Accounting Fraud at Satyam Computers Essay
March 04, 2011
Satyam Computers Services Limited was a consulting and an Information Technology (IT) services company founded by Ramalingam Raju in 1988. It was India’s fourth largest company in India’s IT industry, offering a variety of IT services to many types of businesses. Its network spanned over 46 countries, across 6 continents and employed over 20,000 IT professionals. On 7th January 2009, Satyam scandal was publicly announced and Ramalingam Raju confessed and notified SEBI (Securities and Exchange Board of India), which is the Indian equivalent of SEC, of having falsified the account.
Raju confessed that Satyam’s balance sheet of 30 September 2008 contained inflated …show more content…
ROLE OF ACCOUNTING FIRM
Following the letter from the Satyam chairman, who accepted that he had misrepresented facts in the company’s balance sheet, role of auditors and accountants for the company came under scanner. The falsification of accounts by Satyam for the past several years has put a question mark on the credibility of its auditor, PricewaterhouseCoopers (PwC).
Satyam scandal strengthened India's commitment to adopting International Financial Reporting Standards ("IFRS") by 2011. Currently, Indian Generally Accepted Accounting Practices and the IFRS differ significantly. Globally, more and more countries are moving towards IFRS, as currently more than 100 countries require, permit, or are converting to IFRS. Adopting IFRS will facilitate investor comparisons of financial performance across country lines and will increase confidence in the accounting numbers.
SEBI increased disclosure obligations of promoters and controlling shareholders. Before the Satyam scandal, promoters and controlling shareholders were not required to disclose to investors if they had pledged their stock. Pledging stock is the process whereby a