Question

Before participating in this discussion forum, you must spend time researching public companies that committed fraud by manipulating revenue. Select one company to discuss. Please post a link to an article or video about the case and answer the following questions:

• How did the company do it?
• Why did the company do it?
• Who in the company did it (name and title)?
• Were there signs in the financial statements before the fraud was discovered? If so, what were they?
• How could this fraud have been prevented?
• Have the accounting rules changed since that fraud was committed?

Answer 1

https://en.m.wikipedia.org/wiki/Satyam_scandal

1. This is all about Satyam Computer Service Limited. And this fraud was done by Byrraju Ramalinga Raju, his 2 Brothers and 7 other.
2. This company committed fraud by using fraudualent accounting policies. They falsified accounts and overstated revenues, operating profits, Interest, liabilities, cash and other particulars. They created fake Invoices and bills and did with the help of software called " On time". And the fake debtors never paid which caused a big hole in the Balance sheet.
3. This all fraud was done to purchase several thousands of acres of land across Andhra Pradesh, India. As manipulating revenues it would attract many investors and they could purchase the land.
4. Yes before coming into the light of the law many of the management did notice but took lightly and believed blindly saying " Instruction from the chairman". And the internal control and Internal Audit was not too much serious about the fraud taking place.
5. The changes which happened all after the scam was:

• National Association of Software and Services Company implemented Corporate Governance and Ethics Committee
• In April 2014, Securities Exchange Board of India introduced vigil mechanism and introduced role of Audit Committee.
• In 2013, Companies Act made certain rules and amendments benefiting stakeholders and created certain obligations on Chartered Accountant, Cost Accountant and Company Secretary.