Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

HP’s fraud allegations still a bit vague

with 3 comments

I still can’t quite figure out what is in Autonomy’s accounting that was a severe problem and why that led to an $8.8 billion write-off.  That seems to be a common thread in the discussion of HP and Autonomy that I’ve been reading lately.

I won’t go into much detail. Just want to give a few links to leave a trail of the direction things seem to be going.

From HP’s November 20 announcement:

HP today announced a non-cash impairment charge of $8.8 billion related to Autonomy in the fourth quarter of its 2012 fiscal year. The majority of this impairment charge, more than $5 billion, is linked to serious accounting improprieties, misrepresentation and disclosure failures discovered by an internal investigation by HP and forensic review into Autonomy’s accounting practices prior to its acquisition by HP.

The challenge from former Autonomy CEO:

HP’s reply, which is essentially “Don’t think so. You can see it in discovery”:

Some discussion of how much blame there is and how it might get allocated:

His article starts with a quote, the likes of which you should never put into your work papers (check out the post).

The most likely outcome?  His guess:

What this latest dreary escapade does portend is several years of uncontrolled legal and litigation costs, and a flurry of inconclusive regulatory and oversight investigations –the end results of which will be inconsequential.

Mr. Peterson mentions some skeptics are thinking this could be a “big bath” writeoff to get rid of goodwill so future balance sheets look better.

Here’s a far more serious version of the “show your work” discussion:

Prof. Selling outlines a range of possibilities for what the underlying accounting problems might be. Be forewarned, the four options go into cool/boring details (depending on your perspective and interest) of IFRS revenue recognition.

My previous posts here, here, and here.

Written by Jim Ulvog

December 5, 2012, 8:17 am at 8:17 am

Posted in Accounting, Audits

Tagged with

3 Responses

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  1. Jim – Thanks for the uptake. There’s lots more to come in this ugly situation.
    Regards –
    Jim Peterson

    Jim Peterson

    December 5, 2012, 16:03 pm at 4:03 pm

    • Jim, I don’t see how it could get better. Seems it’ll only get worse.


      Jim Ulvog

      December 5, 2012, 16:11 pm at 4:11 pm

  2. […] HP’s fraud allegations still a bit vague […]

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