12 February 2013

Accountancy watchdog launches Autonomy inquiry

Britain's chief accountancy enforcer is set to investigate claims that Cambridge-founded software company Autonomy misrepresented its profitability before its £7 billion takeover by Hewlett-Packard in 2011.

By James Barnes

Autonomy's Oxford HQ Cmglee

The Guardian yesterday reported that the Financial Reporting Council (FRC) is to launch a rare investigation which will look into Autonomy’s financial reporting between January 2009 and June 2011, just months before the mega-deal with Palo Alto-headquartered HP.

Write down

Last November, HP claimed that there had been a ‘wilful effort on behalf of certain former Autonomy employees’ to inflate the value of the company ‘to mislead investors and potential buyers’, while HP chief executive Meg Whitman said that the alleged fraud forced HP to write down the value of the British company by £5bn.

Unlimited fine

Autonomy’s former chief executive Mike Lynch – who made in the region of £500m from the sale according to the report - said he ‘utterly rejects all allegations of impropriety’.
Mr Lynch also said he welcomes the FRC investigation, adding: ‘As a member of the FTSE 100 the accounts of Autonomy have previously been reviewed by the FRC, including during the period in question, and no actions or changes were recommended or required.’
A spokesman for the FRC said that individuals could be fined an unlimited amount and banned from serving as directors if the investigation finds evidence of wrongdoing.

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