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Fictitious account is
the account that is not real or not exists been recorded by irresponsible
persons. Ramalinga Raju and the company head internal auditors falsified the
fictitious invoices and account using his personal computer. The reasons they
do the fictitious accounts are to inflate the company revenue and to inflate
the amount of balance sheet.

Corporate governance

governance is the system that shows how well the company are directed and
controlled. In this Satyam scandal, they have very poor corporate governance
practices in the company. They also failed to show the good relationship
between the employees and the shareholders. Based on the facts given, this is
due to they did not perform their responsibilities well.

Assets on Balance Sheets

Overstated assets are the reported
amount is more than the true amount in the financial report. Mr. Raju claimed
in the letter he disclosed that the overstated assets on Satyam’s balance sheet
by $1.47 billion. This is because the company wants to show good performance of
their company and meets the analyst expectation which is their shareholder.






Asset and profitability

is a property own by the company either tangible assets or intangible assets. Meanwhile,
profitability is the ability of the company to gain profit from their business
activity. Based on Satyam Scandal, the Chairman, Ramalinga Raju claimed that he
overstated the revenue and assets of Satyam Computer Services Limited. He also
understated the company’s liabilities. The action cause the company provided
false information of their revenue, assets and liabilities to have a good
performance. This is due to achieve the expectation of their analyst and
stakeholder who have shares onto the company.

Corporate governance

governance is the rules, practice, and ethics provided by the company that
should be followed by the individual that work in the company. Based on Satyam
Scandal, the company has a very poor corporate governance practice in the
company. It is shows when the top management of the company includes the head
of internal auditors and the CFO of the company also been charges of fraud.
They were guilty of professional misconduct. Poor corporate governance will
lead the company to easily do fraud and not performing the duties in ethical


is a rival between the companies in a same industry to achieve their company
goals such as achieve higher profit, higher market share and higher sales
volume. Satyam Computer Services Limited is the excellent company in India
outsourced IT-service industry. They won many awards on their excellent
performance. In maintaining the company performance, Ramalinga Raju makes fraud
by doing the creative accounting that cause massive fallen for Satyam Computer
Services Limited. The reasons of the chairman to do fraud are because to
protect the company reputation and to become the top of IT-service Company in


is a personal interest of individual to achieve their interest without
influence from others people. As a chairman of Satyam Computer Services
Limited, Ramaliga Raju have the responsibility to discharge his duty by fulfill
the expectations of the analysts. Ramalinga Raju, should perform his
responsibility in ethical ways. But in Satyam Scandal, it is shows that
Ramalinga Raju makes fraud by using the company assets to buy the stake in
Maytas infrastructure and all of Maytas Properties for his family members at
cost of $1.6 billion. This action made by him is based on his self-interest to
have an asset in the wrong ways and greed to be rich.



Independent auditor is an independent
audit or examination of the financial records, accounts, business transactions,
accounting practices and internal control by an independent auditor without any
personal interests. The Auditor who auditing the Satyam Company which is PWC
were become an auditor for this company for 9 years but unable to detect any
fictitious made by the Director of this company, B. Ramalinga Raju. This has
become a doubt for Merrill Lynch and they are able to discover the fraud for 10
days as part of its diligence. This has shown that PwC were allowing the Satyam
to commit fraud after they have received twice payment from other firms charge
for the audit procedures should receive.


Director is a person who will lead and
control the management of the company. The director of Satyam, Ramalinga Raju
is the one who responsible to maintain a good reputation of the company and
being a fair person towards the members of the company. This is because the
director must promote success of his company in order to attract shareholder to
invest with their company and also gives benefit to its members as a whole.


Government is the representative of
society with the authority to govern a country or a state. The government of
India need to protect the interests of the investors, safeguard the credibility
of their country and the nation’s image across the world. This is because the
government wants to prevents any similar related issues might happened in the
future if they did not start to prevent at current such as the government
re-write the corporate governance rules and tightened the norms for auditors
and accountants.


Shareholder is the individual or company
who finance the Satyam by investing money for them. The shareholder will
continue financed the company based on the results of their financial report.
This is because the shareholders have right to made decision to sells of their
shares with Satyam after they acknowledge about the fraud had been committed
and this has caused the Satyam’s shares fell to 11.50 rupees which is their
lowest level of shares price.



Integrity is company must be honest, have strong moral
principles and being straightforward. In this case, Satyam Computer Services
Limited must be honest and straightforward in providing information for the use
of user. Satyam shall provide appropriate evidence for every transaction occur
in the financial statement. For example, every invoice, bank statements,
assets, loans and liabilities incurred shall be provided with the receipt or
invoice as an evidence for transaction incured by Mr. Ramalinga Raju, Satyam’s
Chairman. This is because to fulfill the interest of user and stakeholder by
providing an honest, true and fair view of information for their usage to make
decision making processes.


Objectivity is free from bias and personal interest. In
this case, Satyam Computer Services Limited shall have no personal interest and
every information disclose in financial statement shall be free from bias.
Satyam’s chairman,Mr Ramalinga Raju need to make a decision based on approval
within the shareholder despite having an approval by the management itself. In
this case, the directors of Satyam went ahead with the management’s decision
without concerning any appoval or opinion of their shareholders upon the
proposal to buy the stake in Maytas Infrastructure and all of Maytas Properties
in which they were owned by the family members of Mr Raju as fully owned
subsidiary for $1.6 billion. This is because to avoid any judgement or decision
made to fulfill their own interest without concerning other’s opinion. Thus, it
is to ensure that the director made a relevance decision for the company
without being bias towards chairman’s family members owned properties


Confidentiality is protection of private information from
being disclosed to the public. In this case, Satyam Computer Services Limited
shall protect their private information from being leaked to the public’s
knowledge. Mr Raju shall not diclosed any of revenue earned, assets and
liablities of company to the public eventhough he did some creative accounting
onto several of element in financial statement. Despite the overstated assets,
fictitious claims on bank loans and cash, underreported liabilities and
falsification of bank accounts, Satyam shall not disclose these information as
it will affect the reputation of company. This is because, fraud done by
company will give impact in the whole industry and country itself.
Nevertheless, company shall not disclose private and important information to
public in order to prevent the acknowldgement by competitors on the uniqueness
of company.


Professional behavior is the professionalism and having a
specific knowledge and skill. In this case, Satyam Computer Services
Limitedshall practice professionalism, skill and knowledge in producing
financial statements. Satyam’s chairman,Mr Ramalinga Raju shall not have any
personal interest and perform his responsibilities in accordance to skill and
knowledge within his job scope. He shall not greed for money, power, competition
and success whereas he shall focus his job in accordance to the original
responsibility. He also need to take into consideration for the approval of
both management and shareholder in any decision making process in the company.
This is because professionalism of the management including the chairman
himself potrays the image of the company. Therefore, it is crucial for the
company to maintain the image of the company so that they can attract more
investor to invest in the company and increase the revenue of the company

competence and due care

Professional competence and due care is the professional
accountant shall undertake responsibilities in accordance to their skill and
knowledge. In this case, Satyam Computer Services Limited’s professional
accountant shall do their job accordance to the knowledge acquired. Mr
Ramalinga Raju shall perform his responsibility to ensure that all fudiciary
duties are met and to ensure the top management have high ethical and moral
standards. Fudiciaries includes the duty of care, the duty of negligence, the
duty of loyalty and the duty of disclosure towards the stakeholders. This is
because Satyam need to ensure their shareholder and customer due care are
properly maintained in order to protect and to fulfill their interest. The
company will get loyalty from shareholder and customer when their interest are
being fulfilled and this will increase the performance of company as
shareholder will continously giving fund for the company to conduct the



The World Bank banned

is officially prohibited to do something that they cannot do. Based on this
cases, Satyam had been banned from conducting their business for 8 years which
will effect their company performance. This issue also had contribute to the
quit of four independent director from the Satyam board. It is because, the
independent director does not want to take any responsibility towards this

Satyam’s share price

price is the price per saleable share of the company that will attract the
investors or shareholder. Impact to this case, Satyam’s share decline to 11.50
rupees on 1 January 2009 from 544 rupees in 2008 .It is the lowest price for
Satyam since March 1998. Because of that all of Satyam’s investors lost about
2.82 billion dollar in that year.



is the unethical behavior that carried out by individual. They will manipulate
the data information according to their own interest. Satyam scandal is
basically based on the fraud cases. Based on this cases, Mr. Ramalinga Raju who
is the Chairman and Founder of Satyam is the major player of performing fraud
in the company. Mr. Raju had disclosed all of his fraud in a letter consists of
he overstated the assets, understated the liabilities and also overstated the
income of the company. Fraud happen because of Mr. Raju’s greed for money,
power, competition, success and prestige and he will do anything to gain it.

Failure of auditor

is an individual that carry out the audit procedure to provide audit report and
opinion on whether the financial statement of the company are free from any
material misstatement. PricewaterhouseCoopers (PwC) is the external auditor for
Satyam’s company in a period of 9 years from 2001 until 2009. In this case,
there are some individual that gives comment on the failure of PwC to detect
fraud happen in Satyam. This is because, PwC are being paid twice by Satyam
rather that other audit firm being charged. It is also can be relate with the
professionalism of PwC itself where they do not act professionally even though  PwC is one of big audit firm in the world.


Company share price

price is the price of single share depends on the number of saleable stocks of
a company.  Company’s stock price will
reflects investor perception of its ability to earn and grow its profit in the
future. If the company stock price increases, the market value will
increase.  Satyam company stocks share
prices were reduce from the highest of 544 INR to lowest of 11.50 INR


Effect on Indian Stock
Market  (SENSEX)

or the full form is Sensitive Index, is 
figure shows the respective prices of shares on the Mumbai (Bombay)
Stock Exchange.  The market weighted
stock index of 30 companies is choosen on the basis of financial soundness and
performance. During the scandal, the Sensex of Satyam company fall by 749.05
points and nifty50 by 192.40 points

Company net worth

worth is a concept that relate to individuals and businesses as a key measure
of how much an entity is worth. Net worth is the amount which assets exceed the
liabilities. A consistent increase in net worth indicates good financial
health. In Satyam case, company net worth reduced from 11464 crores INR  to 1607 crores INR

Bad Corporate

governance is a guideline on how the company should be directed and controlled
to fulfill its goals and objectives. This to adds value to the company and
beneficial for all stakeholders in the long term. Satyam scandal is an effect
of accounting scandal. The financial statements were manipulated and forged by
intentional omissions and by intentional misapplication of accounting policies.

Severe penalty to the
key players

is a punishment for breaking a law or rule. In Satyam scandal, Ramalinga Raju
which is the founder of Satyam Computer Services and nine others get 7 years of
rigorous imprisonment and fined by 5 crore INR.


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