East Anglia: Autonomy founder Mike Lynch welcomes FRC review following HP allegations
15:11 11 February 2013
THE UK’S accounting watchdog said yesterday it had opened an investigation into software company Autonomy, which has been accused of misleading investors prior to its multibillion dollar takeover by American giant Hewlett-Packard.
The Financial Reporting Council (FRC) will examine Cambridge-based Autonomy’s books covering the period between January 2009 and June 2011, three months before it was bought by the US firm in a £7.1billion deal.
HP recently wrote off 8.8bn US dollars (£5.1bn) from quarterly earnings, with the majority linked to its accusations of “serious accounting improprieties, misrepresentation and disclosure failures” at Autonomy.
Referring the matter to the Serious Fraud Office (SFO), the US firm alleged in November that former members of Autonomy’s management manipulated accounts in a bid to “mislead investors and potential buyers”.
However, Autonomy founder Dr Mike Lynch, who pocketed around £500million from the HP takeover, has always denied the allegations.
In a blog maintained by Dr Lynch on behalf of the former management team, he noted that as a member of the FTSE 100 index the accounts of Autonomy had already been reviewed by the FRC, including the period in question.
Dr Lynch, who lives in Suffolk, added: “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.”
Autonomy was considered one of the UK’s biggest technology success stories, having pioneered software that helps companies to search data, particularly in cases involving compliance and legal issues.
The FRC’s decision to open an investigation follows consultation with the Institute of Chartered Accountants in England and Wales.