The Financial Reporting Council, the British accounting watchdog, will be investigating the financial report of cloud service provider Autonomy before it was acquired by Hewlett-Packard in 2011. The FRC’s investigations will include financial accounts from the beginning of 2009 until the middle of 2011, before Autonomy was acquired by HP.
Since the beginning of the accounting scandal, Autonomy CEO MIke Lynch has denied fraud allegations and stated that he welcomes the investigation.
“We are fully confident in the financial reporting of the company and look forward to the opportunity to demonstrate this to the F.R.C.,” Lynch said in a statement on behalf of the former management team of Autonomy.
Last year, HP CEO Meg Whitman disclosed that her company lost $8.8 billion in revenue after Autonomy missed 90 percent of its first quarter numbers. The blow came about a year after being acquired by HP for over $10 billion. Whitman accused Lynch of accounting Fraud, which he answered with an open letter to HP’s board, asking them to explain the accusations. HP wasn’t fazed by Lynch’s PR campaign to undermine HP’s credibility, stating that the proper way to go about the whole issue is by legal process.
HP asked the Securities and Exchange Commission as well as the Federal Bureau of Investigation to investigate Autonomy for its unscrupulous accounting practice that led them to believe that the company was doing well enough to warrant an acquisition. HP has since turned to the US Department of Justice in an effort to increase the odds that the $5 billion write down it’s pushing for the Autonomy deal will be green-lighted by officials.
Though the acquisition has brought negative attention to the company, HP stated that it is still committed to Autonomy’s technology.
“We remain 100 percent committed to Autonomy’s industry-leading technologies and its employees,” Whitman said in a previous statement. Autonomy “will play a very significant role in our growth strategy moving forward.”
2012 ended with HP remaining positive about its future with Autonomy, but it looks like it might not hold for long.
Earlier in January, Whitman revealed that this year, HP will be cutting its losses in an effort to balance its books. There’s no telling how Autonomy and its staff fit into this picture, but it could all be worth it in the end for Autonomy CEO Lynch and HP.