The ERROR parameter is a custom subroutine for displaying errors from AppConfig. If not specified, errors are displayed via warn. Here's an example of a custom error handler:

sub handle_errors {
  # prefix error message with current time
  my $message = sprintf(@_); 
  my $time = localtime(time);
  warn "$time: $message\n";
}
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And, as FunkyMonk points out, you would tell AppConfig to use this handler with:

my $conf = AppConfig->new({ ..., ERROR => \&handle_errors, ...});
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Update: Thanks to FunkyMonk for pointing out the initial typo I had with the the subroutine's name.