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HometechnologyHP details Autonomy allegations

HP details Autonomy allegations

Autonomy, the once high-flying U.K. software company at the center of fraud allegations, massively overstated its revenues and profits in the year before its $11 billion acquisition by Hewlett-Packard, the US technology company has claimed.

The claims mark the first time HP has detailed its charge that Autonomy padded its earnings by reporting sales before they were completed or improperly inflated the value of some of its contracts.

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In a statement, former executives including Mike Lynch, the Cambridge university computer scientist who founded and ran Autonomy, rejected the allegations and characterised them as part of an "ongoing accounting dispute".

Adam Jeffery | CNBC

The initial fraud claim, leveled in 2012, has led to investigations by the Department of Justice and Securities and Exchange Commission in the US, as well as the Serious Fraud Office in the U.K..

The latest allegations of accounting irregularities were contained in restated figures filed at Companies House in the U.K., which refer to "extensive errors (including misstatements)" in previous accounts. The accounts are for Autonomy Systems, which HP said accounted for the majority of Autonomy's U.K. business.

According to the revised figures, the unit's revenue came to only £81.3 million in 2010, less than half the amount the company had recorded before, while its pre-tax profits of £19.6 million were 81 percent lower.

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The HP purchase of Autonomy in 2011 marked a high point for the U.K.'s software industry, though that triumph was dashed a year later when the US company wrote down its purchase by $8.8 billion. Some $5 billion of the write down was due to the accounting misstatements, HP said.

Mr Lynch has claimed that the disputed transactions reflect a difference in accounting treatment between the U.S. and U.K.. The international accounting rules that U.K. companies follow allow sales to be recorded at an earlier stage than they would be in the U.S., he has said.


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