Case Study The Satyam Scam - 799 Words

Aishwarya Gokhale The Satyam Scam Studies suggest that there are four basic factors that lead to fraud. First, is the opportunity to commit fraud, second, the incentive to commit fraud, third, the rationalization of the fraudulent act and fourth, the capability to commit the fraud. Satyam Computer Services Limited was a global consulting and IT services company, offering a wide range of solutions, from strategy consulting to implementing IT solutions for customers. Byrraju Ramalinga Raju was the chairman and the CEO of the company until January 2009, when he had to step down after admitting to misappropriation of financial figures of the company to the amount of INR 71.36 billion (approximately US$1.5 billion), including INR 50.40†¦show more content†¦The fraud was perpetrated by inflating the revenue of the company through false sales invoices and showing corresponding gains by forging the bank statements with the connivance of the Statutory and Internal Auditors of the company. Through investigation it was found that certain people came into the office only at nights to generate fake invoices. This used to happen only towards the end of the quarter or the month, the level of the organized fraud can be interpreted from this. An accrued interest of $77 .46 million was shown, which was nonexistent, an understated liability of $253.38 million on account of funds was arranged by Raju himself and an overstated debtors position of $100.94 million was presented. The annual financial statements of the company with inflated revenue were published for several years and this lead to higher price of the stock in the market. In the process, innocent investors were lured to invest in the company. Attempts were made to conceal the fraud by acquiring the companies of family members and friends, but the gap between the actual and inflated revenues kept growing since April 1999. PricewaterhouseCoopers affiliates served as independent auditors for Satyam. According to a report published by the S.E.C., the auditors had failed to independently confirm cash balances in bank accounts. They relied on the management to provide the cash balances instead ofShow MoreRelatedSatyam Fraud Case1505 Words   |  7 PagesViews on the Satyam fraud case: Before writing this report, I read some articles from The Economic Times, The Times of India, The Hindu and a blog by Shweta Rajpal. In this report, I have tried to figure out what the scam is all about, how it happened, why it was done and the aftermath, exploring corporate governance issues simultaneously. The ‘What’ of the scam: The Satyam scam has been as the Enron scam of India. So one can only imagine the magnitude of wrongdoing and deception. The downfallRead MoreAnalysis Of Corporate Governance Disclosure Practices Of Listed Companies1000 Words   |  4 Pagesstakeholders comprising of the shareholders, creditors, regulators and the public at large. 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