Please Complete And Upload Critical Thinking Assignment 8 Ba ✓ Solved

Please Complete And Upload Critical Thinking Assignment 8 Based On Th

Please review the following articles regarding the Satyam case and answer the questions below:

Sources: Kahn, Jeremy, New York Times, “Founder of Indian Company Interrogated,” January 11, 2009. Raju, B. Ramalinga, “Text of Ramalinga Raju’s Letter to Satyam Board,” MSN.com, January 7, 2009. Cunningham, Lawrence (blogger), “Satyam Fraud’s Systemic Regulatory Implications,” January 8, 2009.

Short Answer Questions

1. In January 2009, approximately how many employees did Satyam Computer Services employ?
2. What is the primary business of Satyam Computer Services Ltd?
3. When the fraud was revealed, who took control of the company?
4. How much money did the Raju family earn from sales of Satyam stock in the eight years preceding the fraud revelation?
5. How many board members did Ramalinga Raju implicate in the fraud?
6. What was the cash balance sheet amount and how much cash actually existed in Satyam’s bank accounts?

Discussion Questions

1. Opinion: Do you believe that fraud in the United States is more or less prevalent than fraud in countries outside the United States? Why?
2. In the case of Satyam, the company reported almost $1 billion in cash balances, yet close to $900 million was missing. How would a fraudster conceal missing cash, especially amounts of this magnitude?
3. How would an audit not catch missing cash amounts of this magnitude?

Sample Paper For Above instruction

The Satyam scandal represented one of the largest corporate frauds in India and drew global attention to corporate governance, auditing standards, and regulatory oversight. This essay addresses key questions surrounding the Satyam fraud, including the company's employee count, core business, deception mechanisms, and implications for corporate oversight, along with personal perspectives on fraud prevalence in different countries.

As of January 2009, Satyam Computer Services employed approximately 53,000 people. The company's primary business was providing information technology and outsourcing services to clients worldwide, primarily focusing on software development, consulting, and business process outsourcing. Its reputation as one of India's top IT firms made the fraud all the more shocking, highlighting vulnerabilities in corporate governance and oversight within rapidly growing sectors.

When the fraud was publicly revealed in January 2009, control of the company was initially taken over by the government of India, which intervened to stabilize the financial situation. Subsequently, the government appointed new board members, and efforts to sell off parts of the company or find a strategic buyer commenced. This transfer of control was a critical step in halting ongoing deception and restoring confidence.

Regarding the financial gains from stock sales, Ramalinga Raju and his family reportedly earned around $40 million from selling Satyam stock in the eight years preceding the fraud revelation. This insider profit was a significant motivation behind the fraudulent accounting practices, as Raju sought to maintain the company's stock price and his personal wealth.

Ramalinga Raju implicated eleven other board members in the fraud scheme, indicating a broad network of complicity that stretched beyond just himself. This widespread involvement underscored systemic issues within corporate governance and lack of oversight.

The reported cash balance sheet indicated approximately $1 billion in cash reserves, but investigations revealed that only about $100 million of this balance actually existed in the company's bank accounts. The discrepancy of nearly $900 million represented a massive financial misstatement, facilitated through falsified accounting entries and off-balance-sheet transactions.

Concerning the prevalence of fraud, it is often argued that fraud in countries outside the United States can be more frequent due to weaker regulatory environments, less stringent enforcement, and cultural differences in corporate ethics. While the U.S. has a mature regulatory framework, financial misconduct still occurs but tends to be less frequent or detected earlier due to rigorous enforcement agencies like the SEC and established audit standards (Beasley et al., 2010). Conversely, in rapidly developing economies such as India, regulatory oversight during the period of Satyam’s fraud was less robust, allowing such schemes to persist longer.

To conceal missing cash of nearly $900 million, a fraudster might employ several tactics. These include creating false bank statements, forging bank confirmations, inflating receivables or inventories to offset cash shortages, and making off-balance-sheet transactions that obscure cash flow problems. Using shell companies or overseas bank accounts can further mask the true cash position (Kranacher et al., 2011).

Auditors might fail to detect such large cash misappropriations due to inadequate sampling, lack of thorough bank reconciliations, or collusion between management and auditors. If auditors rely heavily on management representations and do not independently confirm bank balances or perform substantive testing, substantial misstatements can go unnoticed. Additionally, complex off-balance-sheet arrangements and falsified documentation can hinder the detection of missing funds (Arens et al., 2016).

In conclusion, the Satyam fraud underscores the critical need for effective internal controls, vigilant corporate governance, and rigorous external audits. It highlights the potential for systemic vulnerabilities in emerging markets and demonstrates how deception can be woven into the fabric of corporate operations, leading to significant financial and reputational damage.

References

• Arens, A. A., Elder, R. J., & Beasley, M. S. (2016). Auditing and Assurance Services: An Integrated Approach. Pearson.
• Beasley, M. S., Carcello, J. V., Hermanson, D. R., & Nagy, A. L. (2010). Fraudulent Financial Reporting: 1987-1997 An Analysis of Trends. Contemporary Accounting Research, 17(3), 513-537.
• Kranacher, M. J., Riley, R., & Wells, J. T. (2011). Forensic Accounting and Fraud Examination. Wiley.
• Raghavan, R. (2018). Corporate Governance and Fraud Detection. Journal of Business Ethics, 150(3), 769–785.
• Satyam Scandal. (2009). The Economic Times. Retrieved from https://economictimes.indiatimes.com
• Kahn, Jeremy. (2009). “Founder of Indian Company Interrogated,” The New York Times, January 11, 2009.
• Raju, B. Ramalinga. (2009). “Text of Ramalinga Raju’s Letter to Satyam Board.” MSN.com, January 7, 2009.
• Cunningham, Lawrence. (2009). “Satyam Fraud’s Systemic Regulatory Implications,” Blog, January 8, 2009.
• Gaunt, D., & Melville, P. (2012). Corporate Fraud: An International Perspective. Routledge.
• Carcello, J. V., & Nagy, A. L. (2004). Audit Firm Tenure and Fraudulent Financial Reporting. Auditing: A Journal of Practice & Theory, 23(2), 55-69.