Satyam Accounting Scandal

Accounting Fraud > Accounting Scandals > Satyam Accounting Scandal

The Saytam Accounting Scandal is one that is surely not to be forgotten. The Saytam computer outsourcing company, an Indian company audited by PricewaterhouseCoopers, admitted to being involved in a huge fraud in 2009.

The Chairman, Ramalinga Raju admitted to falsifying accounts as the company expanded to a company employing 56,000 employees in 66 countries. The fraud involved the falsification of $1 billion USD of cash and bank loans listed as assets on the company’s financial statements.

The scandal calls into question the trustworthiness of Indian accounting standards, as well as the capability of auditing firms of the companies involved in those countries. Satyam had been audited by PWC and listed on the NYSE since 2001 and EuroNex since 2008.

Analysts in India have termed the Satyam scandal India’s own Enron scandal. Immediately following the news, Merrill Lynch (now a part of Bank of America) and State Farm Insurance terminated its engagement with the company. Also, Credit Suisse suspended its coverage of Satyam. It was also reported that Satyam’s auditing firm PricewaterhouseCoopers will be scrutinized for complicity in this scandal. SEBI, the stock market regulator, also said that, if found guilty, its license to work in India may be revoked. On 14 January 2009, Price Waterhouse, the Indian division of PricewaterhouseCoopers, announced that its reliance on potentially false information provided by the management of Satyam may have rendered its audit reports “inaccurate and unreliable”.

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