satyam case
Open Journal of Accounting, 2013, 2, 26-38 http://dx.doi.org/10.4236/ojacct.2013.22006 Published Online April 2013 (http://www.scirp.org/journal/ojacct)
Corporate Accounting Fraud: A Case Study of Satyam
Computers Limited
Madan Lal Bhasin
Bang College of Business, KIMEP University, Almaty, Republic of Kazakhstan
Email: madan.bhasin@rediffmail.com
Received January 15, 2013; revised March 12, 2013; accepted March 28, 2013
Copyright © 2013 Madan Lal Bhasin. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
ABSTRACT
From Enron, WorldCom and Satyam, it appears that corporate accounting fraud is a major problem that is increasing both in its frequency and severity. Research evidence has shown that growing number of frauds have undermined the integrity of financial reports, contributed to substantial economic losses, and eroded investors’ confidence regarding the usefulness and reliability of financial statements. The increasing rate of white-collar crimes demands stiff penalties, exemplary punishments, and effective enforcement of law with the right spirit. An attempt is made to examine and analyze in-depth the Satyam Computer’s “creative-accounting” scandal, which brought to limelight the importance of
“ethics and corporate governance” (CG). The 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”. Unlike Enron, which sank due to “agency” problem, Satyam was brought to its knee due to ‘tunneling’ effect.
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
Corporate Accounting Fraud: A Case Study of Satyam
Computers Limited
Madan Lal Bhasin
Bang College of Business, KIMEP University, Almaty, Republic of Kazakhstan
Email: madan.bhasin@rediffmail.com
Received January 15, 2013; revised March 12, 2013; accepted March 28, 2013
Copyright © 2013 Madan Lal Bhasin. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
ABSTRACT
From Enron, WorldCom and Satyam, it appears that corporate accounting fraud is a major problem that is increasing both in its frequency and severity. Research evidence has shown that growing number of frauds have undermined the integrity of financial reports, contributed to substantial economic losses, and eroded investors’ confidence regarding the usefulness and reliability of financial statements. The increasing rate of white-collar crimes demands stiff penalties, exemplary punishments, and effective enforcement of law with the right spirit. An attempt is made to examine and analyze in-depth the Satyam Computer’s “creative-accounting” scandal, which brought to limelight the importance of
“ethics and corporate governance” (CG). The 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”. Unlike Enron, which sank due to “agency” problem, Satyam was brought to its knee due to ‘tunneling’ effect.
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
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