ipl-logo

Unethical Creative Accounting Case Study

1925 Words8 Pages

Unethical Creative Accounting : A Case Study of Satyam Computers Limited Ishleen Kaur Ahuja Kanika Sharma Sapna Thukral Khushboo Gautam Upasana Gutt Assistant Professor Assistant Professor Assistant Professor Assistant Professor Assistant Professor Trinity Institute of Professional Studies, GGSIPU, New Delhi Learning Objective: After discussing the case, the students will be able to explain why ethics or ethical behaviour is important for long term survival of an organisation. Emergence of Satyam Computers Limited Satyam Computer Services Limited in the Indian “outsourced” IT service industry was a growing brand name. The company was formed by Mr. Ramalinga Raju in 1987 in Hyderabad. The firm began its operations …show more content…

Raju confessed in a letter to the Satyam Computers Limited Board of Directors “he had been manipulating the company’s accounting numbers for years”. Mr. Raju claimed that he overstated assets on Satyam’s balance sheet by $1.47 billion. Nearly $1.04 billion in bank loans and cash that the company claimed to own was non-existent. Satyam also underreported liabilities on its balance sheet. Satyam overstated income nearly every quarter over the course of several years in order to meet analyst expectations. For example, the results announced on October 17, 2009 overstated quarterly revenues by 75 percent and profits by 97 percent. Mr. Raju and the company’s global head of internal audit used a number of different techniques to carry out the fraud. “Using his personal computer, Mr. Raju created numerous bank statements to advance the fraud. Mr. Raju untrue the bank accounts to increase the balance sheet with balances that did not exist. He overstated the income statement by claiming interest income from the fake bank accounts. Mr. Raju also revealed that he created 6000 fake salary accounts over the past few years and appropriated the money after the company deposited it. The company’s global head of internal audit created fake customer identities and generated fake invoices against their names to increase revenue. The global head of internal audit also fake board resolutions and illegally obtained loans for the company” . It also appeared that the cash that the company raised through American Depository Receipts in the United States never mentioned in the balance sheets. Greed for money, power, competition, success and prestige compelled Mr. Raju to “ride the tiger”, which led to violation of all ethical duties and responsibilities imposed on them as fiduciaries—the duty of care, the duty of negligence, the duty of loyalty, the duty of disclosure towards the stakeholders. “The Satyam scandal is a classic case of negligence of ethical

Show More
Related

  • Mickey Monus

    742 Words  | 3 Pages

    Two days later, the Phar-Mor board confronted him with two books that had been found. The board had found that one of the books had largely inflated profits. This revealed that with the board, banks, and investors deceived, Monus was able to pull in more pay and sell stock at inflated prices to keep everything afloat. “To cover up the continuing losses, Pat Finn was now faxing falsified financial reports to the board of directors and to David Shapira every week. But in November of 1990, a secretary mistakenly faxed a report with the real numbers to Shapira.

    Read More

  • Income Smoothing Case Study

    1491 Words  | 6 Pages

    Another pressure presented in this case for Cendant Corporation was that for the top management once again. The top management needed to have their financial information seem profitable, therefore pressured the accountant of the company to falsify and “cook the books” to make the financial statements seem actually “profitable” when it wasn’t what It really was. As said in the previous question, income smoothing was used in this case by Cendant Corporation as an unethical practice to make the investors believe that their shares were all bright

    Read More

  • Ethical And Legal Issues Of SNC Lavalin Scandal

    1008 Words  | 5 Pages

    Actions which were taken by the company to cover unethical behavior of bribery and

    Read More

  • Describe The Rationalizations Used By Mr Pavlo

    425 Words  | 2 Pages

    He also rationalized his fraudulent activities by hiding the customer’s late payment in order to be benefitted himself, but said that he was helping people more than he was helping himself. 2. Given that Mr. Pavlo’s fraud was restricted to an accounts receivable embezzlement scheme, what symptoms might auditors observe?

    Read More

  • Wells Fargo's Ethical Ethics Of Wells Fargo Financial Corporation

    1347 Words  | 6 Pages

    It is essential for individuals and those representing an organization to understand what is an ethical dilemma. Wells Fargo financial corporation was involved in a dramatic ethical issue due to millions of unauthorized bank account openings. As explained in The PLUS Ethical Decision-Making Model, “many organizations battle to develop a simple set of guidelines that make it easier for individual employees, regardless of position or level, to be confident that his/her decisions meet all of the competing standards for effective and ethical decision-making” (n.d). The Wells Fargo scandal is evident prove that employees lacked ethical judgment and management supervision. The seven ethical decision-making steps foster straightforward thinking that

    Read More

  • Howard Gardner's Five Minds For The Future

    1311 Words  | 6 Pages

    Therefore it is beyond the scope of the ethical mind to make the determination of whether the output of the creating mind is in fact ethically valid. But applying principles of the ethical mind in real life and real workplace settings is not always easy. But one thing is certain: if one hides behind a "veil of ignorance" and deliberately shuts off one 's mind to one 's real position in the world, then one is certain to have a faulty ethical mind that makes bad ethical decision (Gardner 9). For instance, the companies globally are now under scrutiny for setting up off-shore shell companies in the tax heaven through a Panamian law firm called Mossack Fonseca (“Giant”). This scandal shows the huge willingness of global corporations and even powerful political leaders

    Read More

  • Volkswagen's Corporate Social Responsibility

    1858 Words  | 8 Pages

    The selected corporation is Volkswagen (VW), a German car manufacturer headquartered in Wolfsburg, Lower Saxony, Germany. Established in 1937, Volkswagen is the top-selling and namesake marque of the Volkswagen Group, the holding company created in 1975 for the growing company, and is now the second-largest automaker in the world (Wikipedia, 2016). Volkswagen’s corporate website is http://www.vw.com/. According to the International Ethical Business Registry, there has been a dramatic increase in the ethical expectations of businesses and professions over the past ten years. Increasingly, customers, clients and employees are deliberately seeking out those who define the basic ground rules of their operations on a daily basis.

    Read More

  • Examples Of Unethical Behavior In Business

    1191 Words  | 5 Pages

    A) Introduction Unethical behaviors in business affect everyone since you either work in the field or are a consumer of its services. Unfortunately, almost every company usually has individuals who act unethically whether it is for their personal benefit or for the sake of the company they work for. Unethical behaviors in business might be as simple as using company property or funds for personal gain to inside trading and financial fraud. According to The Chartered Institute of Management Accountants, nearly one third of business professionals feel pressured to compromise their ethical standards and are increasingly pushed towards unethical behavior. Moreover, “misconduct is common and accepted by business services professionals, the integrity of entire economic systems is at risk”, states Jordan A. Thomas, partner and chair of the Whistleblower Representation Practice at Labaton Sucharow law firm.

    Read More

  • Lehman Brothers: Financial Fraud In 2008

    2178 Words  | 9 Pages

    It shows how the fraud was detected and the accounting practices that were used at the time, how the director

    Read More

  • Bernie Ebber Case Study

    911 Words  | 4 Pages

    WorldCom upper-level management and individuals in the position of leadership could have taken an ethical stance and collectively formed an opposition against Ebber unethical leadership. This action would have resulted in maintaining an ethical culture within WorldCom. Because of management failure to take ethical stance resulted in several individuals found guilty of accounting

    Read More

  • Ethics And Moral Issues In The Enron Scandal

    931 Words  | 4 Pages

    In this Enron Scandal ,several moral issues and values are being discussed .The moral issues is the misconduct of code of ethics by management level of a corporation , violation of code of professional ,ethical dilemma that faced by a management level when involved own interest . The first moral issues that discussed in Enron Scandal is misconduct code of ethics by management level of a corporation .In this case ,the mastermind of this scandal is the company CEO , Mr .

    Read More

  • Tesco Accounting Report

    1656 Words  | 7 Pages

    Introduction The main objective of the paper is to develop a report for a shareholder that will interpret financial statements of Tesco Plc. for 2013-2014. The shareholder is specifically concerned about the fraudulent reporting. In this way, the paper will explain the reason of income statement and statement of financial position.

    Read More

  • The Importance Of Business Ethics In The Business Environment

    1813 Words  | 8 Pages

    “Title Rhenzl” Business is an economic activity whereas its concern is continuously and constantly producing and distributing goods and services to market in order to provide and satisfy human needs, wants and demand. Meanwhile, ethics had been studied by the philosophers for about 2500 years, since the time of Plato and Socrates. As of today, ethics is considered as the moral standards that an individual is relying upon when making a judgment and decision.

    Read More

  • Ethical Issues In Accounting

    1710 Words  | 7 Pages

    These scandals have made the morality of accountants and businesspeople. The main contributors of business ethical standards are the accountants. The accounting profession has a duty to play so as to reduce the corporate scandals. They should make sure that there is proper financial management, quality audit, ethical standards improvement and that the governance regimes are strengthened

    Read More

  • Literature Review On Unethical Behavior

    2877 Words  | 12 Pages

    Review of Literature Unethical behavior can tarnish a company’s image and reputation. If a company is unethical, they may have to spend additional money to improve their public image, as well as gain back as many customers as possible. The reason I have chosen to use articles that are quite a few years old and that are not so recent is because I feel that they are very good examples of what I am trying to prove in the terms of ethical behaviour within companies and these specific articles relate well to my chosen topic.

    Read More

More about Unethical Creative Accounting Case Study

Open Document