"By admitting they were misled, aren't KPMG just admitting that they're incompetent?"
I think the word is "alleging". That puts the blame elsewhere. I expect the Autonomy PoV will be along the lines of they weren't misled at all, they didn't look. Or maybe the sale went through without the final report which would have had it in. HP seem to have let everyone off the hook by not waiting for that.