British Regulators to Investigate Accounting at Autonomy

British accounting regulators said on Monday that they would investigate the financial reporting at the British software maker Autonomy before its $11.1 billion acquisition by Hewlett-Packard in 2011.
The announcement comes after accusations from H.P. that Autonomy inflated its sales and carried out improper accounting practices that misled the American technology giant ahead of the multibillion-dollar takeover.
In November, H.P. took a charge of $8.8 billion after it wrote down the acquisition of Autonomy. The figure included around $5 billion related to what H.P. called accounting and disclosure abuses at Autonomy.
Investigations by American authorities, including the Justice Department, are under way. The Financial Reporting Council, the British accounting watchdog, said on Wednesday that it would also examine Autonomy’s financial accounts from the beginning of 2009 to the middle of 2011.
The investigation may take around a year to reach disciplinary proceedings if wrongdoing is discovered, according to a spokeswoman for the council.
Mike Lynch, the founder of Autonomy who has denied the charges of accounting misconduct leveled by H.P., said he welcomed the investigation by British regulators.
“We are fully confident in the financial reporting of the company and look forward to the opportunity to demonstrate this to the F.R.C.,” he said in a statement on behalf of the former management team of Autonomy.

By Mark Scott
Source:
http://dealbook.nytimes.com/2013/02/11/british-regulators-to-investigate-accounting-at-autonomy/?ref=technology

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