Software firm Autonomy today faced an investigation by the UK’s accountancy watchdog over its financial statements in the lead-up to its $11.1 billion (£7.1 billion) takeover by US giant Hewlett-Packard in 2011.
HP wrote off a mammoth $8.8 billion of the purchase, of which $5 billion was “linked to serious accounting improprieties, misrepresentation and disclosure failures”. Autonomy founder Mike Lynch has vigorously denied the allegations.
The Financial Reporting Council is launching the probe into Autonomy’s financial reports between January 2009 and June 2011, which were audited by Deloitte, after consultation with the Institute of Chartered Accountants in England and Wales. The Serious Fraud Office and the US Department of Justice are already investigating the claims of improprieties.
The FRC has the power to issue an unlimited fine if it decides to go ahead with a disciplinary hearing and a tribunal upholds the complaint. The biggest fine issued by the body so far was £1.4 million against PricewaterhouseCoopers over its auditing of investment bank JP Morgan.
Lynch said on behalf of the firm’s former management: “The accounts 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.”
Deloitte said it “had no knowledge of any accounting improprieties or misrepresentations in Autonomy’s financial statements”.
