Now UK watchdog to scruntise Autonomy accounts
Inquiry follows Hewlett-Packard's allegations after $8bn write-off on purchase
Tuesday 12 February 2013
The software company Autonomy is to be investigated by the UK's accountancy watchdog over its financial statements in the lead-up to its $11.1bn (£7.1bn) takeover by US giant Hewlett-Packard in 2011.
HP wrote off $8.8bn of the purchase price paid for Autonomy last November, of which it said $5bn was "linked to serious accounting improprieties, misrepresentation and disclosure failures".
The Financial Reporting Council (FRC) is investigating Autonomy's financial reports between January 2009 and June 2011 – audited by Deloitte – after consulting the Institute of Chartered Accountants. The US Department of Justice is already investigating the accounting claims and HP has also asked the Serious Fraud Office to look into the allegations.
Autonomy's former chief executive Mike Lynch, who denies the charges, founded the company in Cambridge in 1996. He personally made around £500m on the sale of the business, although many analysts said at the time that Hewlett-Packard had overpaid. He left the company in May last year.
Mr Lynch said: "The accounts of Autonomy have previously been reviewed by the FRC, including during the period in question, and no actions or changes were recommended or required. Autonomy received unqualified audit reports throughout its life as a public company. This includes the period in question, during which Autonomy was audited by Deloitte. We are fully confident in the financial reporting of the company and look forward to the opportunity to demonstrate this to the FRC."
The FRC can issue an unlimited fine if a disciplinary tribunal upholds a complaint. The biggest fine it has issued was £1.4m against PricewaterhouseCoopers over its auditing of the investment bank JP Morgan. The body could also as an extreme measure withdraw an accountant or auditor's licence to practice.
Deloitte said: "We will co-operate fully with the FRC's investigation … . Deloitte had no knowledge of any accounting improprieties or misrepresentations in Autonomy's financial statements. We conducted our audit work in full compliance with regulation and professional standards."
Sources close to the financial services firm said it was unsurprising that the FRC was investigating.
HP stunned markets three months ago when it said an investigation prompted by a whistleblower had found what appeared to be a "wilful effort on behalf of certain former Autonomy employees" to inflate the value of the company, and "to mislead investors and potential buyers".
The US group, which is struggling against a backdrop of shrinking PC and printer sales, was attracted by Autonomy's high-margin software, which allows users to search "unstructured" data sources such as emails and videos, as well as a roster of blue-clip clients including multinational corporations and government agencies. Autonomy allegedly booked low-margin hardware sales as much higher-margin software licensing revenues, making the company potentially appear more valuable. HP is being sued by US investors over the deal.
- 1 BBC told new political editor must be 'impartial' with Nick Robinson reportedly stepping down
- 2 Number of young homeless people in Britain is 'more than three times the official figures'
- 3 Humans of New York image of crying gay teen receives best response yet from Ellen DeGeneres
- 4 The map showing the most dangerous tourist destinations in Europe, according to the Foreign Office
- 5 Swedish minister gives strongest case yet on why EU should stop turning away asylum seekers
BBC told new political editor must be 'impartial' with Nick Robinson reportedly stepping down
Isis propaganda video shows 25 Syrian soldiers executed by teenage militants in Palmyra
Number of young homeless people in Britain is 'more than three times the official figures'
Humans of New York image of crying gay teen receives best response yet from Ellen DeGeneres
The map showing the most dangerous tourist destinations in Europe, according to the Foreign Office
More Britons believe that multiculturalism makes the country worse - not better, says poll
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...