Ernst & Young has become the third of the Big Four to be dragged into controversy surrounding the acquisition of UK software company Autonomy by Hewlett-Packard (HP), with calls for the firm to be dropped from its position as HP’s auditor.
Change to Win Investment Group (CtW), an investor activist group concerned with the use of labour union pension funds, wrote to HP’s corporate governance committee chair Rajiv Gupta, asking HP to replace Ernst and Young in the aftermath of its $11.1bn acquisition in October 2011.
The fallout from this acquisition has already seen shareholders sue Deloitte, KPMG and HP directors, after the deal was written down by $8.8bn.
CtW is connected with large labour union pension funds, with CtW claiming its fund holds over $200bn (£129bn) in assets, including HP shares.
The letter said that "HP is clearly a company facing serious challenges," adding: "Unfortunately, the highly conflicted, decade-long relationship between Ernst & Young and HP cannot provide shareholders with the reassurance they need."
Although Ernst & Young was not Autonomy’s auditor, CtW claim it had the opportunity to spot Autonomy’s problems when it reviewed the goodwill, or intangible value, that HP recorded for its acquisition of Autonomy.
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