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

Author

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  • Madan Lal Bhasin

    (Professor, School of Accountancy, College of Business, Universiti Utara Malaysia, Sintok, Kedah Darul Aman, Malaysia.)

Abstract

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.â€

Suggested Citation

  • Madan Lal Bhasin, 2016. "Creative Accounting Practices at Satyam Computers Limited: A Case Study of India’s Enron," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 6(6), pages 24-48, June.
    • Handle: RePEc:mir:mirbus:v:6:y:2016:i:6:p:24-48
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    References listed on IDEAS

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    Cited by:

    1. Madan Lal Bhasin, 2016. "Fraudulent Reporting Practices by Satyam," Traektoriâ Nauki = Path of Science, Altezoro, s.r.o. & Dialog, vol. 2(10(15)), pages 1.7-1.1.21, October.
    2. Madan Lal Bhasin, 2016. "Accounting Manipulation Practices in Financial Statements: An Experience of an Asian Economy," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 2(11), pages 199-214, 11-2016.

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