'Do not allow the CEO to also hold the position of chairman of the board'

Inflated cash and bank balances, most shocking in Satyam

Could analysts have unearthed the malaise in the reported statements of Satyam? Or, at least, what lessons can they take away from this episode and apply to other statements? Pose these questions to Mr Siva Nathan, Associate Professor, School of Accountancy, Robinson College of Business, Georgia State University, Atlanta, US, and this is what he has as answer: “I have looked at the Satyam financial statements carefully after the scandal broke. Looking at the same in hindsight I have made the following observations: Satyam reported operating margin of 24 per cent of revenues. Satyam generally quotes lower rates than competitors.”

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'Traditional wisdom says frauds are like cockroaches'

A defined audit process cannot be a defence against frauds

The Big Four accounting firms are reputed to have strong process controls. How then could one such firm have failed to detect such a multi-year scam as is getting unravelled in Satyam? "There is a co-relation between the size of audit firms and the size of companies, and hence all large corporate frauds involve big audit firms," answers Mr Shankar Jaganathan, author of Corporate Disclosures 1553-2007: The Origin of Financial and Business Reporting (Routledge).

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'Every crisis and fraud presents some opportunity to learn from mistakes'

When a management is intent on committing fraud…

The Satyam episode is all over the place. Who are responsible for this largest ever corporate scam reported in the Indian context? “Obviously, the primary responsibility to report ‘true and fair’ representation of the company’s state of affairs rests with the CEO of the company, along with the CFO. In this specific instance, they seem to be perpetrators of the scam,” says Mr N. Muthuraman, former Director-Ratings, CRISIL Ltd ., and now a Co-founder of the Chennai-based RiverBridge Investment Advisors Pvt. Ltd., in the course of an email interaction with Business Line soon after the letter of the Satyam Chairman B. Ramalinga Raju was on the BSE site.

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'We need to understand whether India will adopt IFRS or converge to IFRS'

IFRS transition should be in a phased manner

A common myth about IFRS (International Financial Reporting Standards) is that transition is swift and painless, observes Mr N. Venkatram, IFRS Country Leader, India, and Partner in Deloitte Haskins & Sells, Mumbai. There is a belief that since India has adopted accounting standards which are based on the international standards, conversion for most companies would entail passing a few more journal entries, in order to transform accounts as per Indian GAAP (generally accepted accounting principles) into IFRS financial statements, he explains.

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