DELOITTE AND KPMG have been named in a lawsuit filed by a Hewlett Packard shareholder, following the announcement that the IT company overvalued its acquisition of Autonomy by billions of dollars.
The legal claim, filed this week in California, alleges that Deloitte, Autonomy's auditor, and KPMG, brought in to conduct some due diligence work on the acquisition, missed numerous red flags, Reuters reports.
Hewlett Packard acquired Autonomy in 2011 for around $11bn (£6.87bn). However, just 15 months after the deal HP was forced to write down $8.8bn, the majority of which HP claims was linked to improper accounting at Autonomy.
HP chief executive Meg Whitman (pictured) told analysts on the day of the write-down announcement that HP had relied heavily on the financial data audited by Deloitte, and brought in KPMG to essentially audit Deloitte's work in a due diligence exercise.
The lawsuit, filed by HP shareholder Philip Ricciardi, also named several HP board directors, officers and former executives, including HP ex-CEO Léo Apotheker, for alleged breach of duty and negligence for their role in the acquisition.
This is the second lawsuit filed against HP this month. Investors have filed a suit against HP claiming it knew that statements from its Autonomy acquisition were misleading, which led to the write-down.
PwC carried out a forensic review of Autonomy's accounting practices following a whistleblower's accusations of accounting irregularities in Autonomy prior to its take-over.
A KPMG spokesman said:"The firm's only role was to provide a limited set of non-audit-related services.
"Within the narrow scope of non-audit tasks KPMG did perform, we can say with confidence that we acted responsibly and with integrity. Our professional obligations and client confidentiality agreements prevent us from speaking in any greater detail without HP's consent."
Deloitte has also previously defended its audit work at UK technology company Autonomy.
"Deloitte categorically denies that it had any knowledge of any accounting improprieties or misrepresentations in Autonomy's financial statements at the time of the write-down announcement," said a Deloitte spokesman.
"We conducted our audit work in full compliance with regulation and professional standards."
Citigroup analysts have criticised the way financial reporting is policed by the UK's accounting watchdog following the Autonomy and HP issues.
Sign up for Financial Director email alerts
Please enter your email below to receive your profile link
Search by job title, salary, or location - we only list senior financial roles
This web seminar will explain how finance directors can monitor and understand the various financial costs of staff turnover, including logistical costs and the impact of lost productivity as new employees are brought up to speed
8.30am, 26 Jun 2014
Targeted at FDs and CFOs, the FD Conference 2014 provides a platform in which to learn from outstanding keynotes and network with like-minded peers
Send to a friend