Interpreting the evidence

As predicted, the case against former senior managers of Autonomy, the firm that was bought by Hewlett-Packard (HP) for $11bn (£6.7bn) in 2011 and then found to be heading for a ‘financial plane crash’, is hotting up.  Now an email has come to light suggesting that Autonomy’s sales reps had ‘nothing to do’ as far back as 2010, indicating that the firm was in serious trouble at the time, and is only one of the pieces of evidence in support of HP’s claims that the acquired business’s managers falsified accounts.

Within a year of the acquisition, HP had written down the value of the UK firm by $5.5bn, leading the US firm to be suspicious about the accounts they had been given when the deal was being negotiated. Meanwhile, in an escalation of the dispute, HP has also accused the auditor used by Autonomy of playing down evidence from a whistleblower about the way the accounts were being presented.

All of this is the sort of information a forensic accountant would look for when assisting with a defence or a prosecution, as when a legal case is brought over something like the valuation of a business, every shred of evidence that supports either case is highly prized.  It can be misleading to think that the figures always speak for themselves, as sometimes, what looks like a suspect move may have a perfectly rational explanation. In this case, for instance, Autonomy’s camp says that the email has been taken completely ‘out of context’.

Likewise with the whistleblower, the auditor says that it was not employed by either party to provide any due diligence in relation to the deal, so should therefore not be held to account for any alleged wrongdoing on the part of the former management team.  Whatever shape the evidence is in, the forensic accountants will find it and use it to make their case and will then defend it robustly against the opposing team’s interpretation of it.

Author: Roger Isaacs, 12 September 2014

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