Regulator the Financial Reporting Council (FRC) is taking Deloitte to a tribunal over alleged failings surrounding IT company Autonomy’s accounting.
UK software company Autonomy was bought by Hewlett Packard in 2011 for $10.3 billion (£6.7 billion).
However in 2012 HP announced an $8.8 billion write-down, with over $5 billion of that due to alleged accounting regularities.
The FRC on Thursday announced that following an investigation into Autonomy’s financial reporting between 2009 and 2011 it was delivering formal complaints under the accountancy scheme to Deloitte and two of its former partners Richard Knights and Nigel Mercer.
It is also bringing actions against Sushovan Hussain, former Autonomy chief financial officer, and Stephen Chamberlain, former vice president of finance.
The FRC alleged that Deloitte, Knights, and Mercer failed to adequately challenge Autonomy’s accounting and disclosure of its purchases and sales of computer hardware and failed to adequately challenge its accounting for transactions with value-added resellers.
It also said they failed to correct false or misleading communications made by Autonomy to the Financial Reporting Review Panel (FRRP) of the FRC.
Knights is also alleged to have breached the fundamental principle of integrity in that he recklessly failed to correct a misleading statement made by Hussain to the FRRP in a meeting in January 2010.
A spokesperson for Deloitte UK, said: “Deloitte acknowledges today’s announcement from the FRC and has fully cooperated with the investigation to date. We are disappointed that these complaints have been brought and we will defend ourselves against them at tribunal.”
Hussain and Chamberlain are alleged to have breached the fundamental principle of integrity by acting dishonestly and or recklessly.
Hussain was convicted of fraud by a US court in May and is currently on bail awaiting sentencing.
Frontpage November 16, 2018
Frontpage February 25, 2020