Satyam Fraud: A Case Study of India's Enron

Brown, Veena L.; Daugherty, Brian; Persellin, Julie S.

doi:10.2308/iace-50735

Cited by 26 publications

(10 citation statements)

References 5 publications

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“…6 6During the SEC's investigation of Satyam it was revealed that an interfirm review requested by PwC India raised concerns about the cash confirmation process, but that ultimately the Indian affiliates chose to ignore this feedback (SEC 2011; Brown et al 2014). The ability to ignore feedback raises questions regarding the enforceability of internetwork recommendations as well as members' ability to certify their own compliance with global network requirements.…”

mentioning

confidence: 99%

Challenging Global Group Audits: The Perspective of US Group Audit Leads*

Downey

Westermann

2021

Contemporary Accting Res

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Regulators are concerned about the quality of group audits because of poor inspection results, recent enforcement actions against component auditors, and the significance of these audits to the global economy. Yet research in this area is nascent. In response, we survey and interview US‐based global group audit leads to better understand the group audit process and their perceptions of challenges that arise on such engagements. Our findings indicate that group auditors organize their audits consistent with the client's structure, which drives component auditor selection, scoping, and fees. Group auditors routinely find fault with component auditors, perceiving that work performed and/or documentation provided is not sufficient, not appropriate and/or not communicated timely, to comply with US standards and reporting deadlines. In some cases, they perceive that the component auditor is unable and/or unwilling to comply and in others, that the component auditor misunderstands group instructions due to language proficiency or differing interpretation of the standards. Notably this perspective is ethnocentric, as group auditors almost exclusively attribute issues to component auditors. While ethnocentric tendencies appear myopic, they provide insight into unrecognized or overlooked aspects of the global firm model of cooperative arrangements. This study highlights the significance of the global firm's network structure to global group audits. Thus, we encourage intercommunity research, among (quantitative and qualitative) scholars and standard setters, to consider group audits in the broader context of firm networks.

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mentioning

confidence: 99%

Challenging Global Group Audits: The Perspective of US Group Audit Leads*

Downey

Westermann

2021

Contemporary Accting Res

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“…The company demonstrated an annual compound growth rate of 38% over that period. Similarly, operating profits, net profit and operating cash flows growth averaged 28,33 and 35%, respectively." Thus, Satyam generated significant corporate growth and shareholder value too.…”

Section: Case Study Of Creative Accounting Scam At Satyammentioning

confidence: 99%

“…The audits for a company of that size would have been staggered, with millions of dollars of outstanding receivables pouring in to different locations at any given time. As Veena et al [33] commented, "The Satyam case focuses on auditors' responsibilities related to obtaining and evaluating audit evidence, particularly as it relates to confirming cash and receivables. It also explores the quality control responsibilities related to audit procedures performed by foreign affiliates of a large international audit firm."…”

Section: Fake Audit and Dubious Role Played By Auditor'smentioning

confidence: 99%

Creative Accounting Scam at Satyam Computer Limited: How the Fraud Story Unfolded?

Bhasin¹

2016

OJAcct

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Keen to project a perpetually rosy picture of the Satyam to the investors, employees and analysts, Mr. Raju (CEO and Chairman) manipulated the account books so that it appeared to be a far bigger enterprise than it actually was. The Satyam fraud has shattered the dreams of different categories of investors, shocked the government and regulators alike, and led to questioning of the accounting practices of statutory auditors and CG norms in India. An attempt has been made to provide an explanation for various "intriguing" questions about Satyam scam, such as: What was the need to commit a fraud on such a large scale? How Raju managed to cook-up books? What was Raju's real modus-operandi to manipulate the accounts for eight years? Why was Raju forced to blow his own whistle? Why was not there a stricter punitive action against the auditors of Satyam PwC?, etc." Now, after thorough investigations done by the CBI and SEBI, they have unveiled the methodology by which Satyam fraud was engineered. Finally, we recommend that "CA practices should be considered as a serious crime, and as such, accounting bodies, law courts and other regulatory authorities in India need to adopt very strict punitive measures to stop such unethical CA practices".

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“…The BMS case study was provided in the beginning of a 15-week semester. It was the last of six case studies that students had to analyze during the semester: Enron (Dharan and Bufkins, 2008); WorldCom (Kaplan and Kiron, 2007); Dell (Sandretto, 2011); Satyam (Brown, Daugherty, and Persellin, 2014); and Groupon (Dutta, Caplan, and Marcinko, 2014). Students learned how these companies had misapplied GAAP in recognizing revenues in their financial statements.…”

Section: Case Administrationmentioning

confidence: 99%

Caught in a Cognitive Trap? an Examination of Student Heuristics and Debiasing When Analyzing an Accounting Restatement Case.

Sampath¹

2020

Preprint

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Student evaluations and judgments of the accounting method used in the restatement by a public company for channel stuffing are examined. A panel of accounting and legal experts evaluated the appropriateness of the accounting method and the sanctions provided to the company and its former executives. In order to reduce any heuristics that may have affected student judgments, a group brainstorming method was incorporated to supplement individual assessments made by the students. The case study was administered to 206 students in three student groups: non-degree, justice school and business school students. Qualitative evidence about the efficacy of the use of the brainstorming technique is provided. Between-subjects' assessments of the accounting restatements shows that justice school and business school students are more likely than nondegree students to disagree with the assessment that the restatement was appropriate. Empirical evidence was also found for the presence of social identity bias between business school and justice school students' evaluation of sanctions. Implications on the use of behavioral techniques in accounting and ethics education are discussed.

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Satyam Fraud: A Case Study of India's Enron

Cited by 26 publications

References 5 publications

Challenging Global Group Audits: The Perspective of US Group Audit Leads*

Challenging Global Group Audits: The Perspective of US Group Audit Leads*

Creative Accounting Scam at Satyam Computer Limited: How the Fraud Story Unfolded?

Caught in a Cognitive Trap? an Examination of Student Heuristics and Debiasing When Analyzing an Accounting Restatement Case.

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