UK accountancy watchdog begins Autonomy probe

The UK Financial Reporting Council (FRC) is to investigate Autonomy's bookkeeping for the 18-month period before it was acquired for £10bn by HP.

According to an announcement on the UK accountancy watchdog's website, the decision was taken following consultation with the Institute for Chartered Accountants in England and Wales.

The multi-billion pound acquisition has gained infamy after HP wrote down much of the value last year, and accused Autonomy's former management of financial misrepresentations.

HP had said it would attempt to recoup much of the money and claimed the acquisition was being investigated by the US Securities and Exchange Commission and the UK's Serious Fraud Office.

The investigation was welcomed by Mike Lynch, Autonomy founder and former chief executive. 

“As a member of the FTSE 100 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,” Lynch wrote on the AutonomyAccounts website, the site set up to rebuff HP's allegations of financial impropriety.

“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."

While the FRC investigation has the potential to embarrass Autonomy's former management, it is Deloitte that would be in the firing line.

The FRC can impose punishments which include unlimited fines, exclusion from membership or withdrawal of practising certificates or licences.

HP had not responded to a request for comment at the time of writing.