In 2011, Hewlett-Packard (HP) [HPQ NYSE] acquired Autonomy, the UK-based software company for over $10 billion dollars. After a collective gasp, the tech industry debated how a company like Autonomy could reach that level of valuation, and why HP, who has struggled for years finding its place in the modern software/hardware space, would empty the coffers to make the acquisition. After all, Oracle called Autonomy's former CEO, Mike Lynch, on his bluff, stating the market value of $6 billion at the time was overpriced, and this was before HP plopped down the whopping $10+. After a year of head shaking, we now know how they pulled it off – like so many other big-company-scandals, Autonomy cooked the books.

Thanks to a whistleblower at Autonomy, HP learned that before the deal took place, Autonomy "Mischaracterized some sales of low-margin hardware as software and recognized some deals with partners as revenue even when a customer never bought the product" [WSJ]. HP and its shareholders are not happy to say the least (shares are at a 10-year low), and we can expect a multi-year, complex battle in the courts as HP stated it will attempt to recoup some of their loss via the legal system.

With the former HP CEO Leo Apotheker and Chief Strategist, Shane Robison both gone, Meg Whitman continues the battle of turning the once-leading technology company around. Who wins in a scandal like this? Probably Mike Lynch and other Autonomy execs that profited from the shady accounting, and of course the teams of lawyers that will hash it out in the courts for years.

While they're busy in the courts, NetDocuments will continue switching firms who are using Autonomy's iManage document management system, to NetDocuments cloud-based service. The reasons for the exodus off of the iManage platform all underpin the fact that firms of all sizes are realizing legacy systems (on-premise, server based) are more costly and don't offer built-in disaster recovery, mobility, etc., which ultimately hinder the firm's productivity – not to mention that cooking your books is simply bad business.

Hear the stories of firms using Autonomy's iManage product and why they switched to NetDocuments.