Lawsuit Filed Against Deloitte and KPMG Over HP's Acquisition of Autonomy

In a shocking turn of events, HP shareholders have filed a lawsuit against Deloitte and KPMG, accusing the auditing firms of failing to spot alleged accounting irregularities at Autonomy before its acquisition last year. This is the second lawsuit launched over the Autonomy deal this week.

HP, which acquired Autonomy in 2011, is facing allegations of making false and misleading statements and concealing that it had acquired the company based on financial statements that were unreliable due to accounting manipulation. The lawsuit also includes HP CEO Meg Whitman, CFO Cathi Lustak, former CEO Leo Apotheker, and Autonomy's founder Mike Lynch as defendants.

Tuesday's class action lawsuit alleges that HP made false and misleading statements, concealing the true state of Autonomy's finances. The lawsuit claims that Autonomy's financial statements were manipulated, and this was not detected by either Deloitte or KPMG, who were responsible for auditing the company's financial results.

Deloitte, Autonomy's auditor, gave the company's most recent financial results the all clear before the acquisition. However, Deloitte has denied having any knowledge of any accounting misrepresentations in Autonomy's financial statements. In an open letter to HP, Mike Lynch, Autonomy's founder, has demanded more details of the allegations against Autonomy. HP has replied that the information Lynch sought would be revealed in court.

KPMG, which was used by HP to inspect Deloitte's audits of Autonomy, has stated that it acted responsibly and with integrity in its work related to Autonomy. KPMG denies being responsible for auditing Deloitte's work on Autonomy and claims it was not involved in the due diligence process of the deal.

Moody's credit rating agency has cut HP's rating from A3 to Baa1, citing competitive pressure and "execution challenges". The Baa1 rating means HP is "rated as medium grade, with some speculative elements and moderate credit risk" in the long term but able to pay its debts in the short term.

HP CEO Meg Whitman stated that the company relied on Deloitte-audited reports when assessing the Autonomy deal. However, Deloitte has claimed it was not responsible for HP's due diligence in the deal. The name of the person who brought charges against Deloitte and KPMG regarding the alleged accounting irregularities at Autonomy has not been publicly disclosed.

This is not the first time HP has been embroiled in a controversy related to Autonomy. In September 2012, HP wrote down the value of Autonomy by $8.8 billion, citing accounting improprieties. The controversy has cast a shadow over HP's acquisition strategy and its financial management. The outcome of the lawsuits and investigations is eagerly awaited by HP shareholders and the technology industry at large.