PracticeAuditFRC to investigate Autonomy over financials

FRC to investigate Autonomy over financials

The FRC is investigating Autonomy over alleged misrepresentations made in its accounts prior to its acquisition by Hewlett Packard

FRC to investigate Autonomy over financials

THE FINANCIAL REPORTING COUNCIL is undertaking an investigation into software firm Autonomy over its accounts for the period between January 2009 and June 2011.

Autonomy was acquired by Hewlett Packard (HP) in an $11bn (£6.87bn) deal in August 2011, but just 15 months later it was forced to write down £5.5bn in impairment costs, the majority of which it claimed was caused by “serious accounting improprieties, misrepresentation and disclosure failures” to misrepresent the business.

The alleged misrepresentations, discovered by PwC during a forensic review of Autonomy’s accounting practices, were said to have been flagged up a by a “senior member of Autonomy’s leadership team”, who said there were “questionable accounting practices” at the UK business prior to its acquisition.

HP chief executive Meg Whitman told analysts on the day of the write-down announcement that HP had relied heavily on the financial data audited by Deloitte, and brought in KPMG to essentially audit Deloitte’s work in a due diligence exercise.

Subsequently, lawsuits have been filed by investors, one alleging that Deloitte and KPMG missed numerous red flags – something both firms denied at the time – while the other suggested HP knew of misleading statements in the acquisition.

Following the acquisition, Citi analysts criticised the way financial reporting is policed by the FRC, branding it “toothless” and called for greater transparency.

Related Articles

KPMG replaces PwC as Croda auditor

Accounting Firms KPMG replaces PwC as Croda auditor

1m Emma Smith, Managing Editor
FRC closes investigation into PwC over Barclays compliance

Accounting Firms FRC closes investigation into PwC over Barclays compliance

1m Alia Shoaib, Reporter
KPMG rocked by South African corruption scandal

Audit KPMG rocked by South African corruption scandal

2m Alia Shoaib, Reporter
PwC to take over from Deloitte as Diploma auditor

Accounting Firms PwC to take over from Deloitte as Diploma auditor

2m Alia Shoaib, Reporter
Deloitte rises in auditor rankings with most FTSE 250 clients

Accounting Firms Deloitte rises in auditor rankings with most FTSE 250 clients

3m Alia Shoaib, Reporter
BDO replaces Deloitte as Mitie auditor

Audit BDO replaces Deloitte as Mitie auditor

2m Emma Smith, Managing Editor
FRC closes KPMG HBOS audit investigation, Treasury Committee expects ‘full explanation’

Accounting Firms FRC closes KPMG HBOS audit investigation, Treasury Committee expects ‘full explanation’

2m Emma Smith, Managing Editor
PwC to audit BBC pay policies following gender pay gap outrage

Accounting Firms PwC to audit BBC pay policies following gender pay gap outrage

2m Alia Shoaib, Reporter