Satyam Scandal
Report
On
Report
On
| Satyam Scandal | | March 04, 2013 | | Satyam Scandal | | March 04, 2013 |
Abstract
The purpose of this report is to highlight the ethical issues involved, wrongdoings by the top management of the Satyam Computer services, and some ways adopted by government to prevent this type of fraud in the future. This scandal is a blot on the face of Indian corporate governance standards. It has proved that if there is corruption at the top, it’s bound to trickle down.
The Satyam accounting scandal that rocked the country has proven once again that companies still have a lot to learn. It highlights two major corporate governance failures. First is the board ineffectiveness, when Satyam’s board approved of an acquisition of two companies, one of them unlisted and where Chairman’s family members were the majority shareholders. And second is the accounting shock, when it was disclosed that the firm had been fudging it’s accounts for several years and it’s much talked about $1.2 billion cash holding was largely non-existent and the result of a long-drawn accounting fraud. Prosecutors are pursuing cases against Satyam executives and auditor PricewaterhouseCoopers accountants.
It is quite shocking that Mr. Raju was able to perpetrate a fraud of this magnitude in a public company for several years undetected. Along with his accomplices, Raju appears to have taken the advantage of the glaring weaknesses of corporate governance of the company. This scandal has also emphasized that all - investors, auditors, regulators, analysts – have to be vigilant when discharging the duties, since financial fraud can sometimes be hidden in overlooked parts of the financial statements.
Table of Contents ABSTRACT 1 INTRODUCTION 3 IMPACT
On
Report
On
| Satyam Scandal | | March 04, 2013 | | Satyam Scandal | | March 04, 2013 |
Abstract
The purpose of this report is to highlight the ethical issues involved, wrongdoings by the top management of the Satyam Computer services, and some ways adopted by government to prevent this type of fraud in the future. This scandal is a blot on the face of Indian corporate governance standards. It has proved that if there is corruption at the top, it’s bound to trickle down.
The Satyam accounting scandal that rocked the country has proven once again that companies still have a lot to learn. It highlights two major corporate governance failures. First is the board ineffectiveness, when Satyam’s board approved of an acquisition of two companies, one of them unlisted and where Chairman’s family members were the majority shareholders. And second is the accounting shock, when it was disclosed that the firm had been fudging it’s accounts for several years and it’s much talked about $1.2 billion cash holding was largely non-existent and the result of a long-drawn accounting fraud. Prosecutors are pursuing cases against Satyam executives and auditor PricewaterhouseCoopers accountants.
It is quite shocking that Mr. Raju was able to perpetrate a fraud of this magnitude in a public company for several years undetected. Along with his accomplices, Raju appears to have taken the advantage of the glaring weaknesses of corporate governance of the company. This scandal has also emphasized that all - investors, auditors, regulators, analysts – have to be vigilant when discharging the duties, since financial fraud can sometimes be hidden in overlooked parts of the financial statements.
Table of Contents ABSTRACT 1 INTRODUCTION 3 IMPACT