Three big auditors are slapped with lawsuits over past work

Marion Dakers
AUDIT firms Deloitte and KPMG are among the firms named in a US lawsuit brought by a disgruntled investor in Hewlett-Packard, though both firms distanced themselves from the troubled deal yesterday.

The case, filed in California, claims the auditors missed numerous red flags about Autonomy, which HP bought last year. The tech firm has since been forced to write down $8.8bn (£5.5bn) of its purchase.

The lawsuit, brought by investor Philip Ricciardi, names a raft of people linked to the deal including Autonomy founder Mike Lynch, Margaret Whitman, former HP chief Leo Apotheker and Barclays.

HP chief executive Meg Whitman has said her firm relied on the audits by Deloitte and KPMG when sizing up the purchase.

But KPMG said it was not engaged in any audit work or oversight of Deloitte’s audit, adding that the claims “are based on incorrect understandings about the firm’s role in this matter and are without merit”. Deloitte repeated its statement that it was not asked by HP to provide any due diligence on the deal.

In a separate case, Ernst & Young is being sued by the former Anglo Irish Bank for its role before the bank was nationalised in 2009.

Anglo, now known as the Irish Bank Resolution Corp (IBRC), has been under investigation for fraud for the past four years and three former executives face charges next year. The bank gave no further information on the litigation.

E&Y said it was aware of the lawsuit but had not yet formally been served and had only scant details of the case.