HEWLETT PACKARD plans to sue Deloitte over its auditing of Autonomy’s accounts in the two years leading up to its botched acquisition on the UK software company, a lawyer for the computer giant said in a US court on Monday.
HP is locked in a long-running and increasingly bitter dispute with the former management of Autonomy, the company it bought for $11.1bn (£6.7bn) in 2011 and subsequently accused of inflating its profits.
A year after the deal was signed, HP wrote down the value of its purchase by $8.8bn, of which $5bn was attributed to accounting misstatements. In restated accounts published on Companies House earlier this year, HP drastically revised Autonomy’s 2010 performance and claimed to have uncovered “extensive errors (including misstatements)” in the accounts, which were audited by Deloitte.
Deloitte has said that any HP claim “would be utterly without merit” and that it would defend itself strongly against it. “Deloitte was not engaged by HP, or by Autonomy, to provide any due diligence in relation to the acquisition of Autonomy. Deloitte UK was auditor to Autonomy at the time of its acquisition by HP. Deloitte UK conducted its audit work in full compliance with regulation and professional standards,” it said in a statement.
At the same hearing yesterday, US district judge Charles Breyer said he was unable to agree HP’s proposed settlement with investors who launched a lawsuit against HP for destroying shareholder value through the acquisition.
Mike Lynch, Autonomy’s founder and former CEO who denies any wrongdoing, has argued that the difference between Autonomy’s and HP’s valuation of the company stem from different accounting policies applied under US GAAP and IFRS, a claim HP has rubbished as “patently ridiculous’.
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