Accounting giants Deloitte and KMPG are being named in a new class-action lawsuit filed in the HP-Autonomy accounting scandal case, according to a Reuters report.
The new lawsuit, which was filed in federal court in San Jose, Calif., also names HP's board of directors and other officers of HP, alleging breach of duty and negligence.
The accounting firms are coming under fire in the wake of HP's disclosure last week that it was taking an $8.8 billion non-cash impairment charge related to the Autonomy acquisition. In fact, HP claims it was duped into paying too much for Autonomy, a cloud computing enterprise software company.
[Related: HP's Board: Do You Trust These 11 People?]
HP has said that former members of Autonomy's management used "accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company," prior to the HP acquisition. HP has referred the case to the U.S. Securities and Exchange Commission and the United Kingdom's Serious Fraud Office for what it has called civil and criminal investigation.
Both Deloitte and KPMG have denied wrong-doing with regard to the Autonomy acquisition. HP did not have a comment at this time. Deloitte had not issued a formal statement to CRN at press time.
KPMG, however, said in a written statement that the claims made against the firm are "based on incorrect understandings about the firm's role in this matter and are without merit."
"KPMG was not engaged by HP to perform any audit work on this matter," said in a prepared statement. "The firm's only role was to provide a limited set of non-audit related services. KPMG did not audit or oversee the work being questioned regarding Deloitte's audit of Autonomy, nor did KPMG review Deloitte's work papers as part of this engagement. Within the narrow scope of non-audit tasks KPMG did perform, we can say with confidence that we acted responsibly and with integrity. Our professional obligations and client confidentiality agreements prevent us from speaking in any greater detail without HP's consent.”
HP CEO Meg Whitman has pointed the finger at both Deloitte and KPMG as prime targets in the accounting scandal along with former HP CEO Leo Apotheker and former HP strategy chief Shane Robison.
As for the role of the HP Board of Directors, Whitman last week told Wall Street analysts: "The board relied on audited financials, audited by Deloitte, not brand X accounting firm but Deloitte and, by the way, during our very extensive due diligence process, we hired KPMG to audit Deloitte, and neither of them saw what we now see after someone came forward to point us in the right direction."
A top executive for one of HP's enterprise partners, who did not want to be identified, said he sees the latest HP scandal as opening the door to stronger ties between channel partners and HP.
"The HP management team has [channel] religion," he says. "They know they have a mess of problems. Now is not the time to stand by and jeer. Now is the time to look for more opportunities to partner together."
PUBLISHED NOV. 29, 2012
