UK watchdog launches Autonomy investigationMonday 11 February 2013 15.59
Britain's accountancy regulator said it was investigating the financial reports of British software firm Autonomy before it was bought by Hewlett Packard, a deal which was later subject to accusations of fraud.
The Financial Reporting Council, an independent watchdog that sets standards for accountants and auditors, said it would investigate Autonomy's published accounts between 1 January 2009 and 30 June 2011, two months before the deal was announced.
The probe follows consultation with The Institute of Chartered Accountants of England and Wales, the FRC said.
The body does not have the power to bring criminal charges, but it operates a disciplinary process that can result in the suspension of accountants and fines.
Deloitte, which audited Autonomy's accounts, said it would co-operate fully with the FRC probe.
"As previously stated, Deloitte had no knowledge of any accounting improprieties or misrepresentations in Autonomy's financial statements," a spokesman said.
"We conducted our audit work in full compliance with regulation and professional standards."
US-based PC and printer maker HP paid $11 billion in 2011 to make Autonomy the centrepiece of a shift into software.
However little over a year later it wrote off some $5bn of the company's value and accused its former management of accounting improprieties that inflated the company's value.
Mike Lynch, Autonomy's founder and former chief executive, has strenuously denied the allegations.
He has demanded that HP provide more details, but HP has said that it wants the claims to be heard in court.
A spokeswoman for Autonomy's former management welcomed the FRC investigation, saying it would be the first independent third-party scrutiny of HP's claims.
"Autonomy received unqualified audit reports throughout its life as a public company. This includes the period in question, during which Autonomy was audited by Deloitte. We are fully confident in the financial reporting of the company and look forward to the opportunity to demonstrate this to the FRC."
HP confirmed in December that it had passed evidence from a whistleblower to the USDepartment of Justice, the Securities and Exchange Commission and Britain's Serious Fraud Office.
It is also facing a number of lawsuits from disgruntled shareholders, which allege the company's directors and auditors missed numerous red flags about Autonomy's accounting.