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ACCOUNTING

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Financial Accounting is the original form of accounting. It is mainly

confines to the preparation of financial statements. These financial

statements are following:

1. Balance Sheet

2. Trading and Profit & Loss Account

The motive behind the preparation of financial accounting

is to know weather the business is running on profit or bearing the loss. It

also give information about the financial position of the enterprise.

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ACCOUNTING PRINCIPLES

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COMPANY NAME : SATYAM COMPUTER SERVICES LTD.

COMPANYs CHAIRMAN : MR. B. RAMALINGA RAJU.

MANAGING DIRECTOR : MR. RAMA RAJU

BUSINESS SEGMENT : IT (INFORMATION TECHNOLOGY)

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Satyam was established in 1987.

4th fastest growing IT company in India.

9 % market share

40,000 employees

Revenue $2.1 billion

It is the first company of India listed in three International Exchanges i.e.

NYSE, DOW and EURONEXT

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The Satyam Computer Services scandal was publicly announced on 7

January 2009, when Chairman Ramalinga Raju confessed that Satyam'saccounts had been falsified Mr. Raju resigned after notifying board

members and the Securities and Exchange Board of India (SEBI)that

Satyam's accounts had been falsifiedRaju confessed that Satyam's balance

sheet of 30 September 2008 contained:

Inflated figures for cash and bank balances of 5,040 crore (US$ 1.14 billion) asagainst 5,361 crore (US$ 1.22 billion) reflected in the books.

an accrued interest of 376 crore (US$ 85.35 million) which was non-existent.

an understated liability of 1,230 crore (US$ 279.21 million) on account of fundswas arranged by himself.

an overstated debtors' position of 490 crore (US$ 111.23 million) (as

against 2,651 crore (US$ 601.78 million) in the books).

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He claimed that none of the board members had any knowledge of the

situation in which the company was placed.

He stated that:What started as a marginal gap between actual operating profit and the

one reflected in the books of accounts continued to grow over the years.

On 14 January 2009, Price Waterhouse, the Indian division

of PricewaterhouseCoopers announced that its reliance on potentially falseinformation provided by the management of Satyam may have rendered its audit

reports "inaccurate and unreliable.

On 22 January 2009, CID told in court that the actual number of

employees is only 40,000 and not 53,000 as reported earlier and that Mr. Rajuhad been allegedly withdrawing INR 20 crore rupees every month for paying

these 13,000 non-existent employee

BALANCE SHEET OF SATYAM COMPUTER SEVICES LTD.

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http://balance%20sheet%20of%20satyam%20computers.xlsx/http://balance%20sheet%20of%20satyam%20computers.xlsx/


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After going through the case of Satyam Computer Services Ltd. We peoplecame to know that Mr. Raju made some changes in financial statements and

show

The fictitious profit to the investors. It shows the weakness of financial

accounting as well as the importance of financial accounting. After analyzing

the case we come to know that a person who know very well that how to

prepare financial statement he can easily make other people fool.

It also shows that how the principles of financial accounting are important.

Mr. Raju did not follow some principles of financial accounting that's why he

was able to do this scam.


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PARDEEP KUMAR

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