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Admission Leading to Crash

Admission Leading to Crash

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Published by neetamoni
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Published by: neetamoni on Mar 28, 2013
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03/28/2013

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ADMISSION LEADING TO CRASH 1.

Greater emphasises on short term performanceRaju had a strong desire for success or achievement and he wanted to become a leading player in supplying outsourced IT services to clients so to achieve this goal raju emphasised on achieving short term performance of satyam 2. Greed for money, power,success and prestigeGreed for money, power,success and prestige compelled mr.Raju to “ ride on tiger” . his greed overshadowing the responsibility to meet fiduciary duties- duty of care, duty of loyalty. 3.Whistle blower policyWhistle blower policy of satyam not being effective. 4.Opaque disclosure strategySatyam adopt deceptive reporting practices. There was lack of transparency. 5.Inflated financial statement –Satyam presented a inflated financial report by understated liabilities, overstated debtors position and claimed false revenue. The benefit of falsifying SATYAM accounting was increasing satyams stock prices and the appearance of continued growth. 6.False invoicesSatyam adopted a system to create false invoices. SRP, OPTIMA, ONTIME, IMS are computer applications through which satyam creates false IDs of project and invoices. Satyam created 7500

50 rupees on January 10. construction and project management company.5118 crore.false invoices of Rs.since march 1998. compared to a high of 544 rupees in 2008. the director went ahead with the management decision of acquisition of MAYTAS property. Audit failureAuditors fail to performed their duty both internal auditors and external auditor. 7. . CBI investigated that Ist fraudlent invoices went through the companies book in 1999. Without shareholder approval . Raju had a 37% stake in MAYTAS and 35% share in MAYTAS properties.2009 to their lowest level . RAMALINGA RAJU the share price of satyam fell to 11.Decision to acquire MAYTASSATYAM planned to acquire a 51% stake in MAYTAS infrastructure . Fall of satyams shareAfter confession of B. Cash and balances were not verified The auditors did not do beginning to end transactions verification Serious findings of the auditing team were ignored by the audit team leader Auditors were more faithful to promotors rather than to the company because promoters paid 4 times fees to auditors . a leading infrastructure Development . Fake invoices were ignored The matter was not reported to audit committee. 9.for $ 300 million. 8.

10. 11. World bank . cisco. Satyam s stakeholder expected high returns on their investments. SATYAM s extraordianary growth rate made it hard for raju to live up to expectations.client of satyam express loss of trust and reviewed their contracts preferring to go with other competitors of satyam. . 12. Raju reacted to these pressure by falsifying satyam accounting until it got out of control. Telstra cancelled contracts with satyam.

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