HP audit finds profit shortfall at Autonomy
BRITISH software firm Autonomy allegedly inflated its revenue and profit by as much as 81 per cent before Hewlett-Packard (HP) bought it for $11bn (£6.74bn) in 2011, according to UK accounts filed by HP on Friday.
Autonomy, currently at the centre of fraud investigations by the Serious Fraud Office (SFO) and the US Department of Justice, reported profit after tax of £105.7m in 2010, but this figure was revised down to just £19.6m in the most recent accounts filed by HP.
“These restatements, and the reasons for them, are consistent with HP’s previous disclosures regarding accounting improprieties in Autonomy’s pre-acquisition financials,” said HP.
HP, which wrote off $8.8bn of Autonomy’s value in 2012, also restated Autonomy’s revenue for 2010 from £175.6m to £81.3m.
The ongoing investigation by the SFO and US Department of Justice centres around allegations that Autonomy booked sales in 2010 that it was unlikely to be paid for.
Former chief executive and founder Michael Lynch, who denies any wrongdoing, said HP’s claims on Autonomy’s revenue are due to misunderstandings in the difference between Autonomy’s use of GAAP accounting standards and HP’s use of IFRS, allowing sales to be recorded at an earlier stage. “We continue to reject these allegations by HP. We know even these include revenue that will be recognised at a later time, under HP’s new approach,” said his spokesperson.