Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Hewlett-Packard’s logo is seen outside its Belgian headquarters in Diegem in a file photo. Hewlett-Packard took an $8.8-billion (U.S.) charge related to its acquisition of software firm Autonomy, citing ‘serious accounting improprieties.’

THIERRY ROGE/Reuters

Britain's accountancy regulator said it was investigating the financial reports of British software firm Autonomy before it was bought by Hewlett-Packard Co., a deal that was later subject to accusations of fraud.

The Financial Reporting Council (FRC), an independent watchdog that sets standards for accountants and auditors, said on Monday it would investigate Autonomy's published accounts between Jan. 1, 2009 and June. 30, 2011, two months before the deal was announced.

The probe follows consultation with The Institute of Chartered Accountants of England and Wales, a professional organization for accountants, the FRC said.

Story continues below advertisement

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 & Touche, 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."

U.S.-based PC and printer maker Hewlett-Packard paid $11-billion (U.S.) in 2011 to make Autonomy the centrepiece of a shift into software.

But little over a year later it wrote off some $5-billion 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.

Story continues below advertisement

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 whistle blower to the U.S Department of Justice, the Securities and Exchange Commission and Britain's Serious Fraud Office. It is also facing a number of lawsuits from disgruntled shareholders, who allege the company's directors and auditors missed numerous red flags about Autonomy's accounting.

Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies