scholarly journals Creative Accounting Practices at Satyam Computers Limited: A Case Study of India’s Enron

2016 ◽  
Vol 6 (6) ◽  
pp. 24 ◽  
Author(s):  
Madan Lal Bhasin
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Lessons Learned ◽  
Audit Committees ◽  
Board Members ◽  
Accounting Fraud ◽  
Creative Accounting ◽  
Depth Analysis ◽  
The Government

<p>Satyam Computers were once the crown jewel of Indian IT industry, however, the debacle of Satyam raised a debate about the role of CEO in driving a company to the heights of success and its relation with the board members and core committees. The scam brought to the light the role of corporate governance (CG) in shaping the protocols related to the working of audit committees and duties of board members. The Satyam scam was a jolt to the market, especially to Satyam stockholders.  This paper attempts an in-depth analysis of India’s Enron, Satyam Computer’s “creative-accounting” scandal. In public companies, this type of ‘creative’ accounting leading to fraud and investigations are, therefore, launched by the various governmental oversight agencies. The accounting fraud committed by the founders of Satyam in 2009 is a testament to the fact that “the science of conduct is swayed in large by human greed, ambition, and hunger for power, money, fame and glory.” Scandals have proved that “there is an urgent need for good conduct based on strong corporate governance, ethics and accounting &amp; auditing standards.” The Satyam scandal highlights the importance of securities laws and CG in emerging markets. Indeed, Satyam fraud “spurred the government of India to tighten the CG norms to prevent recurrence of similar frauds in future.” Thus, major financial reporting frauds need to be studied for ‘lessons-learned’ and ‘strategies-to-follow’ to reduce the incidents of such frauds in the future. The increasing rate of white-collar crimes “demands stiff penalties, exemplary punishments, and effective enforcement of law with the right spirit.”</p><h2> </h2>

scholarly journals Effects of CEO Turnover and Board Composition Reform on Improvements in the Internal Control Quality

2018 ◽  
Vol 9 (3) ◽  
pp. 36
Author(s):  
Hiroshi Uemura
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Internal Control ◽  
Chief Executive ◽  
Audit Fees ◽  
Internal Controls ◽  
Board Independence ◽  
Accounting Fraud ◽  
Outside Directors ◽  
The Government

Several serious accounting scandals have occurred in Japan in recent years (e.g., Olympus); however, the government, regulators, and auditing standard setters have struggled to identify new directions for corporate governance in listed companies, such as standard setting to address risks of fraud in an audit or the adoption of new corporate governance codes. The validity and effectiveness of monitoring by outside directors have received criticism within such a context. Nevertheless, in 2015, accounting fraud at Toshiba was discovered, which surprisingly involved upper management; the outside directors had failed to detect and prevent this fraud. Again, the monitoring function of the Japanese board of directors and outside directors was viewed with suspicion. Thus, this study examines Japanese corporations that disclose significant deficiencies (SDs) in internal controls over financial reporting (ICFR) and determines whether replacing the chief executive officer (CEO) and enhancing board members’ independence and financial expertise are followed by SD remediation. The results indicate that Japanese companies that disclose SDs in ICFR are more likely to replace their CEOs and enhance board independence. In addition, this study finds that although these actions do not affect SD remediation, upgrading the board’s accounting expertise does correlate positively with SD remediation. Moreover, if a company remediates a SD by increasing the number of accounting experts on the board, an increase in audit fees during the following term can be mitigated. These findings should be of interest to Japan’s regulators, auditing standard setters, and financial statement users when considering improvements in the quality of internal controls. In particular, these individuals must realize that the control environment is not improved in Japanese firms merely by replacing the CEO and increasing board independence, particularly because new CEOs encounter difficulties in changing the environment established by their predecessors.

The Role of Accounting Mechanisms for Corporate Governance in Reducing Creative Accounting Practices in Telecommunications Sector Companies in Riyadh City: An Empirical Study: دور الآليات المحاسبية لحوكمة الشركات في الحد من ممارسات المحاسبة الإبداعية في شركات قطاع الاتصالات بمدينة الرياض: دراسة ميدانية

2020 ◽  
Vol 4 (15) ◽  
Author(s):  
Lamis Jameel Banasser, Maha Faisal Alsayegh
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
Internal Auditors ◽  
External Auditors ◽  
Riyadh City ◽  
Creative Accounting ◽  
Telecommunications Sector

The study aimed to identify the role of accounting mechanisms for corporate governance in reducing creative accounting practices in telecommunications sector companies in Riyadh city. A descriptive analytical approach was followed to conduct the field study. Sample of the study consisted of members of the audit committee, internal auditors, accountants from the surveyed telecommunications’ sector companies, and the external auditors in the audit offices that specialized on auditing the examined sample of companies. Questionnaire was used as a data collection method. Results showed that activating the role of accounting mechanisms for corporate governance can greatly contribute in limiting creative accounting practices. As they are controlling mechanisms that capable of protecting companies, shareholders and stakeholders from any manipulation or misleading information in the financial statements. Further, internal audit plays a major role in limiting creative accounting practices by examining and evaluating the effectiveness of the internal control system. Furthermore, the independence and competence of the external auditor and his commitment to the rules of conduct and ethics of the profession contribute greatly in limiting creative accounting practices in the examined companies. The study recommended the necessity of holding specialized training courses for members of audit committees, internal auditors and external auditors on methods of detecting creative accounting practices to combat and reduce them.

scholarly journals Pengaruh Good Corporate Governance dan Budaya Tri Hita Karana Pada Kinerja Bank Perkreditan Rakyat

2017 ◽  
pp. 17
Author(s):  
I Gusti Ayu Made Asri Dwija Putri ◽  
I.G.K.A Ulupui ◽  
Ni Gusti Putu Wirawati
Keyword(s):  
Corporate Governance ◽  
Regression Analysis ◽  
Sampling Method ◽  
Research Result ◽  
Economic Problem ◽  
Good Corporate Governance ◽  
Result Show ◽  
The Government ◽  
Cultural Effect

The purpose of this study, namely to obtain empirical evidence that the implementation of corporate governance affect the performance of “Bank Perkreditan Rakyat” ( rural banks), and the role of local culture “Tri Hita Karana “to the BPR’s performance. The population is all BPR located in Badung and Denpasar. The samples using purposive sampling method. The data in this study were collected using a questionnaire are distributed directly to the object of research. “BPR” number into the sample in this study was 65 Banks. Data analyzed by model Multiple Regression Analysis. The research result show that the principles of corporate governance and the local cultural effect on the performance of BPR in Badung and Denpasar. “Bank Perkreditan Rakyat”. The implication of the study is important for the government to solve the economic problem using Corporate Governance and Tri Hita Karana concept.  

scholarly journals Corporate Social Responsibility, Audit Committee Expertise, and Financial Reporting: Empirical Evidence from Korea

2021 ◽  
Vol 13 (19) ◽  
pp. 10517
Author(s):  
Haeyoung Ryu ◽  
Soo-Joon Chae ◽  
Bomi Song
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Reporting ◽  
Audit Committee ◽  
Earnings Quality ◽  
Audit Committees ◽  
Accounting Expertise ◽  
Corporate Social

Corporate social responsibility (CSR) involves multiple activities and is influenced by the cultural and legal environment of the country in which a firm is located. This study examines the role of audit committees’ (AC) financial expertise in the relationship between CSR and the earnings quality of Korean firms with high levels of CSR. Using a multivariate analysis, it investigates whether the ACs that include members with accounting expertise, finance expertise, or supervisory expertise individually affect a firm’s decision making. It also examines how ACs with diverse expertise contribute toward improving the financial reporting quality of firms with high levels of CSR. The results demonstrate that when there is a certified accountant in the AC of a firm that practices CSR based on ethical motivation, the earnings management through discretionary accruals is more strictly controlled. This is more effective when the AC comprises members with accounting and non-accounting expertise. This finding implies that the AC plays a positive role in improving the accounting information quality of firms with CSR excellence. Moreover, while the role of accounting experts in the AC is important for maintaining high earnings quality, combining other types of expertise creates synergy.

scholarly journals Earnings Management: The Role Of Accounting Professionals

2011 ◽  
Vol 1 (3) ◽  
Author(s):  
Paul J. Carruth
Keyword(s):  
Earnings Management ◽  
Financial Markets ◽  
Financial Reporting ◽  
Vital Role ◽  
Securities And Exchange Commission ◽  
Accounting Fraud ◽  
Earnings Expectations ◽  
Corporate Executives ◽  
Accounting Professionals

In todays financial markets there is a great deal of pressure for corporations to meet investors earnings expectations. Failure to do so may result in the loss of millions of dollars in stock capitalization. As a result, an increasing number of corporate executives have succumbed to the temptation to manage their earnings in order to achieve targeted profits. The number of companies under investigation by the Securities and Exchange Commission (SEC) for possible accounting fraud related to earnings management has increased significantly in recent years. This article identifies and discusses four common areas of potential financial reporting abuse: restructuring costs, miscellaneous reserve accounts, materiality, and manipulation of revenue recognition. In addition, this paper discusses the vital role of accounting professionals as gatekeepers responsible for helping to maintain the viability of our financial markets.

scholarly journals Audit committee quality and audit report lag: the role of mandatory adoption of IFRS in Saudi companies

Accounting ◽  
2021 ◽  
pp. 167-178
Author(s):  
Mahfod Mobarak Aldoseri ◽  
Nasr Taha Hassan ◽  
Magdy Melegy Abd El Hakim Melegy
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Audit Committees ◽  
Strong Impact ◽  
Audit Report ◽  
Before And After ◽  
Mandatory Adoption ◽  
The Impact ◽  
Weak Influence

This paper aims to examine the effect of audit committee characteristics on audit report lag, and also explores whether this effect will vary between before and after mandatory adoption of IFRS in Saudi listed companies. Based on a Saudi sample of 388 firm-year observations from 2015 to 2018, the Poisson regression analysis shows that among audit committee characteristics, only audit committee financial experience significantly influences the timing of financial reporting. The result indicates a weak influence of audit committees on timeliness of financial reporting, which is consistent with the results of most of previous studies. On the other hand, the results show a strong impact of the adoption of IFRS on the context of that relationship, where the results show the impact of IFRS on audit report lag, audit committee quality and the association between them.

scholarly journals Research Topics in Accounting Fraud in the 21st Century: A State of the Art

2019 ◽  
Vol 11 (6) ◽  
pp. 1570
Author(s):  
Monica Ramos Montesdeoca ◽  
Agustín Sánchez Medina ◽  
Felix Blázquez Santana
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Social Cost ◽  
State Of The Art ◽  
Psychological Characteristics ◽  
Accounting Fraud ◽  
Research Topics ◽  
Financial Reporting Standards ◽  
The Social ◽  
Financial Scandals

Companies play a role in society that clearly goes beyond mere economic interest. Their contribution to social development and to the sustainability of the territory where they are located seems unquestionable. However, after the great financial scandals of companies such as ENRON, WorldCom or AHOLD, interest groups require accurate and transparent financial information. The development of more demanding financial reporting standards seems, however, not to have been up to scratch, since accounting fraud continues to be detected all over the world. The search, therefore, for possible causes that may induce companies to act unethically was the main motivation behind this research. To do this, a review of the literature in high-impact journals that has dealt with accounting fraud, covering the main lines of research, was carried out. The findings of the literature review highlight the importance of responsible corporate governance and good accounting practices, as well as the importance of certain psychological characteristics of managers and employees as enhancers of the lack of ethics. It is clear that the social cost of accounting fraud should be minimized, and governments should develop specific policies that combine responsible corporate governance in companies with the sustainability of their environment.

Die öffentliche Funktion des Prüfungsausschusses

2019 ◽  
Author(s):  
Nora Schaffer
Keyword(s):  
Financial Reporting ◽  
Public Interest ◽  
Audit Committee ◽  
Supervisory Board ◽  
Balance Of Power ◽  
Audit Committees ◽  
State Supervision ◽  
Government Supervision ◽  
Supervisory Boards

The audit committee of public interest entities performs a public function through its auditing of financial reporting, which can be broadly broken down into three facets: (i) its role of relieving the burden on the state by supplementing or replacing government supervision, (ii) its role as guarantor of the capital market’s confidence and (iii) its role as guarantor of an audit and thus as the ‘guarantor of the guarantor’. This public function is emphasised by the recent introduction of hitherto non-systemic state supervision of supervisory boards and audit committees. This supervision is, however, to be viewed critically as it could result in the beginnings of ‘stock authorities’. This study examines how the aforementioned public function radiates to the other supervisory bodies in companies, namely the auditor and the supervisory board. It also examines the dangers which European strengthening of audit committees pose to corporate governance based on the dualistic system and to the balance of power in public limited companies.

A “Big Bath” in China: accounting and corporate governance

2011 ◽  
Vol 1 (1) ◽  
pp. 1-6
Author(s):  
Mingchuan Ren
Keyword(s):  
Corporate Governance ◽  
Governance Structure ◽  
Subject Area ◽  
Performance Criteria ◽  
Corporate Governance Structure ◽  
Content Type ◽  
Accounting Practice ◽  
Creative Accounting ◽  
The Government ◽  
One Year

Subject area Accounting, corporate governance, business ethics. Study level/applicability MBA and EMBA. Case overview China has largely changed its accounting practice in line with international norms. But its corporate governance structure continued to be administratively driven. Many Chinese-listed companies, especially big ones, are transformed from state-owned enterprises, with the government as their largest shareholder. It is no exception to Company C. Then what is the common pattern of accounting behaviour in China? An insight could be drawn by analysing this case. Expected learning outcomes Highlight two issues in point, namely accounting issue and governance issue. Chinese companies are now allowed to choose their accounting policies, while their top decisions are subject to government policies. Identify Company C's creative accounting by discussing China's accounting reform. In this regard, China has been relatively robust in terms of dropping its own practice and adopting western one. Discuss the corporate governance issues unveiled. What are company's performance criteria? Are they clearly established and enforced? And what about government's decision to change CEO twice in less than one year? What are the impacts on CEO's behaviour? Supplementary materials Teaching note.

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