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HP and Autonomy clash over accounting fraud

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8th Jan 2014
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Hewlett Packard has rejected claims by Mike Lynch that its allegations of fraud against Autonomy's former management are based on misunderstanding international accounting rules as "patently ridiculous".

Lynch, the founder of UK software company Autonomy, made the claim this week after a US Air Force document detailing some of his alleged improprieties emerged, the Telegraph reported.

HP claimed that the alleged accounting irregularities at Autonomy forced it to take an US$8.8bn write-off in 2012, a year after buying the company.

HP is being sued for US$1bn by some of its shareholders over the “vastly overvalued” acquisition of Autonomy.

On 7 January an HP spokesman said: “It is patently ridiculous to continue to claim that these very serious allegations, currently the subject of investigation by both the US Department of Justice and the UK's Serious Fraud Office, are merely the result of a 'misunderstanding' in the difference between US GAAP and IFRS accounting rules.

“The writedown by HP was primarily due to pre-acquisition accounting improprieties, disclosure failure and misrepresentations by former Autonomy senior management.”

According to claims made in the US Air Force document, Autonomy booked revenues from uncompleted transactions at the end of a number of quarters to meet sales targets.

The accusations, made against Autonomy founder Lynch and five other former executives, contain the first details of the alleged accounting irregularities.

A representative for Lynch told the Financial Times that Autonomy’s accounting had been in compliance with international accounting standards.

“We strongly reject HP’s allegations,” a spokesperson for Lynch’s private investment firm was quoted as saying by the FT.

“The few examples seen to date show that HP appears to have had a fundamental misunderstanding of [international] accounting practices, and we vehemently deny anything improper.”

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By carnmores
09th Jan 2014 14:05

Evidence

they should have no problem extracting information from emails etc using autonomy

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By MDK45
13th Jan 2014 08:05

It beggars belief that anybody could pay approx. 13bn for a company only to subsequently write off 9bn!! How did this happen?

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