Question

Search the internet and find an instance of "Earnings Mismanagement" and "Fraud" in your pathway. In a minimum of 3 paragraphs, tell us:

• The company name (in the subject line of your post).
• Why this company interests you.
• When they did it.
• Describe in detail what they did and how they got caught.
• Tell us what the consequences were to the individuals responsible.
• Cite at least two sources for your information.

Examples of businesses in pathways could be:

• AHCD: Dance, Theater, Film production, Social media, Graphics design or architecture business
• Business: Accounting office, caterer, advertising firm, dry cleaner, restaurant, any business is acceptable
• Education: K-12 tutoring, Child care, Charter schools
• Health Sciences: Dr. or Dentist office, PT office, Hospital, Insurance co,
• IMCT: Engineering Co., Aviation maintenance, Aviation distribution, Supply Chain Management
• Public Safety: Law office, PI, Equipment providers for the industry
• STEM: Engineering Co., Vet. Office, Computer Services co.
• SGSHS: Psychology office, Non-profit agencies, Social Media

Do not copy and paste any of the information, use your own words.

Answer 1

1. COMPANY'S NAME : SATYAM
2. SATYAM computers services was an India based information technology public (limited)company. Satyam Scandal is biggest corporate earnings mismanagement and fraud in the history of India. I have chosen SATYAM because it covers many important aspects need to be understand for the learning of earnings mismanagament and fraud .
3. SATYAM Scandal was exposed in the year 2009 dated january 7, by the former CEO and chairman of SATYAM compueters limited Byrajju Ramalinga Raju.

SATYAM limited was one the leading multinational service provider of india . It provides services of Information Technology,,business support services,network technological solutions. It was started by Ramalinga Raju in 1987 on a very sall scale.In 1991,it got converted into punlic ltd compay and got listed in bombay stock enchange. By the year 2008,it became the 4th fastest growing IT company of India.
The fraud was deliberately done by key managerial personells of SATYAM ltd. PROMOTERS are held liable for this scam.The names behind this biggest corporate failure of india is as follows :

1. RAMALINGA RAJU (satyam founder and chairman)
2. B.RAMA RAJU(managing director)
3. V SRINIVAS(chief financial officer)
4. S.GOAPALAKRISHANAN(auditor of the company)
5. TALLURI SRINIVAS(auditor of the company) ,and many employees.

The company conducting the audit of the company was Price waterhouse(most leading auiditing company).
On january 7 ,CEO confessed about manipulation of financal statements of the company.The company misrepresented its accounts to its all stakeholders.he admitted that he had manipulated the accounts of 14,162 crore rupees.
The total amount of financial irregulartities was rupee 7885 crores.

This all was carried out by many ways :

• the fictitious invoices and bills numbered 7500 were created by using a online software "ONTIME".
• many company were created to manipulate the transfer of funds. Around 356 investment companies were created to divert funds in the forms of intercorporte investements.advances loans and funds.
• fictitious revenue of amount rupess 5352.8crores was shown in financial statements between april2002 and september 2008.
• fictitious interest income of amount nearly 900 crores were recorded from 2002 and 2008
• actual no of employess in the company was 40000 and statements were showing number to 53000.
  CEO had been withdrawing 20 crore rupess every month to pay those nonn existent employess.
• fictitious foreign exchange gain of amount around 206 crore rupees was shown between 2002 and 2008.

How did they caught:

The SATYAM scam was exposed by its CEO Mr.Raju in 2009.
the confession of CEO acted as a explosive for the market and economy. but it can be traced by the failure of acquisition of 2 related companies a month ago.
in dec 2008, SATYAM announced the acquisition of2 companies of Mr.Raju's brothers MAYTAS INFRA and MAYTAS PROPERTIES.but no shareholder apporval was obtained for the acquisition which would resultes in use of cash of nearly 5500 crores of SATYAM.SATYAM was trying to fill the gap between its balnace sheet by this acquisition..

Consequeces for the individual responsible and effect on economy.

after the confession in january , the CBI took the charge of the case and investigated it .they filled the 3 separate charge sheets in the year 2009 and 2010 which was further merged into a single chargesheet.

In april 2015 ,Mr Raju was convicted with other 10 members. he and his brothers were senteced to 7 years imprisonment and fined Rs 5.5 crores.

ACTION ON AUDITORS : PWC served as independent audiotrs of SATYAM . The INDIAN arm of PWC was fined of $6billion by USA SECURITIES AND EXCHANGE COMMISON for not following code of conducts.ethics of conductiong audit.IN  2008, SEBI suspends listing of PWC in stock exchange for 2 years .SEBI also ordered fine of Rs 13 crores for wrongfull gain.

WORLD BANK banned satyam for carrying out its business operations for 8 years.

IMPACT ON ECONOMY:

• The value of SATYAM's shares fell nearly 78%
• SENSEX stock index fell by 7.3%
• NSE fell by around 6.18%
• due to sudden downfall in the market ,shareholders beared the loss of nearly rs9300cr a day.
• around 45000 employess job were at risl
• India'sGDP fell by 0.4% and there were a drastic effect on indian economy.

SOURCES:

1. slideshare.net
2. wikipedia/satyam scandal
3. hindustantimes/satyamscam.