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February 11, 2013

FRC launches Autonomy investigation

The Financial Reporting Council (FRC) has launched an investigation into the published financial reports of Autonomy as the British software company is alleged to have inflated its profits prior to being bought by Hewlett-Packard (HP) in October 2011.The FRC is to investigate Autonomy’s accounts for the period between 1 January 2009 and 30 June 2011.

The alleged Autonomy fraud, unveiled by the forensic work of PwC, found Autonomy inflated its profits, which lead to a $5bn write off from the $11.1bn deal.

At the time of the acquisition Autonomy was audited by Deloitte UK and HP is audited by Ernst & Young and there have been calls since the scandal broke in October 2012 by investor groups for HP to replace E&Y.

KPMG was also drafted in at the time of the acquisition to oversee some of the work done by Deloitte.

Both Deloitte and KPMG are being sued by some of HP’s shareholders over alleged misstatements related to the acquisition.The FRC said the decision to investigate was taken following consultation with The Institute of Chartered Accountants in England and Wales (ICAEW).

The FRC’s investigation will investigate whether to bring disciplinary proceedings against a member firm or members and, if so decided, refer the matter to a disciplinary tribunal.

Rleated articlesHP shareholders sue directors, KPMG and Deloitte

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