This website uses cookies to ensure you have the best experience. Learn more

Corporate Governance At Satyam: The Satyam Scandal

835 words - 4 pages

Satyam Board’s was mainly comprised of ‘friendly’ directors who were not in the position to question the decisions adopted by the managers. Not only they were pro-management, but they were also incapable of acting when it was quite obvious that the company was facing some severe financial distress. Out of the nine board directors six were ‘independent’ directors. These independent directors clearly did not act on the interest of shareholders and other stakeholders, even when it was obvious that there were fraudulent acts within the company.
Satyam’s scandal has pointed out the larger regulatory failure, which is closely related to audits. The role of the audit committee is to verify and ...view middle of the document...

External auditors, hired by the auditing committee, are responsible for assuring that accounting statements are thorough and objective, and in Satyam’s case, PwC did not fulfill its role as external and objective auditor. Evidence may lead to believe that PwC was aware of the fraud but refused to disclose it under increasing auditing fees provided by Satyam. PwC’s fault lies mainly in failing to verify cash and bank balances. According to a statement released by PwC, its auditors simply relied on the books prepared by the company and did not further investigate the data presented to them. The auditors did not verify the existence of the fictitious fixed deposits and certified the good standing of Satyam. Not only PwC, failed to do its job of providing accurate information to the shareholders, but also played an important role in perpetrating the fraud by certifying a spotless audit report for fraudulent and manipulated books. Another important aspect was the audit fee paid by Satyam to PwC. In fact, between 2003 and 2008, the fee was raised three times, reaching almost double the average pay of comparable firms in the same industry (TCS, Infosys, and Wipro). This evidence is an indication that PwC was bought to comply with the fraudulent practices adopted within Satyam, and ensured that the external auditors would not investigate nor disclose such activities to the public.
External auditing firms are often faced with fierce competition among themselves and the risk of losing an auditing contract from a...

Find Another Essay On Corporate Governance at Satyam: The Satyam Scandal

Integrating Corporate Governance with the Balanced Scorecard

1248 words - 5 pages provides greater visibility into their company and strengthen corporate governance and corporate performance management. The three-parts balanced scorecard-based system, namely the Enterprise Balanced Scorecard, Board Balanced Scorecard and Executive Balanced Scorecard needs to be introduced.Enterprise Balanced ScorecardThe three-parts balanced scorecard-based system begin with an Enterprise Balanced Scorecard that specifies the strategy of the

The Rising Importance of Corporate Governance in Contemporary Business Environment

1816 words - 7 pages disclosure.Society is concerned about corporate governance as it assures itself of guaranteed protection on investments and purchases made. Additionally, society wants assurance that it is receiving value for money.Consumers are concerned with corporate governance to ensure that they obtain the highest quality products and services at the lowest cost.Investors and shareholders are concerned with corporate governance to ensure that their investments are

Legal Regulation of Corporate Governance in the Role of Auditors

2552 words - 10 pages INTRODUCTION In recent years, general public start to raise questions about the level of audit independence and the quality of audit information, especially after corporate collapses such as HIH, Enron and One.Tel where independent audit reports showed that the companies were making a profit, when in fact they were heavily in debt. This essay is to provide a brief overview of the current regulation of corporate governance in Australia in the

'To what extent has corporate governance reduced the separation of ownership and control?'

2837 words - 11 pages the best interests of it's owners, i.e. its share holders. 'The problems of corporate government arise when the rights of share holders are violated.' (Global Corporate Governance, Debates and Challenges, Malla Bhasa, Corporate Governance, Vol.4, Number 2, accessed 24/12/04, Emerald). In this instance the 'stake holder' is the shareholder, Berle and Mean's (1967), identified the problem of the separation and ownership (cited at Accounting and

Corporate Governance and Separating the Board Chairperson from the Chief Executive Officer

1853 words - 7 pages Corporate Governance and Separating the Board Chairperson from the Chief Executive Officer Numerous reports on corporate governance have emphasised the desirability of increasing the number of outside directors on boards. An equally important and related issue is a growing insistence that the role of chairman and chief executive should be separate, though on this issue there is less unanimity in the U.S. than in other countries. Choosing

The relationship between corporate governance and earnings quality of Hong Kong listed company

1779 words - 7 pages Topic: The relationship between corporate governance and earnings quality of Hong Kong listed companyBackgroundCorporate governance means the relationship between the company's management, board of directors, shareholders and other persons associated with the business interests. Meanwhile, corporate governance also provides a system to allow bodies to set goals, develop strategies to achieve goals, and monitoring bodies' performance. That is

Corporate Governance in annual reports. Includes Shell, Ahold, Philips and the new CG-rules in the Netherlands (Commission Tabaksblat)

4873 words - 19 pages paragraph 2.3It was long believed that corporate governance was of little importance when judging the performance of a company. That is, as opposed to a company's financial position, strategy, and operating capabilities. Recent events prove that governance practices are not merely a secondary factor. When the company's share price decreases because of an accounting scandal, the importance of good governance practices become obvious. Corporate disasters


1494 words - 6 pages problems of the economy nowadays. These five changes in the Corporate Governance have pushed the financial sector to the actual crisis. Undeniably, over the last decades it had been created an artificial growth based too much in the Financialization of the Economy and not in real value added through the generation of goods and the development of the industry, thus creating the right environment for the Global Financial Crisis. As was stated at

The role of accounting in corporate governance and how it might differ among countries - ACCY 6110 - Case Study

302 words - 2 pages Accounting plays an integral role in corporate governance. The function not only helps companies compile the data necessary to prepare the financial statements but also provides insight as to the soundness of these entities. It is important to differentiate between financial accounting and managerial accounting given that they serve two different audience – external and internal. A sound and honest financial accounting practice helps

Research in the area of Information Security at Corporate Websites including the role of "Privacy Seals"

3857 words - 15 pages Research in the area of Information Security at Corporate Websites including the role of "Privacy Seals"The moot question that needs to be answered before one starts the analysis of research in the area of web security is to gauge the importance of electronic commerce. Electronic Commerce has taken the world by storm and is perhaps the fastest growing frontiers in the business arena. The sheer statistics tells a story that is often untold and

Romero: Summarizes the movie and explains the unjustness of the government of Mexico at the time. Compares to the Watergate Scandal

702 words - 3 pages fast and some reporters at the Washington Post then began to write reports that the break in was linked to Nixon and his staff.. This soon grew into a full fledged investigation by the FBI into the burglars and the people that hired them.Richard Nixon denied that neither he nor any of his staff were involved in the scandal. When the burglars went to trial, the story turned from a small break-in to a national scandal. These series of events brought

Similar Essays

Research On The Importance Of Corporate Governance

2130 words - 9 pages businesses are controlled and managed (ICAEW, 2013). Since standards are embedded into the hearts of every business and are now required for rigorous accountability; what overall impacts has it had on businesses? Every year or so, the exposure of a major accounting scandal becomes headline and hence targets the current Corporate Governance standards. As a result, this literature review looks into all those aspect and tries to understand the true value

The Role Of Ethics In Corporate Governance

1743 words - 7 pages to its shareholders and society at-large in promotion of accountability, fairness and transparency. The Organization for Economic Co-operation and Development (OECD) defines corporate governance as “Procedures and processes according to which an organization is directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organization – such as the

Corporate Governance: The South Pacific Stock Exchange

674 words - 3 pages International Telecommunications Limited (FINTEL), 51% shareholding of Vodafone Fiji Limited (VFL) and Pacific Emerging Technology Limited (PETL). ATH is a listed company under the South Pacific Stock Exchange ATH Group’s vision is to be an internationally competitive ICT Investment company in the Pacific. • Corporate governance in ATH As at 1 January 2009, all listed companies under the South Pacific Stock Exchange (SPSE) including ATH are encouraged to

The Rules And Principles Of Corporate Governance

1048 words - 5 pages Corporate governance often refers to a set of rules and principles by which a company is directed. It provides a guideline for directing a company in order to fulfil its objective, brings added value to the enterprise, and is beneficial to the shareholders in long-term. (1) The rules and principals of corporate governance to an extent might be different in various companies, but some of these rules are similar in all the firms; such as