Software company Autonomy is being investigated over allegations of misleading investors before its multibillion dollar takeover.
The Financial Reporting Council (FRC) announced the investigation today and will examine the Cambridge-based firm’s books in the period between January 2009 and June 2011 – three months before it was bought by the US firm in a £7.1 billion deal.
HP recently wrote off $8.8 billion from quarterly earnings, with the majority linked to its accusations of "serious accounting improprieties, misrepresentation and disclosure failures" at Autonomy.
The news comes just days after former Autonomy boss Dr Mike Lynch announced he had raised $1bn through his Invoke Capital fund to invest in fledgling British technology companies.
Referring the matter to the Serious Fraud Office, the American firm alleged in November that former members of Autonomy's management fiddled accounts in a bid to "mislead investors and potential buyers".
Autonomy founder Dr Mike Lynch, who pocketed around £500 million from the HP takeover, has always denied the allegations.
In a blog maintained by Dr Lynch on behalf of the former management team, he noted that as a member of the FTSE 100 Index the accounts of Autonomy have previously been reviewed by the FRC, including the period in question.
Dr Lynch added: "We welcome this investigation. Autonomy received unqualified audit reports throughout its life as a public company.
"This includes the period in question, during which Autonomy was audited by Deloitte. We are fully confident in the financial reporting of the company and look forward to the opportunity to demonstrate this to the FRC."
Autonomy was considered one of the UK's biggest technology success stories, having pioneered software that helps companies to search data, particularly in cases involving compliance and legal issues. Its clients include Procter & Gamble, Nestle and Shell.
The FRC's decision to open an investigation followed consultation with the Institute of Chartered Accountants in England and Wales.
Dr Lynch’s Invoke Capital fund will be used to support fledgling research-led technology companies as well as buying bigger established companies to help smaller companies grow and several former Autonomy executives have joined his team.