Corperate Governance Failure At Satyam Essay

813 words - 4 pages

Satyam's speed development across the world won Raju great wealth and personal honors. Second, Raju decided to found a group of companies called Maytas, which involved too many industries and costed too much capital. The inappropriate development of Maytas leaded to huge deficit and made Raju struggle to raise money.Last,Raju decided to let Satyam acquire Maytas, and faked the financial recorder to remain shareholders and raise money. This leaded to big losses of talents and independent directors, as well as losses of capital from lenders and shareholders.

4. Recommendations:
1. Strengthening the internal control. The critical cause of Satyam’s failure is lack of effective internal control. Therefore, if a company wants to avoid necessary frauds, it should improve the internal monitor. For example, the company can perfect the governance structure, create an excellent enterprise culture, or develop the monitor system. Internal control self-assessment (or "CSA") can be used in this process. A Control Self-Assessment (CSA) is a tool designed to assist in identifying and evaluating the effectiveness of internal controls. Typically the CSA is a survey (question and answer) used in evaluating the internal controls related to a business activity. A "control process" is a check or process performed to reduce or eliminate the risk of error.
2. Enhancing the auditors’ ability. From the case we know, the Satyam’s auditor had admitted the inaccuracies in its audits and the auditor firm faced the multiple-agency problems. Hence, the auditors should improve their professional knowledge and take more responsibly to do their jobs. This is the effort of external auditors. But the most important efforts should from the company’s internal auditors. They should strive to monitor operating results, verify financial records, evaluate internal controls, assist with increasing efficiency and effectiveness of operations and detect fraud; and review and confirm information...

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