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November 27, 2012



Thank you for your thoughts, they have served as an interesting and topical distraction to revising for my auditing exam!

On this subject of auditors' liability, if HP come at Deloitte I would imagine Deloitte may first use the Caparo defence in terms of its 'duty of care' (i.e. lack thereof to HP).

Assuming that avenue is blocked off, HP or regulators may point to Deloitte's duty to detect material misstatement under ISA240 (auditors responsibilities relating to fraud).

Deloitte have stated that they were not aware of any 'accounting misrepresentations' by HP. In my opinion by stating this they are leaving themselves wide open if such misrepresentations did occur and they signed off on the accounts. Perhaps I am naive but that is unlikely for such an experienced and distinguished firm. (JRP Note: sorry, sadly, it would not be the first time.)

It is hard for anyone to know what has went on here but you could conclude therefore that the problem lies more with HP's running of Autonomy post acquisition.


Kudos to you James! You uncovered far better information than I have seen anywhere else combined (FT, WSJ, TC, etc).

These guys have some share of blame, but how would you rank them based on responsibility? How would you order in terms of legal liability?

1. Former Autonomy Management (Mike Lynch included)
2. HP Management & Board (Apotheker included)
3. Qatalyst (Quattrone)
4. Deloitte
5. E&Y
7. PwC
8. Sell-side attorneys
9. Buy-side attorneys

David Merkel

Meg Whitman could have just paid the ~$100 million breakup fee at the beginning of her time as CEO. She is partly to blame here.


Thank you, I have been looking for details about this subject matter for ages and yours is the best I have discovered so far.

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