In the fall of 2011, Hewlett-Packard (HP) acquired Autonomy, an information technology software company, for $11.1 billion. Less than a year later, several top managers and Autonomy founder Mike Lynch were let go due to corporate culture differences and poor financial results. Shortly afterwards a whistleblower revealed to HP accounting improprieties that over time have forced HP to write-off over $5 billion. HP claims that Autonomy mischaracterized its audited financial statements intentionally in order to make the company more attractive to investors and potential buyers. At the center of the scandal is the method in which Autonomy recognized revenue. Autonomy mischaracterized revenue from its hardware sales as more lucrative software revenue, while hiding some of the costs for these sales as marketing expenses rather than the appropriate account costs of goods sold. HP believes that Autonomy participated in what is known as round-trips, where companies sell each other products at high prices to each other recording a lot of profit without money ever exchanging hands. These practices inflated operating profit significantly All the while Autonomy founder Mike Lynch along with other former Autonomy executives deny all accusations of wrongdoing claiming that HP are using Autonomy has a scape goat for running the company into the ground. HP has reported the situation to both the American and British authorities and investigations are ongoing. HP is currently being sued by investors that claim that HP’s board were negligent in their due diligence of Autonomy. Since 2009, analysts have questioned the strength of Autonomy’s business and the legitimacy of their claims of rapid growth. Fears that HP was overpaying for Autonomy were widely held. According to Paul Morland, three red flags made him suspicious of Autonomy: poor cash conversion, an inflated organic growth