Accounting errors at Autonomy, the U.K. software maker, were recently discovered in an audit that supports claims by Hewlett-Packard that the company had inflated its revenue and profit figures
in its 2010 financial statement prior to its $11 billion sale in 2011.
In its audit, Ernst & Young reviewed Autonomy's 2010 and 2011 financial documents in which they found that the software company had overstated its 2010 revenue in part by 54 percent and its operating profit by 81 percent, CNN Money reported
"These restatements, and the reasons for them, are consistent with HP’s previous disclosures regarding accounting improprieties in Autonomy’s pre-acquisition financials," HP spokesman Michael Thacker wrote in an email to PCWorld.com
on Monday. "The substantial work necessary to prepare these accounts has revealed extensive accounting errors and misrepresentations in the previously issued 2010 audited financial statements, including the problems previously identified by HP."
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HP's decision to purchase Autonomy, which specializes in database search, stemmed from an apparent desire to increase its reach into the Big Data realm and went down as one of the worst, if not the worst, decision Hewlett-Packard had made under the leadership of then CEO Leo Apotheker, CNN noted.
Anotheker was subsequently fired and replaced by Meg Whitman, who over her extensive business career served as an executive for the likes of eBay, DreamWorks, Procter & Gamble, Hasbro and several other major companies.
The decision to purchase Autonomy led to the company’s shares plunging in late 2012 to a 10-year low after Hewlett-Packard received an $8.8 billion writedown.
Reacting to the audit's findings, Autonomy co-founder Mike Lynch, who has since left the company, continued to deny any wrongdoing.
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Speaking through a spokesman on Monday, Lynch said the report does not prove fraud.
"The majority of this restatement seems to have nothing to do with the accounting dispute, but is rather HP moving things around," said Lynch's spokesman Chris Blundell.
HP is considering legal action against Lynch
and others for the alleged fraud and in late January requested an additional six weeks from U.S. District Judge Charles Breyer to consider its legal options.
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