Satyam Computer Research Articles

Financial scams in India: A case study on Satyam computer scandal 2006-2009

Financial scams in India: A case study on Satyam computer scandal 2006-2009

Ethical Issues in Accounting: A Comprehensive Review and Analysis

Ethical conduct in accounting is paramount for maintaining trust and credibility in financial reporting. This research paper comprehensively reviews and analyses ethical issues in accounting, exploring theoretical frameworks, historical perspectives, case studies, and practical strategies for ethical decision-making. It examines the regulatory framework and professional standards governing accounting ethics, highlighting their impact on practice. Case studies such as the Enron scandal, Satyam Computer Services fraud, and Lehman Brothers collapse provide insights into real-world ethical dilemmas and their consequences. The paper also discusses the role of technology in shaping ethical practices, emphasizing the importance of transparency, data security, and professional judgment. Furthermore, it delves into the significance of ethical leadership and organizational culture in mitigating ethical risks within accounting firms and corporations. By synthesizing qualitative and quantitative data from diverse sources, this paper offers valuable insights for accounting professionals, educators, regulators, and policymakers in fostering a culture of integrity and professionalism within the accounting profession.

ACCOUNTING FRAUD IN CORPORATE: CASE STUDY ON SATYAM COMPUTERS LIMITED

In the modern globalized and liberalized era, the firms are facing stiff competition and are under pressure to show the good financial results through financial reporting. In such an environment, they start using the creative accounting practices, especially in unsuitable situation to boost up the profit or manipulate the assets and liabilities to report to the stakeholders the image that is better than the actual image. Corporate accounting fraud is a major problem that is increasing both in its frequency and severity. Research evidence has shown that growing number of frauds have undermined the integrity of financial reports, contributed to substantial economic losses, and eroded investor’s confidence regarding the usefulness and reliability of financial statements. An attempt is made in this paper to examine in-depth and analyse India's Enron, Satyam Computer's " creative-accounting " scandal. Satyam was brought to its knee due to 'tunnelling' effect. The Satyam scandal highlights the importance of securities laws and Corporate Governance in emerging markets. Their scandal/fraud has put a big question mark on the entire corporate governance system in India. Indeed, Satyam fraud "spurred the government of India to tighten the CG norms to prevent recurrence of similar frauds in future. Thus, major financial reporting frauds need to be studied for “lessons-learned” and “strategies-tofollow” to reduce the incidents of such frauds in the future. Thus this paper is devoted to the case study of Satyam, its creative accounting scandal and the effect of it on the global market.

The collapse of corporates: A case study on understanding the managerial perspectives of business ethics. (With special reference to selected industrial and commercial business centers in eastern India)

Is “Corruption” becoming “Custom of Corporates”? Enron the Global Energy Giant collapsed due to poor Corporate Governance. Reliance Communication of Reliance ADAD Group the Leader in India went bankrupt due to Business Culture, Policies & Strategies. What went wrong with Satyam Computers, Kingfisher Airlines, Jet Airways, Air India, Punjab National Bank, Yes Bank, and many? The Companies who commit frauds, scams & scandals lose Market Capitalization and Brand Value. Is Productivity only for the Profits? The Performance Appraisal System is not truly giving desired results. Employees are not loyal to the Corporate Management. Ethical values are being compromised in rat race by the Managers.

The Satyam Effect on Related Party Loans in India

We examine the impact of the failure of Satyam Computer Services Ltd. (“Satyam”), a major corporate governance related event in India, on related party loans of Indian public companies. Using data from a balanced panel of 794 firms for the years 2006–2012, we find that the Satyam failure had a significant negative impact on related party loans given by Indian firms. The average of net related party loans (as a proportion of total assets) declined from 2.37% in 2008 to 0.23% in 2010. Furthermore, the reduction in related party loans was more prominent in firms with lower levels of external monitoring. Finally, since prior research suggests that there was no significant Satyam effect on the frequency or attendance at audit committee meetings, our results suggest that there can be substantive changes in operational decisions without observable changes in governance.

Economic theory and social pressure: audit committee director departures in India

Purpose This study aims to examine the resignations of Indian audit committee directors after a systemic shock (failure of Satyam Computer Services Ltd.). Design/methodology/approach The authors develop the research questions based on interviews with company directors and audit partners, in addition to economic theory. The authors then use archival data to test the research questions. Findings The authors find that social and peer pressure is a very important factor in explaining such departures and provides the basis for some counter-intuitive empirical results, for example, directors were less likely to resign from companies audited by Indian affiliates of PricewaterhouseCoopers even though Satyam was audited by one such auditor and ownership by founding families was not associated with director departures. Research limitations/implications Going beyond economic theory and analyzes can be useful in examining issues related to corporate boards and audit committees. Practical implications Regulators should consider requiring disclosure about director attendance percentages, in addition to the number of meetings, at audit committee – and, perhaps, other board sub-committee – meetings. Social implications Caution is warranted when using results from the USA and other Anglo-Saxon countries to address governance-related issues in India or other Asian countries. Originality/value A triangulation of economic theory and societal norms enables us to gain valuable insights about the resignations of audit committee directors in India.

Satyam Fraud: A Structural Functional Approach to Corporate Governance Reform

The paper uses Satyam Computer Services Limited as a prototypical case of corporate governance failure and recommendations for reforms. In making recommendations for corporate governance best practices, the paper analyzes Satyam’s corporate governance framework and management controls through a structural functionalist lens. The case is based on materials obtained from the news and print media, published articles, and interviews given by experts who commented on the case. Corporate governance data were obtained from the Securities and Exchange Commission’s (SEC) Edgar database. The findings suggest that corporate governance best practices should not be separate from the discrete parts of the organization. A wider context that encapsulates socio-cultural factors must not only be part of corporate governance mandates; but, also integral in the operational logistic of the corporation. As part of this discussion, the paper explicitly reviewed the governance structure and the make-up of the board of directors that were in place at Satyam prior to the resignation of Chairman Ramalinga Raju and his admission that he was involved in financial statement irregularities. Particular emphasis was placed on how management control systems and cultural controls in companies can shape corporate governance mandates to build effective governance framework.

Correlations Between Corporate Governance Practices And Financial Performances In Indian Banks

In the last era, Corporate Governance has advanced and developed significantly. Integration and globilisation of the capital markets and financial markets are the important factors for the rapid developments in this arena. It has also made way to the development of more number of corporate scandals (such as corporate accounting scandal at Satyam computer services) or fraud loans by Banks (Punjab National Banks).The study based on correlation, analyses the link between corporate governance disclosure practices and the financial ratios, which in turn leads to a successful governance paradigm accountability. It also aims to study about the financial ratios, which are within the RBI trigger level and find out whether there is any correlation between the movements of share prices and earnings per share of the banks during the study period.

A Review on Satyam Computer Failure Lessons for Corporate Governance and World

Satyam scam has been the greatest scam in the history of corporate world of the India. Satyam is the fourth largest IT Company in India. The CEO of the company has made a scam of around $2 billion; it appears that corporate accounting fraud is a major problem that is increasing both in its frequency and severity. The Satyam scam shockwaves also impacted the entire auditing structure of Indian Corporate world. The scam has added to a notorious list of companies involved in fraudulent financial activities, one that includes such names as Enron, WorldCom, Societe General, Parmalat, The increasing rate of white-collar crimes demands stiff penalties, exemplary punishments, and effective enforcement of law with the right spirit. The fraud committed by the founders of Satyam in 2009, is a testament to the fact ― the science of conduct is swayed in large by human greed, ambition, and hunger for power, money, fame and glory. In the aftermath of the Satyam scandal, that has tested the efficacy of corporate governance norms in India; the existing framework fails to satisfactorily address the shortcomings in the prevailing regime. The Satyam scandal highlights the importance of securities laws and corporate legislation in emerging markets. Indeed, Satyam fraud spurred the government of India to tighten the corporate legislation norms to prevent recurrence of similar frauds in future. Satyam scandal has had a deep impact on how we construe “Corporate Governance”. Though it is well recognized that corporate governance is about “transparency”, “efficacy” and “accountability” but now the concerns are about the changing paradigm of corporate governance. Thus, major financial reporting frauds need to be studied for “lessons-learned” and “strategies-to-follow” to reduce the incidents of such frauds in the future.

Role of Corporate Governance on Corporate Fraud in Indiaa Case Study of Satyam Computer Services Ltd.

Role of Corporate Governance on Corporate Fraud in Indiaa Case Study of Satyam Computer Services Ltd.

Case Note: The Curious Case of Satyam Computers

This case note canvasses the recent decision of the Full Federal Court of Australia in Satyam Computer Services Limited v. Commissioner of Taxation, where the court applied the Australia-India income tax treaty to create a tax liability on royalties paid to a non-resident, which was not provided for in Australia’s domestic law. The author argues that tax treaties serve as a limitation on taxing liabilities: they allocate taxing rights rather than generate new tax liabilities. The author criticizes the court’s decision for failing to apply the doctrine that an income treaty acts as a shield and not a sword.

Using Evidential Reasoning Technology to Enhance the Audit Quality Assurance Inspection Process

ABSTRACTThis paper considers the use of an emerging technology based on formal evidential reasoning to help audit quality assurers conduct higher-quality inspections of audit engagements. Although the ideas should be relevant to the inspection process in general, we focus on PCAOB stated objectives and procedures and, as an illustration, the inspection of Satyam Computer Services Limited. To enhance audit quality assurance (AQA), we propose and illustrate a portion of a prototype technology that uses formal evidential reasoning to help assess audit quality. The use of a formal evidential reasoning model and a structured process should provide better documented and more precise, consistent, and rigorous AQA assessments of risk, of the sufficiency and competency of audit evidence collected, and of various auditor judgments. The potential of this technology is illustrated by evaluating the Public Company Accounting Oversight Board's (PCAOB) inspection of Satyam Computer Services Limited, in particular the assessment of the risk of financial statement misstatement due to either unintentional or intentional misstatements. The illustration suggests that the proposed technology is likely to facilitate an enhanced inspection of audit quality. By implication, we assert that use of such technology will result in other enhancements to AQA.

Corporate Governance Reforms in India Accommodating Local Culture Along with the Drive for Global Convergence

Can there be a successful global meeting or convergence of broad corporate governance norms or is it merely the stuff of fantasy? India, over the years, like a few other developing countries in Asia and outside, brought in a spate of corporate governance reforms based on the American model and these have not had the highest success rate. This article analyses the evolution of corporate regulation in India starting from the pre-independence era (prior to 1947) up to 2013. The look at the past helps one understand the Indian business structure, institutions and culture which is essential to understand why a lot of the Anglo-American corporate governance norms imported into the country have failed. A wake up call was sounded when Satyam Computers orchestrated one of the biggest accounting frauds in the country and Indian legislators came to realise that it was not enough to transplant western norms into an environment that probably did not have the corresponding infrastructure. This article therefore studies the Satyam case and illustrates the inadequacies of the reforms effected up until then. Responding to Satyam, India enacted the Companies Act, 2013 which attempts to adapt the international norms specifically to the Indian situation. Does this give convergence a better chance of success? An analysis of the provisions of this new law as well as industry reactions seems to answer this question in the affirmative. However, much of the success depends on its implementation and it remains to be seen if it is indeed a success story.

The C‐Suite and Fraud

Fraud committed by the C‐suite is a secret that is rarely discussed. However, C‐suite fraud happens with enough regularity to be a major concern for firms (Darvall‐Stevens, 2015). The financial debacles of Enron Corporation, Tyco International, WorldCom, and Satyam Computer Services, Ltd. taught us that the C‐suite can certainly play a major role in perpetrating white‐collar crime (WCC). In each of these environments, the C‐suite was either directly or indirectly involved in creating and or approving fraudulent financial statements as well as committing other types of fraud. These actions came at great cost to the firms and those involved with the firms: investors; creditors; and employees, both current and retired. The purpose of this article is to suggest possible safeguards and remedies that an organization can implement to prevent and detect C‐suite fraud in order to eliminate the potential cost of WCC for the organization. © 2017 Wiley Periodicals, Inc.

Satyam’s Manipulative Accounting Methodology Unveiled: An Experience of an Asian Economy

<p>Manipulative accounting practices are perennial and such practices have occurred in all eras, in all countries and affected millions of corporations. Unfortunately, there are few loopholes in accounting and auditing standards, which provide leeway and thus motivate accounting professionals to use aggressively manipulation practices. In fact, manipulative accounting (MA) involves the intentional cooking-up of financial records towards a pre-determined target. Every company indeed maneuvers the numbers, to a certain extent, as formally reported in its financial statements (FS) to achieve budgetary targets and generously reward senior managers. From Enron, WorldCom to Satyam, it appeared that window-dressing leading to MA is a serious problem that is increasing both in its frequency and severity, which undermines the integrity of financial reports and eroded investors’ confidence. The responsibility of preventing, detecting and investigating financial frauds rests squarely on Board of Directors and they should adopt preventive steps. Despite the raft of CG, and financial disclosure reforms, corporate accounting still remains murky and companies continue to find ways to play ‘hide-and-seek’ game with the system. Satyam computers were once the crown jewel of Indian IT-industry but were brought to the ground by its founders in 2009 as a result of financial manipulations in FS. The present study provides a snapshot of how Mr. Raju (CEO and Chairman) mastermind this maze of AM practices? Undoubtedly, Satyam scam is illegal and unethical in which computers were cleverly used to manipulate account books by creating fake invoices, inflating revenues, falsifying the cash and bank balances, showing non-existent interest on fixed deposits, showing ghost employees, and so on. Satyam fraud has shattered the dreams of investors, shocked the government and regulators and led to questioning of the accounting practices of auditors and CG norms in India. Finally, we recommend that “All types of MA practices should be legally recognized as a serious crime, and accounting bodies, law courts and regulatory authorities must adopt exemplary punitive measures to prevent such unethical practices.”</p>

Fraudulent Reporting Perpetuated by CEO’s Team: Unveiling the Sayam ‘Modus Operandi’

Fraudulent reporting practices can have very significant consequences for organizations and all stakeholders, as well as, for public confidence in the capital and security markets. In fact, comprehensive, accurate and reliable financial reporting is the bedrock upon which our markets are based. Keen to project a ‘rosy’ picture of the Satyam Computer Services Limited to investors, employees and analysts, Mr. Raju (CEO & Chairman) and his team members ‘fudged’ the account books for 5 years so that it appeared to be a far bigger enterprise, with high profits and fast growth rate, than it actually was. The Satyam fraud has shattered the dreams of different categories of investors, shocked the government and regulators alike, and led to questioning of the accounting practices of statutory auditors and corporate governance norms in India. This is an exploratory and qualitative study based on secondary sources of information. An attempt has been made here to provide an explanation for various intriguing questions about Satyam scam. After thorough investigations by the CBI and SEBI, they have unveiled the methodology by which Satyam fraud was engineered. Finally, we recommend “Fraudulent reporting practices should be considered as a serious crime, and accounting bodies, law courts and other regulatory authorities in India need to adopt very strict punitive measures to stop such unethical practices.”

Creative Accounting Practices at Satyam Computers Limited: A Case Study of India’s Enron

<p>Satyam Computers were once the crown jewel of Indian IT industry, however, the debacle of Satyam raised a debate about the role of CEO in driving a company to the heights of success and its relation with the board members and core committees. The scam brought to the light the role of corporate governance (CG) in shaping the protocols related to the working of audit committees and duties of board members. The Satyam scam was a jolt to the market, especially to Satyam stockholders. This paper attempts an in-depth analysis of India’s Enron, Satyam Computer’s “creative-accounting” scandal. In public companies, this type of ‘creative’ accounting leading to fraud and investigations are, therefore, launched by the various governmental oversight agencies. The accounting fraud committed by the founders of Satyam in 2009 is a testament to the fact that “the science of conduct is swayed in large by human greed, ambition, and hunger for power, money, fame and glory.” Scandals have proved that “there is an urgent need for good conduct based on strong corporate governance, ethics and accounting & auditing standards.” The Satyam scandal highlights the importance of securities laws and CG in emerging markets. Indeed, Satyam fraud “spurred the government of India to tighten the CG norms to prevent recurrence of similar frauds in future.” Thus, major financial reporting frauds need to be studied for ‘lessons-learned’ and ‘strategies-to-follow’ to reduce the incidents of such frauds in the future. The increasing rate of white-collar crimes “demands stiff penalties, exemplary punishments, and effective enforcement of law with the right spirit.”</p><h2> </h2>

A Study to Show the Relation between Creative Accounting and Corporate Governance

The concept of corporate governance and creative accounting has come into picture after the big accounting scandals (Enron, WorldCom, Satyam computers etc.). Corporate governance represents the manner in which a company is directed and controlled and this aspect is closely related to creative accounting practices, ownership structure, board of director’s structure, they all can encourage or discourage creative accounting practices. Corporate governance is a current issue with great impact on creative accounting. Occurrence of creative accounting is related to weakness of corporate governance. The paper is structured as follow, at first some definitions of creative accounting and corporate governance after introduction. After that role of corporate governance in detecting creative accounting practices is shown, theories of corporate governance are bring into attention to identify the nature, existence and incidences. Comparative analysis of top scandals is also shown on the basis of some corporate governance parameters. In this paper we examine the relation between creative accounting and corporate governance. Corporate governance is measured through TDI, and results that more information is provided on audit committee and for company’s shareholders as compared to its Board structure and disclosure practices. Creative accounting is measured by performance indicators like Tobin’s Q, ROA, ROCE, Debt/Equity. In correlation we find significant negative relationship between ROCE and leverage of firm, and significant positive relationship between P/E and leverage.

Determinants of Board Structure: Evidence from India

The paper analyse the role of directors in sustainability of business to ensure good corporate governance. The objective is to highlight the economic and strategic implications of independent role of directors with regards to regulatory framework in India in the light of major corporate governance failure at India's fourth largest software company, Satyam Computers in January 2009. The present paper highlights the long-term strategic perspective for India as far as corporate governance and business sustainability are concerned. The data set consist of nifty companies, from Prowess corporate data base. The paper tries to analyse the impact of various company characteristics and board size on independence of directors. The findings include analysis of role of independence in decision making of corporate including director as far as overall governance is concerned and possible recommendations for future so as to carve out a voluntary good governance culture on a large scale among corporate entities. There is lack of reliable data on various aspects of governance and independence of director. Therefore, the study focused on the availability of data and compliance to regulatory framework in India along with future implications as regards to new Companies Act 2013. All stakeholders including government, investors, corporate sector, regulatory bodies and citizens need clarity on the role of directors, and other key managerial personnel in sustainability of interest of all the stakeholders and overall growth of corporate in India. In India, there is dearth of research in the area of corporate governance practices. This paper aims at highlighting the historical relationship between independence of directors; and overall business sustainability.

Creative Accounting Scam at Satyam Computer Limited: How the Fraud Story Unfolded?

Keen to project a perpetually rosy picture of the Satyam to the investors, employees and analysts, Mr. Raju (CEO and Chairman) manipulated the account books so that it appeared to be a far bigger enterprise than it actually was. The Satyam fraud has shattered the dreams of different categories of investors, shocked the government and regulators alike, and led to questioning of the accounting practices of statutory auditors and CG norms in India. An attempt has been made to provide an explanation for various “intriguing” questions about Satyam scam, such as: What was the need to commit a fraud on such a large scale? How Raju managed to cook-up books? What was Raju’s real modus-operandi to manipulate the accounts for eight years? Why was Raju forced to blow his own whistle? Why was not there a stricter punitive action against the auditors of Satyam PwC?, etc.” Now, after thorough investigations done by the CBI and SEBI, they have unveiled the methodology by which Satyam fraud was engineered. Finally, we recommend that “CA practices should be considered as a serious crime, and as such, accounting bodies, law courts and other regulatory authorities in India need to adopt very strict punitive measures to stop such unethical CA practices”.