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Audit firms sued over HP's Autonomy buy out

by on29 November 2012

Missed loads of red flags

Four big audit firms have been sued for missing numerous red flags about Autonomy's accounting before it was flogged to HP.

The lawsuit, filed on Tuesday in federal court in San Jose, California, also named HP's board of directors, officers, and former executives, alleging breach of duty and negligence for their role in HP's acquisition Autonomy. This is expected to be one of many lawsuits by investors seeking to recoup losses as a result of the Autonomy write down. HP's shares fell 12 percent to a 10-year low last week after it announced an $8.8 billion write-down on its acquisition of Autonomy.

HP Chief Executive Meg Whitman has said that the company relied on audits of Autonomy, done by the UK arm of Deloitte Touche Tohmatsu, when it paid $11.1 billion for Autonomy last year. She also added that HP relied on KPMG's audits of Deloitte's work.

But KPMG said it was not engaged to do any audit work or oversee the Deloitte audit work being questioned. Deloitte said it was not responsible for due diligence on the Autonomy acquisition. It said its last audit opinion on Autonomy was for the year ended December 2010.

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