...History Satyam Computer services Limited an Information Technology Company was founded in 1987 by Ramalinga Raju. The company is based in Hyderabad, India and was the fourth largest software exporter in India until January 2009. As one of the largest software company, Satyam traded in the Bombay Stock Exchange, the national Stock Exchange and New York Exchange. Satyam grew rapidly with customers stretching over 66 countries and was ranked at 185th on the Fortune 500 companies list. In 2008, Satyam received the the Global Peacock Award for global excellence in corporate accountability. Satyam continued to grow even when stock markets around the world were collapsing. In December 2008, Mr. Raju wanted to merge Matyas a real-estate company with Satyam. Matyas a company owned by his family was a complete diversity from the software company. Raju and his family owned a lot more shares in Matyas than they did in Satyam. The merge caused investors to question Mr. Raju’s intentions. The stockholders objected to the merge and the idea was aborted. However, the damage had already been done. The investors had lost faith and Satyam’s stocks plunged to an unbelievable low. Ironically, the word Satyam means Truth in Sanskrit and as the world watched the truth about Raju started to unravel. Fraud is Uncovered In October of 2008, World Bank fired Satyam and restrictions were put in place against the company from bidding for eight years. World Bank alleged that that Satyam had placed spy...
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...Satyam scam- Accounting Fraud (MBA III B) Submitted to:- Submitted by:- Dr. Urvashi Ghai Varun Sachdeva(124) Khyati Mathur(123) INDEX S.No. | Topics | Page No. | 1 | Satyam Scam- Introduction | 3 | 2 | Factors responsible for Fraud | 6 | 3 | Lessons learnt from Scam | 8 | 4 | Guide to Predetermine Manipulations | 9 | 5 | References | 12 | Introduction to the Scandal Mr. Ramalinga Raju and the Satyam Scandal On January 7, 2009, Mr. Raju disclosed in a letter to Satyam Computers Limited Board of Di- rectors that “he had been manipulating the company’s accounting numbers for years”. Mr. Raju claimed that he overstated assets on Satyam’s balance sheet by $1.47 billion. Nearly $1.04 billion in bank loans and cash that the company claimed to own was non-existent. Satyam also underreported liabilities on its balance sheet. Satyam overstated income nearly every quarter over the course of several years in order to meet analyst expectations. For example, the results announced on October 17, 2009 overstated quarterly revenues by 75 percent and profits by 97 percent. Mr. Raju and the company’s global head of internal audit used a number of different techniques to perpetrate the fraud. “Using his personal computer, Mr. Raju created numerous bank statements to advance the fraud. Mr. Raju falsified the bank accounts to inflate the balance sheet with balances that did not exist. He inflated the income statement by claiming interest income from the fake bank accounts...
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...The Satyam Scandal Jessica English February 9, 2015 Professor Nauri Ahmed ACC 556 The Satyam Computer Service started in 1987 by Byrraju RamalingaRaju in India. The Satyam became the fourth largest Indian IT firm in 2009, but January 7 2009, RamalingaRaju confessed to the very large revenue that was misstated of the company (Pallimanideep, 2015). Raju wrote a letter to the Satyam board confessing to the fraud and to reinsure no board members had no knowledge of the fraud. The letter written by RamalingaRaju states: “It is with deep regret and tremendous burden that I am carrying on my conscience, that I would like to ring the following facts to your notice: “The balance Sheet carries as of September 30,2008 (a) Inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books); (b) An accured inters of Rs 376, which is non-existent (c) An understand liability of Rs 1,230 crore on account of funds arranged by me; (d) An overstated debtors’ position of Rs 490 crore (as against Rs 2,651 reflected in the books); For the September quarter we reported a revenue of Rs 2,700 crore and an operating margin of Rs 649 crore (24 cent of revenue) as against the actual revenues of Rs 2,112 crore and an actual operating margin of Rs 61 crore (3 per cent of revenues). This has resulted in artificial cash and bank balances going up by Rs 588 crore in quarter 2 alone ("Satyam fraud: Full text of Raju's letter to board"...
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... as well as content and concepts from the text. ANSWER I was overwhelmed while doing the internet news search to find an example of business that has abused its power. The search came up with so many examples that it made me realize that probably all the business abuse their position in some or the other way. There were many example to choose from but I chose “Corporate accounting scandal at Satyam “, which is also infamously called as India’s Enron. The reason why I selected this particular company is that I had my cousin brothers and sisters working for this company and this scandal affected our families in a big way. The background Scandals are like an iceberg, they represent the only visible catastrophic failure. Saytam Computers was founded By Mr. Ramalinga Raju who hailed form a traditional agriculture family of Andhra Pradesh, India in 1987 with a just 20 employees and converted the company got Public in 1992.The chairman of the company was the founder himself, Mr. Ramalinga Raju (Alias Raju) until January 7, 2009 when he resigned from the board of directors after admitting to corporate fraud. (Author HT correspondent, April, 9, 2015). The company offered consulting and information technology services to the various business sectors. The company had services in 66 countries and 53000 employees in 6 continents. It was listed on Bombay stock exchange, NSE & NYSE. The scam Ironically,...
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...background Satyam Computers Services Limited (SCSL) was incorporated in the year 1987 as a private limited company at Andra Pradesh. Later at 1991 Satyam recognized as a public limited company. SCSL is fourth largest provider of Information Technology services in India. In the year 1995 company awarded ISO 9001 certification. Twenty years ago, Satyam has consistently innovated across various aspects of the enterprise-processes, technology, business and engagement models, and service offerings. Satyam offers a range of expertise that includes: Software Development Services, Embedded Systems, Engineering Services (CAD/CAM/CAE), Systems Integration, Enterprise Resource Planning Solutions, Enterprise Application Integration, Customer Relationship Management, Supply Chain Management, Product Development, Electronic Commerce, and Consulting. As IT services became more and more technology-centric and generic, hence now Satyam offers services to enhance the customers business needs. Satyam starting with deeper focus on customized IT solution on insurance, financial services, telecom, manufacturing, transportation, health care, Bioinformatics and Retail sectors. 2 Satyam Computer Services – a company based in India (now known as Mahindra Satyam). This is the most recent scandal (declared only in 2009) among those on this list. The accounting fraud in this case involves overstating cash ($1.5 billion) and receivables by $100 million and understating liabilities by $250 million. Taken...
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...| IBA111 Management Concepts | | Luke Sutton | 10/8/2012 | Case for Critical Thinking: Satyam – the ‘Enron’ of India. | Table of Contents Background to case study1 introduction to management issues1 Identification of management issues2 rationalisation behind unethical behaviour2 corporate governance and social responsibility2 recommendations3 Implementation of recommendations3 references4 1.0 BACKGROUND The purpose of this case study is to identify the management issues of Satyam Computer Services Limited’s, former chairman Ramalinga Raju when he admitted to corporate fraud in 2009, and how these issues could be addressed. Satyam Computer Services Limited, (now known as Mahindra Satyam) is a “leading global information communications and technology company”. (Anon., n.d.) It is a part of the “US $15.4 billion dollar Mahindra group, a global industrial federation of companies of the top 10 business houses based in India”. (Anon., n.d., p. 1; Anon., n.d.)). 1.1 INTRODUCTION TO MANAGEMENT ISSUES “India’s corporate community experienced a significant shock in January 2009 with damaging revelations about board failure and colossal fraud in the financials of Satyam.” (Afsharipour, 2010)Ramalinga Raju and the CFO of the company were charged with “conspiracy, cheating and falsifying records. Raju was also allegedly using salary payments to fabricated employees, in order to steal money from the company.” (Anon., n.d.) This case study will explore the...
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...The below are the requirements for term paper. 1)Title 2)Object 3)Review(2 articles) 4)Analysis 5)conclusion 6)Source(References) http://www.businessweek.com/blogs/globespotting/archives/2009/01/satyam_scandal.html The terror attacks on Mumbai were just a tremor for the country’s tech industry compared to the shocks coming from the Satyam scandal. Earlier today, Ramalinga Raju, Satyam’s founder and longtime chairman, admitted in a letter to the board that he had been cooking the books for years to make up for revenue and profit shortfalls. Read the details in this report by my BW colleague, Manjeet Kripalani. In his letter, Raju wrote that the cover-up finally got the best of him: “It was like riding a tiger, not knowing how to get off without being eaten.” This admission will have a crippling impact on Satyam. Its chances of getting new business are nil. Don’t expect its current customers to abandon the company overnight. That’s not easy in a tech services business where the operations of the client and service provider are so interwoven. On the other hand, it’s possible that the company may collapse financially, in which case clients will have no choice but to flee. Which brings us to a bigger shock: This betrayal of trust could have a major impact on the entire Indian tech services industry. The industry has spent 20 years building up credibility with Western clients, but this disaster will make many US and European clients rethink their reliance on Indian outsourcing...
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...Satyam is a company that specializes in information technology, business services, computer software, and is a leading outsourcing company in India. The company grew quickly during the 1990s and 2000s as more and more companies around the world looked to India for outsourcing solutions. It eventually became the fourth largest outsourcing company in India. Satyam provides solutions to approximately 185 Fortune 500 companies throughout the world. The business community recognized Satyam as a global leader in information technology outsourcing. Satyam was as an example of India's growing success. It won numerous awards for innovation, governance, and corporate accountability. Unfortunately, less than five months after winning the Global Peacock Award which is a World Council for Corporate Governance, Satyam became the centerpiece of a massive accounting fraud. As stock markets around the world collapsed during 2008, the Indian Stock Exchange fell enormously. The enormous losses caused investors to withdraw large amounts of cash from their investments. These cash withdrawals in turn triggered the discovery of several cases of financial fraud as perpetrators could no longer hide the results. Mr. Raju, the founder of Satyam, and the company's global head of internal audit used a number of different techniques to perpetrate the fraud. He created numerous bank statements to advance the fraud and falsified the bank accounts to inflate the balance sheet with cash balances...
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...Public Accountants (CPAs) and accounting educators. The study identified sixteen skills needed by forensic accountants. According to the study, the five most important skills are analytical skills, basic accounting skills, problem solving skills, data analysis skills and interviewing skills (McMullen & Sanchez, 2010). Forensic accountants need analytical skills because as they review financial reports and other source documents, they need to analyze the validity of each transaction and determine if the company recorded the transaction fairly. The forensic accountant needs the ability to analyze where the data came from and whether the data accurately reflects the numbers posted in the financial reports (McIntosh, n.d.). With an in house forensic accountant, this will ensure the company’s financial state is accurately reflected while an independent forensic accountant can verify the accuracy of the reports, both of which help investors determine if the company is worth investing in. “Accounting is widely regarded as the language of business” (McMullen and Sanchez, 2010, pg.1). As such, the need for basic accounting skills is self-evident, for a forensic accountant to be able to review financial reports and other source documents he needs to have an understanding of basic accounting. Without that understanding, the forensic accountant couldn’t determine if the entries in the financial journals are correct or if there is some kind of fraud being committed. As for the...
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...Ethics in Accounting By Pace University – New York Accounting for Decision Making, MBA 640 Fall 2011 Required Research Paper Page 1 of 11 Table of Contents Number Content Page Number 1 Introduction 3 2 Ethics in Accounting 4 3 Enron Scandal 6 4 Satyam Scandal 8 5 Conclusion 10 6 References 11 Page 2 of 11 Introduction • What is “Ethics”? Ethics, also known as moral philosophy, is a branch of philosophy that addresses questions about morality—that is, concepts such as good and evil, right and wrong, virtue and vice, justice and crime, etc. Source: http://en.wikipedia.org/wiki/Ethics • What is “Accounting”? Accounting is basically maintaining and providing records of transfer of funds for an individual or business. All the data collected from these records are then summarized in form of reports and statements, which are used by outside parties and the company itself for various uses and analysis. Source: http://www.investopedia.com/terms/a/accounting.asp#axzz1fbCBL2q0 Page 3 of 11 Ethics in Accounting With many scandals and scams coming out regarding the unethical behavior of firms in terms of Business and accounting, higher authorities in governments across the globe are worried. These scams are disturbing and damaging the economy at large. When the economy is already sliding down, governments have started taking extra care and strict rules are being applied to control the damage...
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...SEMESTER ASSIGNMENT 2014 – 16 Minor Project Financial Fraud –Sathyam computers SUBMITTED BY: Abhijith Rajan AUD 2351 MBA (GENERAL) ABSTRACT From Satyam, we can see that corporate book keeping misrepresentation is a noteworthy issue that is raising both in its recurrence and seriousness. Exploration confirmation has demonstrated that these developing number of fakes have made undermined the trustworthiness of monetary reports, added to generous financial misfortunes, and disintegrated speculators' certainty with respect to the handiness and dependability of money related articulations. The expanding rate of these sort of law violations need to get hardened punishments, excellent disciplines, and powerful requirement of law with the right soul. An endeavor is made to inspect and investigate inside and out the Satyam Computer's "inventive bookkeeping" embarrassment, which conveyed to spotlight the significance of "morals and corporate administration" (CG). The extortion submitted by the authors of Satyam in 2009, is a demonstration of the way that "the art of behavior is influenced in huge by human eagerness, aspiration, and crave influence, cash, acclaim and wonderfulness". Dissimilar to Enron, which sank because of "organization" issue, Satyam was conveyed to its knee because of "burrowing" impact. The Satyam embarrassment highlights the significance of securities laws and CG in "developing" markets. Without a doubt, Satyam misrepresentation "prodded the administration of...
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...Mahindra Satyam, formerly known as Satyam Service Company Limited, is one of the successful global business and information technology services company. This company handles industry and functional expertise relating to technology, and provides clients the best services to improve business processes and their performances. B Rama Raju, and Ramalinga Raju founded Mahindra Satyam in 1987, and is headquartered in Hyderabad, India, for providing software development and Consultancy services to large corporations. (Mahindra Satyam) Mahindra Satyam operates globally including the US, Canada, Brazil, United Kingdom, China, Singapore, Malaysia, and also many Fortune 500 companies. That being said Mahindra Satyam provides services at General Electric, General Motors, Nestle, and the US government. This company serves automotive products, aviation, farm equipment, hospitality, information technology, real estate and the retail industries. Three main segments that the company operates are IT services, Business Process Outsourcing (BPO), and Software Products. (Mahindra Satyam) The IT service provides wide variety of services, including software development, system maintenance, packaged software integration, and engineering design services. Whereas, BPO segment provides services related to Human resource, finance and accounting, and transaction processing. Lastly, Software Products segment provides involves product development, and creation of software. http://www.mahindrasatyam.com/about-mahindra-satyam/ICT-company...
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...Running head: ETHICAL ISSUES IN SATYAM SCAM 1 A Study of Ethical Issues in Satyam Scam Haresh M Patel (Roll No.2234) B.K.School of Business Management (Evening Programme) Ethical Issues in Satyam Scam Abstract “Reputation is an idle and most false imposition: oft got without merit, and lost without deserving”. Failed institutions, including Lehman Brothers, Enron and Satyam, would stand a testimony to this affray in a post-mortem analysis. This paper discusses corporate ethical issues involved in ‘Satyam Scam’ from a compliance perspective. It makes a distinction between legal and ethical compliance mechanisms and also shows that the legal compliance mechanism has clearly proven to be inadequate as it lacks the moral firepower to restore confidence and the ability to build trust. The concepts of freedom of indifference and freedom for excellence provide a theoretical basis for explaining why legal compliance mechanisms are insufficient in 2 dealing with fraudulent practices and may not be addressing the real and fundamental issues that inspire ethical behavior. The focus of the virtues in governance is to establish a series of practical responses which depend on the consistent application of core values and principles as well as commitment to ethical business practice. In my opinion, No one makes it to the top ranks of corporate management without a healthy amount of self-assurance. Confidence underlies decisive, strong leadership, but does overconfidence lead...
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...https://www.youtube.com/watch?v=bauzUSu2v5k http://www.thehindu.com/specials/timelines/satyam-scandal-who-what-and-when/article7084878.ece http://cbi.nic.in/fromarchives/satyam/satyam.php http://www.dnaindia.com/money/report-all-that-you-need-to-know-about-the-satyam-scam-2067138 https://en.wikipedia.org/wiki/Satyam_scandal http://www.hindustantimes.com/business/satyam-scam-all-you-need-to-know-about-india-s-biggest-accounting-fraud/story-YTfHTZy9K6NvsW8PxIEEYL.html http://www.business-standard.com/article/economy-policy/in-case-of-satyam-issue-is-not-just-about-money-but-biz-ethics-109051100040_1.html http://rammallar.blogspot.in/2013/04/satyam-scam-is-it-failure-of-business.html http://www.termpaperwarehouse.com/essay-on/Satyam-Scam-And-Ethics/198522 http://www.researchgate.net/publication/271133751_CORPORATE_ACCOUNTING_SCANDAL_AT_SATYAM_A_CASE_STUDY_OF_INDIA'S_ENRON (point 5) http://www.scirp.org/journal/PaperDownload.aspx?paperID=30220 https://www.scribd.com/doc/73590653/Satyam-Fraud-Ethical-Corporate-Governance (page 9 onwards imp) http://knowledge.wharton.upenn.edu/article/scandal-at-satyam-truth-lies-and-corporate-governance/ The Satyam Computer Services scandal is a corporate scandal that worked in India in 2009 where chairman Ramalinga Raju confessed that the company's accounts had been falsified. The Global corporate community was shocked and scandalised when the chairman of Satyam, Ramalinga Raju resigned on 7 January 2009 and confessed that he had manipulated the accounts...
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...Sathyamoorthy Vasanth Raj Sneha Jaiswal Navin Prakash Group C9 Satyam Scandal The irony of the meaning of Satyam has been highlighted by many media reports. Satyam is derived from the Sanskrit word for truth and honesty. In January 7, 2009, will go down as a black day in corporate India for this was the day India was hit by its first major market/corporate scandal leading to the collapse of the stock of a major Indian IT corporate house. Ramalinga Raju, founder and Chairman of Satyam Computer Services Ltd, India’s 4th largest IT services company, admitted to fraud and inflating the revenue and costs and resigned from the company and the board. Raju admitted that he falsified the account books at Satyam. The $1.04 billion listed in assets is non-existent according to Raju reports The New York Times (12/01/2009). Satyam was listed on the Bombay Stock Exchange, The New York Stock Exchange (NYSE) and Euronext. NYSE stopped trading Satyam’s stocks after news spread. Later, Satyam removed from the Indian stock exchange. Analysts in India have termed the Satyam scandal as India's own Enron scandal. The following is a list of factors that contributed to the fraud: • Greed • Ambitious corporate growth • Deceptive reporting practices—lack of transparency • Excessive interest in maintaining stock prices • Executive incentives • Stock market expectations • Nature of accounting rules AFTERMATH OF SATYAM SCANDAL Satyam's shares fell to 11.50 rupees on 10 January 2009, their...
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