Deloitte and KPMG named as defendants in HP/Autonomy lawsuit
Audit firms accused of missing accounting inconsistencies during acquisition.
Big Four audit firms Deloitte and KPMG have been named as defendants in a second shareholder lawsuit which alledges that they missed numerous red flags about Autonomy's accounting.
The lawsuit was filed in federal court in San Jose, California and 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 is expected to face a barrage of lawsuits by investors seeking to recoup losses. Its shares fell 12 per cent to a 10-year low last week after it announced an $8.8 billion write-down on its acquisition of Autonomy.
HP Chief Executive Meg Whitman has repeatedly said that the company relied on audits of Autonomy, done by the UK arm of Deloitte, when it paid $11.1 billion for Autonomy last year.
HP last week blamed the majority of its $8.8 billion write-down on improper accounting at Autonomy.
Whitman also said HP relied on KPMG's audits of Deloitte's work.
In a statement, 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 "we can say with confidence that we acted responsibly and with integrity," the firm said.
Deloitte said it had nothing to add to its statement last week that it was not responsible for due diligence on the Autonomy acquisition. Deloitte also denied last week that it had any knowledge of any accounting improprieties or misrepresentations in Autonomy's financial statements.
It said its last audit opinion on Autonomy was for the year ended December 2010.
Tuesday's lawsuit also named as defendants Whitman, HP Chief Financial Officer Catherine Lesjak, and former HP CEO Leo Apotheker.
It said the defendants' inadequate due diligence caused billions of dollars of damages to HP and resulted in HP "grossly" overpaying for Autonomy.
A spokesman for HP declined to comment.
The lawsuit was filed by Philip Ricciardi, an HP shareholder since 2007.
The case is Philip Ricciardi, derivatively on behalf of Hewlett-Packard Co, v. various defendants, U.S. District court for the Northern District of California, San Jose, No. 12-6003
