The UK Financial Reporting Council (FRC) has launched an investigation into the published financial reporting of Autonomy, in relation to its takeover by HP.

HP claims it was forced to downgrade and devalue its multi-billion investment by $8.8 billion (£5.6 billion) after it "discovered" financial "misreporting" following the acquisition - something which Autonomy's former CEO Mike Lynch fiercely disputes.

HP says it is taking legal action again former Autonomy execs and is demanding an investigation by US and UK statutory bodies.The FRC says it will look into Autonomy's accounts for the period between 1 January 2009 and 30 June 2011.

The FRC's decision to initiate an investigation was taken "following consultation" with the Institute of Chartered Accountants in England and Wales (ICAEW).

According to its mandate the FRC is "responsible for promoting high quality corporate governance and reporting to foster investment". It sets the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work.

A swarm of external accountants and auditors were involved in the due dilligence period during the HP takeover on both sides, so their performance is expected to be brought under the microscope.