UK Corporate Governance Regulator to Investigate Autonomy results

The UK’s Financial Reporting Council (FRC), which sets standards for accounting and auditing, said that it will review financial reporting at Autonomy, following accusations by
Hewlett-Packard (HP)
 that the UK tech firm hid “serious accounting improprieties” when it was acquired by HP in a US$11.1bn deal in October 2011.

The FRC said that it was looking into Autonomy’s published results for the two-and-a-half year period up to 30 June 2011, shortly before the deal was completed. It did not reveal whether it was investigating Autonomy, the company’s former auditor, Deloitte, or both those firms but did confirm that its action followed discussions with the Institute of Chartered Accountants in England and Wales (ICAEW) and that autonomy’s founder and chief executive officer (CEO), Mike Lynch, had been informed.  Lynch left HP several months after the takeover and maintains that the group has mismanaged his former company.

Lynch issued a statement on behalf of the company’s former management in response to the FRC announcement, which read: “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.

“We welcome this investigation. 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.”

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