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Fraudulent Reporting Practices by Satyam

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  • Madan Lal Bhasin

    (University Utara Malaysia)

Abstract

Fraudulent financial reporting practices can have 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 to investors, employees and analysts, Mr. Raju (CEO and Chairman) fudged the account books 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 study based on secondary sources of information. An attempt has been made 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, courts and other regulatory authorities in India need to adopt very strict punitive measures to stop such unethical practices”.

Suggested Citation

  • 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.
    • Handle: RePEc:pos:journl:15-2
    DOI: 10.22178/pos.15-4
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    References listed on IDEAS

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    1. Kalpana Pai & Thomas D. Tolleson, 2015. "India’S Satyam Scandal: Evidence The Too Large To Indict Mindset Of Accounting Regulators Is A Global Phenomenon," Review of Business and Finance Studies, The Institute for Business and Finance Research, vol. 6(2), pages 35-43.
    2. Gregory S. Miller, 2006. "The Press as a Watchdog for Accounting Fraud," Journal of Accounting Research, Wiley Blackwell, vol. 44(5), pages 1001-1033, December.
    3. Reurink, Arjan, 2016. "Financial fraud: A literature review," MPIfG Discussion Paper 16/5, Max Planck Institute for the Study of Societies.
    4. 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.
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    Cited by:

    1. Mahmoud Elmarzouky & Khaled Hussainey & Tarek Abdelfattah, 2022. "Do Key Audit Matters Signal Corporate Bankruptcy?," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 21(3), pages 315-334, September.

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    More about this item

    Keywords

    Fraudulent financial reporting practices; Satyam computer; modus-operandi; financial statements; corporate governance; auditors; forensic accounting; corporate culture and ethics; SEBI; SFIO; CID; India.;
    All these keywords.

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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