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Second HP shareholder lawsuit targets major audit firms

updated 08:41 pm EST, Wed November 28, 2012

Deloitte, KPMG charged with missing obvious signs

The saga surrounding HP's multi-billion dollar Autonomy write-down took new turns and added new players today, with the announcement of a second shareholder lawsuit over the faltering computer giant's acquisition of the British software firm. The new suit names not only HP's board of directors, officers, and former executives, but also Deloitte and KPMG, two of the Big Four audit firms, as defendants. The suit alleges that the firms missed multiple red flags that should have alerted them to flaws in Autonomy's accounting.

Reuters reports that the new suit was filed Tuesday in a federal court in San Jose, California. It is the second in what is expected to be a wave of suits surrounding the Autonomy acquisition.

Another suit, filed on Monday, claimed that HP misled investors regarding the Autonomy purchase. That suit, filed in a San Francisco court, claims that HP withheld information from investors regarding the verifiability of Autonomy's financial statements. According to that suit, HP also tried to undo the Autonomy agreement before it closed due to accounting issues, though the company did not inform investors of the action.

The new suit charges multiple HP officials with breach of duty and negligence in the Autonomy acquisition. It also points to KPMG and Deloitte. The latter's UK arm performed the audits of Autonomy, while the former supposedly verified Deloitte's work.

HP officials have steadily maintained since the story broke earlier this week that the issue was one of poor and deceptive accounting standards on Autonomy's part. The computer maker says that it relied on KPMG's audits of Deloitte's work.

KPMG maintains that it was not engaged to oversee Deloitte's audit or to do any audit work on its own. KPMG, in a statement to Reuters, said that it had only provided limited services not related to Autonomy's audit.

Deloitte also denies any responsibility for the due diligence on the Autonomy acquisition. The auditing firm said last week that it did not have any knowledge of any accounting improprieties, and that its last audit opinion on Autonomy was for the year ending December 2010.



By Electronista Staff
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