Faulty due diligence results in an $8.8 billion write-down and lawsuit against the Audit firm.
HP is expected to face a barrage of lawsuits by investors seeking to recoup losses. Its shares fell 12 percent to a 10-year low last week after it announced an $8.8 billion write-down on its acquisition of Autonomy.
A new lawsuit is filed by Philip Ricciardi, an HP shareholder since 20 over Hewlett-Packard's acquisition of British software firm Autonomy. The Big Four audit firms Deloitte and KPMG are defendants, alleging they missed numerous red flags about Autonomy's accounting.
The lawsuit, also named HP's board of directors, officers, and former executives, alleging breach of duty and negligence for their role in HP's acquisition Autonomy.
HP Chief Executive Meg Whitman has repeatedly said that the company relied on audits of Autonomy, done by the UK arm of Deloitte Touche Tohmatsu, when it paid $11.1 billion for Autonomy last year.
- HP blamed the majority of its $8.8 billion write-down on improper accounting at Autonomy.
- HP relied on KPMG's audits of Deloitte's work
KPMG said it was not engaged to do any audit work or oversee the Deloitte audit work being questioned. KPMG provided limited services not related to Autonomy's audit and said that they acted responsibly and with integrity.
Deloitte said it had nothing to add to its statement and that they were not responsible for due diligence on the Autonomy acquisition. Deloitte also denied that it had any knowledge of any accounting improprieties or misrepresentations in Autonomy's financial statements.
It said that due to inadequate due diligence caused billions of dollars of damages to HP and resulted in HP "grossly" overpaying for Autonomy.
Source. Yahoo and Thomson finance
