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February 11, 2013

UK watchdog to investigate Autonomy’s accounts

The watchdog's probe will cover the company's accounts for two and a half years up until June 2011.

By CBR Staff Writer

The UK Financial Reporting Council (FRC) has launched an investigation into the financial reports of software firm, Autonomy, which was acquired by Hewlett-Packard (HP) for £7.8bn in 2011.

The FRC’s probe will cover Autonomy accounts published between 1 January 2009 and 30 June 2011 and the work of Deloitte UK which audited the accounts.

The FRC said its decision to initiate an investigation folows after an accusation of fraud and will be consulting with the Institute of Chartered Accountants of England and Wales (ICAEW).

Last year, HP announced that it was writing off $8.8bn of goodwill and intangible assets relating to its acquistion of Autonomy.

Besides the UK watchdog, the US Department of Justice (DOJ) has also started an investigation relating to HP’s acquisition of Autonomy.

Autonomy founder and CEO Mike Lynch denied fraud allegations at the time of the deal.

Commenting on the UK FRC’s probe a spokesman for Lynch said the company welcomed the latest investigation.

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"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," said spokesman.

"We are fully confident in the financial reporting of the company and look forward to the opportunity to demonstrate this to the FRC."

In November 2012, HP was sued by its shareholders who claimed the company knowingly made misleading statements about its controversial Autonomy acquisition.

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