its future effects on the Plan’s net assets available for benefits and changes in net assets available for benefits are uncertain.

Subsequent Events

The Plan has evaluated subsequent events for potential recognition and disclosure through June 25, 2021, the date the Plan's financial statements were issued. Management has determined that there are no subsequent events to be reported in the accompanying financial statements.

Note 3 - Investments

During the year ended December 31, 2020, the Plan’s investments, including gains and losses on investments purchased, sold and held during the year, appreciated in value as follows:

	Net Realized and Unrealized Appreciation In Fair Value of Investments
Mutual funds	$ 25,849,912
Self-directed accounts	216,787
Kforce Inc. common stock	237,235
Net appreciation in fair value of investments	$ 26,303,934

Note 4 - Investment Contract with Insurance Company

The Plan participates in the Prudential Guaranteed Income Fund ("GIF"), a fully benefit-responsive investment contract with Prudential Retirement Insurance and Annuity Company (“PRIAC”). PRIAC maintains the contributions in its general account, which is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. Participants may direct the withdrawal or transfer of all or a portion of their investment at contract value.

Since the GIF is fully benefit-responsive, contract value is the relevant measurement. Contract value represents contributions plus earnings and participant transfers into the fund, less participant withdrawals, administrative expenses and participant transfers out of the fund.

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The contract has certain restrictions that impact the ability to collect the full contract value, for example, the Plan may not withdraw more than 10% of the value of the general account without incurring a penalty. The Plan Administrator believes that the possibility of the occurrence of events that would cause the Plan to transact at less than contract value is remote. In the case of termination of the investment contract, the contract value would be paid no later than 90 days from the date the Plan sponsor provides notice to discontinue. PRIAC may not terminate the contract at any amount less than contract value.

Note 5 - Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy uses a framework which requires categorizing assets and liabilities into one of three levels based on the inputs used in valuing the asset or liability.

• Level 1 inputs are unadjusted, quoted market prices in active markets for identical assets or liabilities.

• Level 2 inputs are observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

• Level 3 inputs include unobservable inputs that are supported by little, infrequent, or no market activity and reflect management’s own assumptions about inputs used in pricing the asset or liability.

Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The following table sets forth by level, within the fair value hierarchy, the Plan’s investments measured at fair value on a recurring basis at December 31, 2020 and 2019:

Description of Investment	Fair Value Measurements at December 31, 2020 — Total	Level 1	Level 2	Level 3
Mutual funds	$ 177,539,515	$ 177,539,515	$ —	$ —
Kforce Inc. common stock	4,319,534	4,319,534	—	—
Self-directed accounts	861,450	861,450	—	—
Total Investments at fair value	$ 182,720,499	$ 182,720,499	$ —	$ —

Description of Investment	Fair Value Measurements at December 31, 2019 — Total	Level 1	Level 2	Level 3
Mutual funds	$ 148,649,440	$ 148,649,440	$ —	$ —
Kforce Inc. common stock	4,356,841	4,356,841	—	—
Self-directed accounts	1,651,019	1,651,019	—	—
Total Investments at fair value	$ 154,657,300	$ 154,657,300	$ —	$ —

Note 6 - Federal Income Tax Status

The Internal Revenue Service has issued a favorable determination letter dated November 6, 2017, determining that the Plan and related trust were designed in accordance with applicable requirements of the Code and underlying regulations. The Plan has been amended since receiving the favorable determination letter. Kforce and the Plan Administrator believe that the Plan has been and is currently designed and operated in compliance with the applicable requirements of the Code and underlying regulations and that the Plan and related trust continue to be tax-exempt. As such, no provision for income taxes has been included in the Plan’s financial statements.

GAAP requires the Plan Administrator to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan Administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2020 and 2019 there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan is subject to routine audits by taxing authorities; however, there are currently no audits for any tax periods in progress.

Note 7 - Exempt Party-In-Interest Transactions

Certain Plan investments include an unallocated insurance contract managed by the Trustee and, therefore, these transactions qualify as exempt party-in-interest transactions. Fees paid by the Plan participants for the investment management services were included as a reduction of the return earned on each investment.

At December 31, 2020 and 2019, the Plan held 102,626 and 109,744 shares, respectively, of common stock of Kforce, party-in-interest as the sponsoring employer, with a fair value of $4,319,534 and $4,356,841, respectively. During the year ended December 31, 2020, the plan recorded approximately $86,000 in dividend income related to the Kforce common stock. Additionally, the notes receivable from participant employees of Kforce are considered exempt party-in-interest transactions.

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KFORCE 401(k) RETIREMENT SAVINGS PLAN

FORM 5500, SCHEDULE H, PART IV, LINE 4i—SCHEDULE OF ASSETS (HELD AT END OF YEAR)

AS OF DECEMBER 31, 2020

Identity of Party Involved	Description of Investment	Current Value**
Kforce Inc. *	Common Stock	$ 4,319,534
Vanguard Growth Index Institutional	Mutual Fund	34,406,928
American Funds EuroPacific Growth R6	Mutual Fund	26,536,496
Fidelity 500 Index	Mutual Fund	18,113,730
Vanguard Small-Cap Growth Index I	Mutual Fund	15,913,739
MassMutual Select Mid Cap Growth I	Mutual Fund	13,221,602
PGIM Total Return Bond R6	Mutual Fund	11,730,716
Vanguard Small-Cap Index Institutional	Mutual Fund	9,597,858
Vanguard Mid-Cap Value Index Admiral	Mutual Fund	5,733,197
American Funds American Balanced R6	Mutual Fund	6,366,022
Vanguard Mid-Cap Index Fund	Mutual Fund	3,700,199
DFA Intermediate Government Fixed Income Institutional	Mutual Fund	3,582,138
DFA Global Equity Institutional	Mutual Fund	2,685,533
Vanguard Small-Cap Value Index Admiral	Mutual Fund	2,716,614
Vanguard Total International Bond Index Admiral	Mutual Fund	582,841
PIMCO Real Return Fund Institutional	Mutual Fund	2,076,441
Columbia Dividend Income Inst3	Mutual Fund	19,433,481
Federated Hermes Opportunistic HY Bd IS	Mutual Fund	1,141,980
Guaranteed Income Fund*	Unallocated Insurance Contract	22,643,693
Notes receivable from participants*	Interest rates 4.25% to 6.50%, maturing through 2036	1,680,359
Self-Directed Accounts	Mutual Funds/Common Stock	861,450
Total		$ 207,044,551

*	Indicates a party-in-interest to the Plan.
**	Cost information not required for participant directed investments.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

	Kforce 401(k) Retirement Savings Plan
June 25, 2021	/s/ JEFFREY B. HACKMAN
	Jeffrey B. Hackman
	Senior Vice President, Finance and Accounting of the Plan Administrator, Kforce Inc.

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EXHIBIT

Exhibit No.	Description
23.1	Consent of Warren Averett, LLC, Independent Registered Public Accounting Firm

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