Download - Final Presentation on Accounting Fraud
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SATYAM
SCAM
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Born- September 16, 1954 { Bhimavaram ,
Andhra Pradesh, India}
Residence- Hyderabad, Andhra Pradesh, India
Nationality- IndianOccupation- Former Chairman of Satyam
Computer services
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Traditional agriculture business
Spinning &weaving mill( sri satyam)
Real estate business
Construction company(satyam construction)
1987 Satyam computers
1992 public
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SATYAM
COMPUTERS WHATIT IS ABOUT ?
4th Largest IT Outsourcing Company of India
Employees more than 50,000 people in India
High Global Reputation
Offers Services to more than 550 MNCs
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Former chairman B.Ramalinga Raju is the prime
convict in the case with several other board
members
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SATYAM Scam Involves Amount Close To 10,000
Crore
SATYAM is the Fourth largest IT firm in INDIACarrying india's outsourcing image globaly, so it's
about nation's image
December the 16th, 2008: $1.6 billion bid for two Maytascompanies i.e. Maytas Infrastructure Ltd and Maytas
Properties Ltd
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Thumbs down given by investors and the market
forced him to retreat within 12 hours
Share prices plunges by 55% on concerns about
Satyams corporate governance
December 23, 2008: World Bank announced that
Satyam has been barred from business with World
Bank for eight years for providing Bank staff with
improper benefits and charged with data theft
and bribing the staff
Share prices fell another 14% to the lowest in over
4 years
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December 28 :Mangalam Srinivasan, announced
resignation followed by the resignation of three
more independent directors
January 7, 2009:Ramalinga Raju announced
confession of over Rs. 7800 crore financial fraud
and he resigned as chairman of Satyam
He revealed in his letter that his attempt to buy
Maytas companies was his last attempt to fill
fictitious assets with real ones.
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Satyams auditors Price Waterhouse finally admitted that
its audit report was wrong as it was based on wrong
financial statements provided by the Satyams
management
The companys balance sheet was inflated to Rs 5,361
crore against the actual Rs 5,040 crore.
Satyams CFO Srinivas Vadlamani confessed to having
inflated the number of employees by 10,000.
This helped in drawing around Rs 20 crore per month
from the related but fictitious salary accounts
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Youngest sibling of Ramalinga Raju who owned 4.3
per cent in Maytas Infra, and recovered 112 sale
deeds of different land purchases and developmentagreements
Senior partners S Gopalakrishnan and Srinivas
Talluri of the auditing firm PricewaterhouseCoopers(PwC) were arrested for their alleged role in the
Satyam scandal
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Jobs of over 50,000 technocrats were at risk
Countrys booming economy feared slight collapse
as countrys GDP fell by estimated 0.4%
Indias IT sector suffered downturn as its image
was tarnished globally
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Reforms
Governance ReformIndependent Directors
After the Satyam scandal, investors and regulators called for strengtheningthe regulatory environment in the securities markets.
The Ministry of Corporate Affairs is devising a new Corporate Code and is
considering changing the securities laws to make it easier for shareholders to
bring class action lawsuits.
Disclosure of Pledged Securities
After Satyam, the SEBI increased disclosure obligations of promoters and
controlling shareholders.
Increased Financial Accounting Disclosures
The SEBI also recently proposed requiring companies to disclose theirbalance sheet positions twice a year.
IFRS (Adoption of International Standards)
Satyam strengthened India's commitment to adopting International Financial
Reporting Standards ("IFRS") by 2011.
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Contd..
Increased Financial Accounting Disclosures
The SEBI also recently proposed requiring companies to disclose their balance sheet
positions twice a year.
IFRS (Adoption of International Standards)
Satyam strengthened India's commitment to adopting International FinancialReporting Standards ("IFRS") by 2011.
Creation of New Corporate Code - Ministry of Corporate Affairs
New code will apply along with the regulatory obligations imposed by the SEBI.
Adherence to the Code will be voluntary; however, every company that deviates fromthe code's requirements must disclose the deviations to the ministry.
Tech Mahindra purchased 51 percent of Satyam on April 16, 2009, successfully
saving the firm from a complete collapse. With the right changes, India can minimize
the rate and size of accounting fraud in the Indian capital markets.
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