Corporate\nfraud refers to actions undertaken by an entity or an individual which are done\nin an illegal or dishonest way and are premeditated to offer an edge to the\norganization or individual. Corporate fraud has the capability to affect an\norganization\u2019s finances and reputation, as such, there is a need to develop\nmeans to prevent fraud before they occur. Organizations can utilize forensic\naccounting to investigate financial activities and identify fraudulent\npractices within organizations. The main\nsteps of financial forecast analysis include data collection, data preparation,\ndata assessment, and reporting. This documentation will describe Satyam fraud\nand also attempt to demonstrate how forensic accounting can be utilized to\nprevent fraud.<\/p>\n\n\n\n
The\nSatyam System is an international IT firm which is based in India. In 2009,\nRamalingam Raju, Satyam\u2019s CEO took charge of the board of improprieties which exaggerated\nthe organization\u2019s incomes and margins and documented a cash holding of about\n1.04 billion dollars which did not exist (Balachandran, 2009). The Satyam fraud\nconcerns corporate governance and duplicitous auditing procedures purportedly\nin connivance with chartered accountants and auditors (\u201dSatyam scam: All you\nneed to know about India’s biggest accounting fraud\u201d, 2015). As a result, the corporation distorted its\naccounts to financial regulators, stock exchanges and board. The Satyam fraud\ninflated operating profits, revenue, cash balances, and interest liabilities in\norder to show the company is in good financial health. This representation\nmisled the shareholders and the market by lying about the organization\u2019s\nfinancial health (\u201dSatyam scam: All you need to know about India’s biggest\naccounting fraud\u201d, 2015). India\u2019s Central Bureau of investigation examined the\ncase and determined that Ramalingam Raju was the one who spearheaded the fraud.\nThe CEO also confessed to the fraud in a letter to the organization\u2019s board of\ndirectors. A special CBI court found Ramalingam Raju, his two brothers, and\nseven other people guilty of the Satyam fraud case and sentenced them to seven\nyears in jail. <\/p>\n\n\n\n
Satyam fraud was the biggest fraud case in\nIndia because approximately 94 percent of the profit and revenue was\nfictitious. The Satyam scandal tarnished the organization\u2019s image and there\nwere serious ramifications that emerged as a consequence. Perhaps the greatest\nimpact was the plummeting of Satyam\u2019s\nshares, this meant that the investors lost approximately 2.2 billion dollars\n(Balachandran, 2016). Citibank froze Satyam\u2019s thirty accounts pending further\ninvestigations. Tech Mahindra Limited merged Satyam Computer Service Limited,\nacquired all the outstanding stocks in the Hyderabad-based company in an\nall-stock business deal worth Rs 5,150 crore and subsequently developed a new\norganization called the Mahindra Satyam (Furtado, 2016). Satyam fraud highlighted\nthe need for corporate governance. It describes the set of systems, procedures,\nand principles that are used to govern a company. They offer guidelines as to\nhow the organizations can be controlled or directed such that it can meet its\nobjective in a way which will add values of the organization and is also\nadvantageous for all shareholders in the long-term (Furtado, 2016). <\/p>\n\n\n\n
Corporate\nfraud is a serious concern that companies need to prepare for. Corporate fraud\ncan have devastating implications on business operations and can also damage an\norganization\u2019s reputation and employees\u2019 morale aside from the clear financial\ndamage. Companies can use the financial forensic investigation to detect fraud.\nOrganizations can use forensic accounting to assess accounting processes and\nresults and investigate whether or not they are legal (Reddy & Sebastin,\n2012). Forensic accounting will assess\ncorporate financial activities in order to determine whether there are any malpractices.\nFinancial forensic investigation is used to determine; how (the manner in which\nthe discrepancy has occurred), where (at what point of the process chain has\nthe discrepancy happened), what (is the discrepancy intentional or not), why\n(the reason or motive for divergence, particularly with regards to intentional\ndeviation), and who (the entity or individual who is at fault). The main steps\nof financial forecast analysis include data collection, data preparation, data\nassessment and reporting (Dorrell & Gadawski, 2012). Financial analysis can\nalso be used in risk assessment as well as prevention services in order to help\norganizations develop a culture of fraud awareness. If financial forensic\ninvestigations were employed at Satyam, then they might have been able to\nprevent the fraud case that destroyed their entire company. This is because\nforensic accounting would have been used to assess financial activates and\nestablished that the organization was fraudulently auditing procedures to\nillustrate that the company was in good financial health.<\/p>\n\n\n\n
Teamwork\nand leadership are significant aspects of any business or corporation.\nEffective teamwork and leadership are significant aspects of financial forensic\ninvestigations. Leaders are tasked with coordinating the team tasked with\nforensic accounting and assigning individual roles to team members. In addition\nto this, Leaders should ensure that team members\u2019 morale remains high and that\nmembers are motivated to perform well (Thorpe, 2016). Teamwork is key in\nfinancial forensic investigations since the combined productivity of the team\nis much greater than the sum of personal efforts. For example, the key steps of\nforensic accounting could be allocated to different team members. When\nassessing Satyam\u2019s financial operations, the leader will allocate different\nduties to team members in data collection, data preparation, and data\nassessment. Once they are done, they would collaborate together as a team to\ncompile a comprehensive report that would be presented to the board of\ndirectors. <\/p>\n\n\n\n
Forensic\naccounting is an important tool in fraud prevention in many businesses.\nFinancial forensic professionals are people who are able to utilize\ninvestigative skills to investigate a corporation\u2019s financial activities for\npossible fraud (Reddy & Sebastin, 2012). In order for an established\nprofessional to continue enjoying long-term success, they should need to\nconduct continuous success in the financial field. This is important because\nthey need to keep up with the latest financial trends and learn new techniques\nthat they can use to identify possible fraud in organizations. I, therefore,\nbelieve that financial forensic professionals should conduct continuous\nresearch in the financial field in order to be well equipped to assess\nfinancial activities.\n\nCorporate fraud is\none of the greatest threat to development and organizational success because it\nhas the capability to affect an organization\u2019s finances and reputation. This is\ndemonstrated through the Satyam fraud in 2009. In this case, the business exaggerated\nthe proceeds and margins and documented a cash holding of about 1.04 billion\ndollars which did not exist. This event tarnished their image and also resulted\nin plummeting of stocks. To prevent such an incident from happening again, the\norganization should implement corporate fraud prevention strategies. One\neffective strategy is forensic accounting. Organizations can use this approach\nto assess corporate financial activities in order to determine whether there\nare any malpractices. Financial forensic professionals should conduct\ncontinuous research in the financial field in order to ensure that they are\nwell equipped to assess financial activities.\n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"
Corporate fraud refers to actions undertaken by an entity or an individual which are done in an illegal or dishonest way and are premeditated to offer an edge to the organization or individual. Corporate fraud has the capability to affect an organization\u2019s finances and reputation, as such, there is a need to develop means to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1116","post","type-post","status-publish","format-standard","hentry","category-research-paper-writing"],"_links":{"self":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/1116","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/comments?post=1116"}],"version-history":[{"count":1,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/1116\/revisions"}],"predecessor-version":[{"id":1117,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/1116\/revisions\/1117"}],"wp:attachment":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/media?parent=1116"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/categories?post=1116"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/tags?post=1116"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}