India Satyam Case Study Essay

Satyam Computers Limited: A Case Study of Corporate Accounting Frauds
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10th Apr 2022
Introduction
Satyam literally denotes "truth" in Sanskrit. Satyam has finest reputation, and the company earned the 'Golden-Peacock honor' for best administered corporation in 2007 and 2009. Satyam computers ltd as a company has experienced one of the India’s largest industrial scams in predicted moments due to encoded IT in India's 'geeks and India's 4th largest firm having multiple responsible customers'.
Mr. Ramalinga Raju, the Chairman and Founder of Satyam Computers, was arrested and admitted to committing a $2.64 million fraud. According to Bhasin's study, Mr. Ramalinga, the founder, and his brother, who had assumed the position of MD, "kept the betrayal hidden from the company's top executives and auditors." The mandated report casts doubt on the issue of the firm's financial mismanagement. To critically assess the firm's comprehension and seriousness of the fraud, which is necessary to understand what reasons led to the firm's senior executives' 'uncouth' ideas.
In fact, it is vital to investigate the motivations behind Satyam's choice (Mr. Ramalinga Raju) as well as those participating in the decision-making process seriously. Second, it's a good idea to look into the role of independent audit in detecting and preventing fraud. Finally, for future endeavors, it is critical to learn the lessons from the Satyam scandal.
Satyam Company Limited's Emergence: A Critical Analysis
Mr. Ramalinga Ruju founded Satyam Company Limited in Hyderabad in 1987. (India). Within Indian software score line technology service industry, the organization was regarded as the greatest of all. Satyam started with only 20 workers and developed quickly to become a "global" company in a short period of time. It provided IT solution and software to a variety of industries. The company established as one of the greatest, and it was dubbed "India's Growing Success" at one point. Satyam's success was followed by a slew of honors and awards for corporate governance, innovation, and transparency. On April 14th, 2008, the firm was recognized as one of the responsible and corporate company. Prior to additional recognition from the “World Group of Industrial Governance”, Satyam was given the most valuable award' for the best industrial accountability in the world. The most incredible truth is that just five months before receiving a Global award, Satyam Computer Services Limited became embroiled in one of the world's worst accounting frauds.
The Satyam Scandal and Mr. Ramalinga Raju
Mr. Ramalinga came out swinging in early 2009, revealing in a letter to Company’s BOD that he has been tampering with the organization’s financial data for years. Mr. Raju admitted in his letter that he inflated the assets on Satyam's financial statements by $2.64m. A total of $1.23m in bank long term loans and funds that the company claimed to hold but didn't. On the balance sheet, the additional $2.47 million was recorded as underreported liabilities. Satyam's motivation for overstating data in every quarter for many years was to match analyst expectations. For instance, on 17th October, 2009, an analyst's results exaggerated earnings by 97% and sales by 75%. Mr. Ramalinga and his internal audit team employed multiple tactics to uncover the fraud. Mr. Ramalinga used his computer to construct 6000 bogus pay accounts and misappropriated the money after the firm had deposited it. The organization’s global internal audit head faked board decisions and acquired loans from the company unlawfully. Furthermore, auditing through the fabricated accounting fraud revealed that money obtained by the corporation through the American earnings report was never shown on any of the financial statements.
Mr. Ramalinga committed the scam out of a desire for rivalry, power, prestige, money, and success, which he afterwards 'choked in himself.' The obligation, the duty of carelessness, the duty of transparency to stakeholders, and the duty of care are all violations of the responsibilities imposed on them as fiduciaries as a result of the crime. The Satyam scandal is widely regarded as a textbook example...