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V Srinivas

Satyam is actually “Saat-Yama” !

8 Comments / Chuckle !, Controversies, Corporate Governance, Information Technology, Insider Trading, Interesting News Sightings, INVESTOR MISTAKES, Reflections, Satyam : The Sordid Asatyam Saga, STOCKS, VALUATION / By

Today the Media has been airing, what they attribute to sources,that the jailed and disgraced Promoter Chairman of Satyam,Ramalinga Raju,has disclosed on interrogation that he has been fudging the Books of satyam for the last Seven Years !

So we are talking about “Saat-Yama” !…That’s Seven Years which heralded the Beginning of the End with the God of Death,Yama, Dancing around in the Accounts ! 

So this would mean that the Re-statement of Account has to be atleast from the Financial Year 2000-2001

The Government has stepped in and constituted a New Satyam Board that begins with three  Members, Deepak Parekh,Karnik and C Achuthan…The New Board appeared before the Media this evening and it was conveyed that an Independent Firm of Auditors will be appointed in the next 48 hours to get working on restating the Accounts 

This has to be the Priority,as No urgent funding can be obtained unless the Accounts reflect the true state of Affairs…Banks will not lend

My advice is to begin with the Accounts of FY 2000-2001 as this would then include investigation of the  hyped Indiaworld Deal between Sify and Rajesh Jain for US $ 116 Million

Read Ramalinga Raju’s Chairman Statement in the Annual Report of FY 2007-8…Incredulous !….This man knew he was lying,as he had been cooking the Books for Seven Years and yet he had the Boldness & Brashness to boast of Satyam Success

Methinks he would make an interesting case Study for Psychiatrists…this guy had to be psychotic as he lost contact with external reality….what was he thinking !? to have persevered with Seven Years of Creative Accounting and not be found !…..and perhaps the Auditors too would make an Interesting Case study for how they failed to Detect such Creative Accounting !  

Interestingly,the jailed CFO,V Srinivas too has confessed that he was completely in the dark on what Ramalinga Raju did…he was only concerned with quarterly results and never looked at the Balance Sheet.He was only instructed by Ramalinga Raju and his Brother,to manage payments with Operational cash and when some Payments got delayed,he suspected something was wrong !…This is realy difficult to swallow ! As CFO for years he had to be privy to what was happening…he did say that the Fixed Deposits were fictitious !….Also he was invited to and attended every Audit Committee Meeting that also included four Independent and Non Executive Directors as Members and both the Auditors,Internal and Statutory as Invitees read more

Satyam Auditors, Price Waterhouse, issues a statement late today..Let’s put it in perspective

6 Comments / Controversies, Corporate Governance, Information Technology, Interesting News Sightings, INVESTOR MISTAKES, Reflections, Satyam : The Sordid Asatyam Saga, STOCKS, VALUATION / By

In this unfolding Satyam Saga unleashed by Chairman,Ramalinga Raju’s confession on fudging accounts for years,this evening we had their auditors,Price Waterhouse releasing a statement defending their audit of Satyam ,stating it complied with generally accepted auditing standards in India and that there was appropriate evidence to support their audit

They have also ,under the excuse of client confidentiality,refused to give more details

Come on Price Waterhouse !…what Client !? Satyam !?…legally it is the Shareholders (Satyam has over 2 lakh of them) who have reappointed you at the last AGM as the auditors…you have a fiduciary responsibility to them more than to Satyam…so hiding behind the Coat of Client Confidentiality is clearly ill- advised

It would ofcourse be interesting to see what their ‘appropriate evidence’ is.

But let’s put their role in perspective and in context of the last published Annual Report of FY 2007-8

Relevant Extracts from Satyam’s Annual Report of FY 2007-8 

Pages 39 and 40 

AUDIT COMMITTEE

The Audit Committee consists of 100 percent independent and non-executive directors.There were four Members….Prof M Rammohan Rao,Chairman,Dr (Mrs) Mangalam Srinivasan,Mr T R Prasad,Prof V S Raju….There were seven committee meetings in 2007-8 an were attended by the CFO,Head of Internal Audit and Statutory Auditors as Invitees.The Committee reviewed the adequacy of the Internal Control Systems and Internal Audit Reports and their compliance thereof. 

Page 56

Internal Control Systems and their Adequacy…Part of Managment’s discussion and analysis…Important Points

  • The Internal Audit,an independent appraisal function to examine and evaluate the adequacy and effectiveness of the Internal Control System,appraises periodically about activities and audit findings to the AUDIT COMMITTEE
  • Internal Audit ensures that transactions are executed and assets are safegaurded
  • The AUDIT COMMITTEE was constituted as a sub -committee of the Board of Directors and it consists solely of Independent Directors.The committee also holds discussions with statutory auditors,internal auditors and the Management.It also reviews with the statutory auditors the scope and results of the audit 
  • Compliance with Section 404 of the Sarbanes-Oxley Act 2002
  • Under revised Corporate Governance standards adopted by the Stock Exchanges a Certification has to be made by the CEO and the CFO of the effectiveness of the Internal Control Systems and that they have disclosed any deficiencies and how they were resolved to the Auditors and the Audit Committee

Page 60

Personnel Costs…Part of Managment’s discussion and analysis…Important Points

Personnel Costs were Rs 5045.54 crs ( 62.01% of Revenues ) for an aggregate employee base of 55360 of which 43279 were technical associates,2690 were non-technical associates and 9391 were onsite technical associates

Page 62

Auditors Report to the Members of Satyam Computer Services Ltd  

Point 2 : We conducted our audit in accordance with auditing standards generally accepted in India.Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement….We believe that our audit provides a reasonable basis for our opinion

Point 4 g goes on to give the auditors unqualified opinion that the financial statements that comprise the Balance Sheet,the Profit and Loss Account and the Cash Flow  as on March 31,2008 ,read with the notes give a True and Fair view inconformity with generally accepted accounting principles in India read more

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