Autonomy accounting errors in financial report revisions
Hewlett-Packard has revised financial reports for its Autonomy division after the company said that an audit turned up a number of serious accounting errors.
The restatements were revealed in U.K. regulatory filings made on Jan. 31.
HP bought U.K.-based Autonomy in 2011 but subsequently said that an internal investigation had found Autonomy was “substantially overvalued” at the time of the acquisition due to alleged accounting fraud. HP later took an US$8.8 billion write-down on Autonomy based in part on the alleged fraud.
The company has been sparring with former Autonomy CEO Mike Lynch, who has denied HP’s claims. Lynch couldn’t immediately be reached for comment on Monday.
“These restatements, and the reasons for them, are consistent with HP’s previous disclosures regarding accounting improprieties in Autonomy’s pre-acquisition financials,” HP spokesman Michael Thacker said via email on Monday. “The substantial work necessary to prepare these accounts has revealed extensive accounting errors and misrepresentations in the previously issued 2010 audited financial statements, including the problems previously identified by HP.”
For example, the 2010 financial results for Autonomy Systems Limited, a major division of the business, were revised to show a 54 percent decrease in revenue and 81 percent drop in operating profit, according to HP.
Given the “volume and magnitude” of the accounting errors, “it is possible that further errors may remain undetected,” according to one of the U.K. regulatory filings.
The U.K. Serious Fraud Office and U.S. Department of Justice have both opened investigations into the Autonomy deal, which was brokered during the short and rocky tenure of former HP CEO Leo Apotheker.
His successor, Meg Whitman, has said Autonomy’s information management and search software will play a significant role in HP’s growth strategy.