PROFESSIONAL SKEPTICISM

FRAUD

HP LO 2, 3, 6, 8, 9 In 2012, HP announced an impairment charge of $8.8 billion related to its 2011 acquisition of Autonomy. More than $5 billion of the impairment charge related to accounting improprieties, misrepresentation, and disclosure failures discovered by an internal investigation by HP, and a forensic review into Autonomys accounting practices prior to its acquisition by HP. Research this case so that you can answer the following questions:

1. What are some examples of the accounting improprieties and misrepresentations made by Autonomy?

2. Consider the fraud triangle. Which factor was most likely the most relevant to the financial statement fraud?

3. For the 10 quarters prior to the acquisition, compare Autonomys reported revenues with analyst expectations. How might a skeptical auditor respond to these comparisons?