Ramalinga Raju inflated sales,showed fake bank receipts:ICAI

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Revealing the methods of operation in the multi-crore rupee accounting fraud at Satyam Computer, its ex-CFO Vadlamani Srinivas has told the apex accounting body ICAI that the company's sales were inflated and bank statements had been forged to justify the claim. "He (Vadlamani) told the Institute of Chartered Accountants of India team that they (former Satyam management) only inflated sales. He said they (the firm) have 600-odd major clients, some of whose sales receipts were doubled. "Then they showed in the (fake) bank statements that they received the money within 90 days," ICAI President Uttam Prakash Agarwal told reporters here. According to Agarwal, Vadlamani said the whole scam started as an adjustment of Rs 10 crore around five to six years ago and the malpractice continued quarter after quarter before it attained unmanageable proportions in the second quarter of 2008. "He told us that for many years, they kept the money in a current account. Then in 2006, two analysts asked them that when Satyam has so much cash and bank balance, why did they want to raise funds? "It was then that Ramalinga Raju (founder and ex-Chairman of Satyam) showed the money as fixed assets instead of bank balance by creating FDR receipts," Agarwal said.

Replies (6)

thanx for sharing

Thanks for the Information

i THINK THE AUDITING SYSTEM FAILED IN SATYAMS EPISODE

Agree with Ratan. Anyways Thanx for sharing...

Hi Ratna Kumar and Ankur,

I am sorry if hurt any one of you to say this, (some people will appreciate and some will not - my view)

forget who did the audit whether big 4 or the others,

The basic duty of an auditor is to express an opinion on the financial statements by verifying the base documents on a sample basis to support his/her opinion.

But believe me, if an accountant misleads the statements or falsified the books or embezzled money, an auditor can/could make out in the normal course of audit, as the management will be happy and encourage such observations.

In the given case, the management it self does the fraud, and produced the forged documents as Mr. Anthony said i dont think any auditor what ever you name can find it during the normal course of our audit. Of course he can find it if it is an investigation but not the audit.

I feel it is better not to blame the entire audit system, audit fraternity.

Thanks and if any modifications to my view you are welcome.

Originally posted by :Vrnanda
" hi, i agree with u. "


 


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