Solving Case of Satyam Scandal

Q-5. How could a fraud like this have been prevented?

Answer:

Satyam could have prevented the fraudulence if they had taken certain necessary steps. The steps are:

1. Better Investigations: Satyam should have ensured better investigation of their seemingly inaccurate accounts. When the accounts had not balanced or even a tiny bit changes occurred, then they should have investigated from top to bottom to identify the issues.

2. Proper Audit Techniques -Auditing and Assurance Standards (AAS): The auditors should have ensured AAS standards on which the quality of audit performance could be measured and any material departure could be disclosed.

3. Division of Responsibilities: By dividing responsibilities across a team of people, Satyam could have made it easier to detect irregularities or misappropriated funds.

4. Transparency: Satyam Computers could have ensured more transparency in their operation, information sharing across the organization

5. Stronger Corporate Governance: As an organization, Satyam should have ensured strong corporate governance. Careful selection of executives and top-level managers could have played a role in preventing the scam. These people have the responsibility of setting the tone for the company. Corruption at the top management actually tickles down to the bottom resulting into massive malpractice.

6. Separating the role of CEO and Chairman of the board: Satyam could have separated the role of CEO and Chairman. Splitting up the roles could have prevented such situation by ensuring the transparency and liability among the top management. If a person had done the illegal acts, his/her crime would have been identified by the other person.

Q-6: If you were the Chief Financial Officer of Satyam, what would you have done differently if you knew that the Fraud was going on? Keep in mind that if you disclose the Fraud then the company most likely would have been bankrupt and you would have...