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Personal Statement : Computer Services Ltd

Decent Essays

Background
Satyam (meaning Truth) Computer Services Ltd was incorporated on June 24, 1987 by two brothers, B Rama Raju and B. Ramalinga Raju. The company started with just 20 employees and primarily provided software development and consultancy services to large corporations. Satyam went public in 1991, which really turned out to be a great decision for the company. Over the years Satyam rapidly grew and developed a remarkable reputation. Satyam was well recognized globally, and highly regarded. Even though Satyam was at the top, trouble was on the horizon.
Problem
A lack of corporate governance, human greed, deceptive reporting practices, weak independent directors and audit committee, fear, power, competition, success and prestige …show more content…

Many of the decisions being made by the executives were done to achieve personal gain, such as the bid for the two Maytas companies that were controlled by the Raju’ family.

Corporate Governance
Corporate governance refers to the mechanisms, processes, and relations by which corporations are controlled and directed. (Bhasin, 2013) It involves balancing the interests of the company and providing the framework of the company; including action plans, and internal controls. Internal controls are defined by the board of directors, and top management. They are necessary to help prevent fraudulent activity within a company. By implementing stronger internal controls, Satyam could have possibly reduced the impact that this scandal had on the firm.
The policy on ethics was not strongly embedded in the company culture of Satyam. Mandatory ethics testing should be required for new hires, and each employee should be required to review it annually. Another internal control that Satyam didn’t enforce was the financial oversight, and audit control. PricewaterhouseCoopers audited Satyam’s books from June 2000 until the discovery of the fraud in 2009. (Kunal) Many of the flaws would have been a common red flag for many other accounting professionals. This is something that could have been discovered years before if Satyam had a stronger personal accounting team, and segregated financial duties

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