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HP's Autonomy's Accounts To Be Investigated

(c) Sky News 2013

The Financial Reporting Council (FRC) has opened an investigation into the accounts of Autonomy before its takeover by Hewlett-Packard (HP).

The UK's accounting watchdog will study the Cambridge (SES: E1:J91U.SI - news) -based company's financial reporting between 1 January 2009 and 30 June 2011 - three months before it was bought by the US software giant for $11.1bn (£7.1bn).

HP subsequently accused Autonomy of lying about its finances, as it announced a write-down of $8.8bn (£5.5bn) relating to its purchase of the company.

It blamed "serious accounting improprieties, misrepresentation and disclosure failures" at Autonomy for the financial hit, and referred the matter to the Serious Fraud Office.

But the company's former chief executive Mike Lynch, who founded  it in 1996 and made around £500m from the HP deal, has always denied the allegations.

In November he told Sky News he "flatly refuted" HP's comments, and refused to be the US group's "scapegoat".

In a statement, Autonomy's former management team said it welcomed the watchdog's investigation.

It said: "As a member of the FTSE 100 (FTSE: ^FTSE - news) the accounts of Autonomy have previously been reviewed by the FRC, including during the period in question, and no actions or changes were recommended or required.

"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."

FRC, which has the power to impose fines and other sanctions, said it opened the investigation following consultation with the Institute of Chartered Accountants.

Before HP's allegations, Autonomy was considered one of the UK's biggest technology success stories, developing technologies discovered at the University of Cambridge.

It pioneered software that helps companies across the world to search through data taken from databases, audio and video sources.

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