Essay On Satyam

869 Words4 Pages
Amusingly, Satyam means “truth” in the archaic Indian language “Sanskrit”. Satyam won the ‘Global Peacock Award’ with for global excellence in corporate accountability by the World Council for Corporate Governance on September 2008. Unfortunately, no longer than five months, Satyam became a great accounting fraud after the World Council for Corporate Governance awarded Satyam the Global Peacock Award.

Mr. B. Ramalinga Raju (Chairman of Satyam) had been cooking up the books of Satyam’s accounts from 2001 to 2008. Satyam’s balance sheet recorded assets with $1.47 billion. However inside the $1.47 billion, nearly $1.04 billion of bank loans and cash was overstated and actually does not existed. This is because Mr. Raju understated the allowance for doubtful accounts. This is a portion of receivables that he thought it can't collect represented in contra-asset account. The allowance account reduces the balance of accounts receivable, so if it's synthetically low, assets are synthetically high. The inventory asset account also manipulated by Mr. Raju. He inflated the cash and bank balances of the company by Rs. 5,040 crore. In 30 September 2008, total assets of Satyam was Rs. 8,795 crore. Nearly 60% of total assets that is Rs. 5,313 crore was cash and bank balances and Rs. 5,040 crore was overstated. Basically, the cash and bank balances of Satyam had less than Rs. 300 crore.”
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Raju. This is because liabilities represent a company's financial obligations, so he tempted to downplay them. In 30 September 2008, Satyam’s balance sheet shown that he understated liability of Rs. 1,230 crore. Next, nearly every quarter over the course of several years, Mr. Raju will overstated income in order to meet analyst expectations. The announcement shown that overstated quarterly revenues by 75 percent and profits by 97 percent on 17 October
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