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HP Businesses Software Technology

Is HP Right? Autonomy Salesperson Shares Internal Emails 92

Julie188 writes "You know how HP said it uncovered $5 billion worth of 'improper' revenue at Autonomy? One thing HP has accused Autonomy of doing is booking software-as-a-service contracts as software licensing deals. So how might that type of accounting work? A former Autonomy salesperson fighting a legal battle with HP says she's seen it happen firsthand. She's shared internal Autonomy emails and documents that show the details of one deal. '[While working for software company CA, Virginia Briody] had closed a four-year $1.22 million hosting/software-as-a-service deal with a customer, Pioneer Investments, and was paid her full commission, over $100,000, she says. Autonomy bought the software unit from CA on June 9, 2010, and Briody became an employee of Autonomy and Autonomy inherited the Pioneer contract. But there was an issue. Autonomy didn't acquire all the pieces called for in the original contract, Briody says. It didn't have a partnership with the hosting facility and it didn't gain from CA a critical piece of compliance software the customer needed, she says. Autonomy needed to find substitutions or Pioneer would cancel the contract, Briody says. So in the fall of 2010, she signed a new deal with Pioneer and walked away with a four-year, $1.859 million contract of which Autonomy execs considered $1.8 million as new revenue, she says.'"
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Is HP Right? Autonomy Salesperson Shares Internal Emails

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  • by jonbryce ( 703250 ) on Saturday January 05, 2013 @02:56PM (#42489107) Homepage

    When they signed the original deal, they should book $25,416.66 as revenue for that month, and the remaining $1,194,583.34 as deferred revenue to be released over the remaining 47 months of the contract. Each month after that, you take $25,416.66 out of deferred revenue and put it in revenue.

    When they signed the new deal, they should cancel whatever is left in deferred revenue, put the new deal in deferred revenue and take $38.729.16 per month to revenue.

    If there are up-front expenses related to the deal, and sales commission may well be one of them, then they go to prepayments, and you expense them every month along with the released deferred revenue.

  • by Anonymous Coward on Saturday January 05, 2013 @03:41PM (#42489369)

    1) It's not obvious from TFA that they were double dipping revenues, but it seems that they improperly recognized revenue up front from a long term consultancy/SaaS contract. If HP, as potential acquirers, were to extrapolate the revenue based on Autonomy being a SaaS business, they would get a misleadingly high figure.

    2) The board didn't have access to the numbers on a per-contract level, but they hired two public accounting firms that presumably did.

    Boy, the courtroom is going to get crowded over this case. The accounting firms will be pulled in as well to defend their performances. As for the "whistle blower", she seems a tad greedy trying to get paid two fat commissions for the same deal.

  • by Anonymous Coward on Saturday January 05, 2013 @05:21PM (#42490085)

    That's more or less one of the serious considerations here. http://www.economist.com/news/finance-and-economics/21567953-two-controversies-ensnare-big-four-accountable?fsrc=scn/tw/te/pe/accountable

The rich get rich, and the poor get poorer. The haves get more, the have-nots die.