U.K. regulators are stepping in to have a look into Hewlett-Packard Co.’s accusations of accounting fraud against Autonomy.
HP announced in November 2012 that it would be taking a multibillion-dollar charge over unexpected losses related to its purchase of Autonomy in 2011. HP claimed Autonomy misrepresented itself during deal discussions and as a result, Autonomy failed to deliver the growth HP expected.
Now, the U.K.’s Financial Reporting Council (FRC) is getting involved, probing into Autonomy’s published accounting records between January 2009 and June 2011, the years and months leading up to HP’s acquisition of the company.
HP claims Autonomy bulked up hardware sales to appear more profitable and used transactions with its software resellers to increase revenue recognition or fabricated sales. HP said it learned of Autonomy’s fraudulent activity through the help of a whistleblower.
Autonomy has come out in defense of these allegations. "We continue to reject these allegations in the strongest possible terms. Autonomy's financial accounts were properly maintained in accordance with applicable regulations, fully audited by Deloitte and available to HP during the due diligence process," Autonomy founder Mike Lynch said in a January statement.
Lynch said today that he looks forward to the FRC’s findings.
Read more about this investigation on Bloomberg.
For more InsideCounsel stories about this case, see:
Autonomy founder Mike Lynch defends company’s books
HP sued over Autonomy-deal accounting fiasco
WSJ Law Blog: Are lawyers to blame for the HP-Autonomy mess?
