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INTRODUCTION
TheAuditor's report is a formal opinion, or disclaimer
thereof,
issued by either an internal auditor or an
independentexternal
auditor as a result of an internal or external auditor
evaluation
performed on a legal entity or subdivision thereof (called
anauditee). The report is subsequently provided to a user as an
assurance service in order for the user to make decisions based
on
the results of the audit.
There are different types of audit report
Unqualified Opinion report
Qualified Opinion report
Adverse Opinion report
Disclaimer of Opinion report
Auditor's reports are important to users of financial
statements
because they inform users of the auditor's opinion as to whether
or
not the statements are fairly stated or whether no conclusion
can be
made with regard to the fairness of their presentation.
Users
especially look for any deviation from the wording of the
standard
unqualified report and the reasons and implications of such
deviations. Having standard wording improves communications
for
the benefit of users of the auditors report. When there
aredepartures from the standard wording, users are more likely
torecognize and consider situations requiring a modification or
qualification to the auditors report or opinion.
Auditors Responsibility
Hence it can be noted that the auditor plays a very important
role by
giving a view of the trueness and fairness of the
accounts.Every
outsider depends on this statement.There fore the auditor should
not
take advantage of his position and resort to any form of
corruption
and give a misleading opinion of the financial statements.
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In this project we showed a role-play considering of 2 main
scenes
Scene 1:we showed what actually happened with Satyam
computer
services ltd and how PWC chartered accountants firm gave an
unqualified report and there was a big scam since the accounts
were
cooked up .Some months later B.RamalingamRaju the chairman ofthe
company confessed his mistake and was arrested along with the
CFO and the external auditor of Pwc-S.Gopalakrishnan.It was
also
shown that the auditor was bribed.
Scene 2:We showed what actually should hav happened in the case
of
satyam and how at the audit level itself the scam in the books
of the
accounts should have been rectified and the auditors did not
take a
bribe and gave an adverse opinion report.
INTRODUCTION TO SATYAM COMPUTER SERVICES LTD
Satyam Computer Services Ltd) was founded in 1987 byB
RamalingaRaju. Thecompany offers consulting andinformation
technology(IT) services spanningvarious sectors, and is listed on
the New York Stock Exchange, the NationalStock Exchange (India)
andBombay Stock Exchange (India).It is considered asan icon among
the IT companies and at one point had over a billion
dollarrevenue.
Satyam's network covers 67 countries across six continents.The
companyemploys 40,000 IT professionals across development centers
in India, the UnitedStates, the United Kingdom, the UAE, Canada,
Hungary, Singapore, Malaysia,China, Japan, Egypt and Australia.It
serves over 654 global companies, 185 ofwhich are Fortune 500
corporations.
Satyam Maytas Fiasco
Satyam Computers had on December 16, 2008, announced that it
will acquiretwo group firms - Maytas properties and MaytasInfraThe
BOD of Satyam hadapproved the founders proposal to buy 51 per cent
stake in Ma ytas Infrastructureand 100 % in Maytas Properties.This
is the move that sparked a row over allegedviolation of corporate
governance laws. This deal is not profitable for investors.So after
this announcement they started to raise their voices against the
deal.Investment giant Templeton and brokerage house CLSA opposed to
this
decision.That aborted attempt at expansion precipitated a
collapse in the price ofthe companys stock and a shocking
confession of financial manipulation andfraud from its chairman, B.
RamalingaRaju.
Rajutried to fill the gap b/w actual profits of the company and
the profits that wereshown in records, balance sheets etc. and also
tried to cope up the situation tilllast minute . But now the
situation were beyond his hands and ther efore heconfessed the
frauds(on Jan 7, 2009) made by him by showing inflated profits
in
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the balance sheet According to theconfessional statement of Mr.
Raju, thebalance sheet shortfall was more than Rs.7000 crore.
How was the manupilation done?
y Simple manipulation of revenues and earnings To show
superior
performancey Raising fictitious bills for services that were
never rendered.To increase
the Cash & bank balance correspondingly.
y Operating profits were artificially boosted from the actual Rs
61 crore toRs 649 crore.
y Its liability was understated by $ 1.23 Billions
y The Debtors were overstated by 400 millions plus.
y The interest accrued and receivable by 376 Millions never
existed
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61
649
588
0
100
200
300
400
500
600
700
Actual Op Reported Difference
Operating Profit
