Financial Fraud Knows No Boundaries

Corruption and fraud on a massive scale knows no boundaries as we discovered again in the disclosure by global outsourcer, Satyam Computer Services, Ltd.  The company’s chairman orchestrated the fraud by falsifying company accounts and inflating revenue and profit figures over several years.  In addition, the cash position of the company was most recently reported at more than $1 billion – an amount that was completely false.  The Wall Street Journal reported the following:

The news prompted concerns about corporate governance and accounting standards across Indian industry, especially since Satyam was audited by PricewaterhouseCoopers and had high-profile independent directors, including a Harvard Business School professor, on its board until recently. PricewaterhouseCoopers said it was examining Mr. Raju’s statement and declined to comment further. Immediate comparisons were drawn to the watershed in U.S. corporate accounting and governance standards that stemmed from the Enron crisis.

“Satyam is now India’s Enron. The independence of the board was already in question, now the auditors’ complicity in what seems to be a multi-year misstatement of financials will also be explored,” CLSA said in a note.  The chairman of the Securities and Exchange Board of India said Wednesday the unfolding fraud at Satyam is an event of “horrifying magnitude.”

Much must be done to stem the tide of corruption and fraud in the corporate boardrooms and executive suites. Our entire financial system depends on investor confidence that is quickly eroding.  Strong internal control over financial reporting is essential and can be a source of competitive advantage in an environment such as this.  Visit to learn how we can help you.


About Wheelhouse Advisors
Wheelhouse Advisors LLC is the publisher of The ERM Current™, an online publication and blog dedicated to providing the latest updates on current trends in Enterprise Risk Management & Control. Wheelhouse Advisors provides cost-effective Enterprise Risk Management & Control solutions to both large and mid-size corporations. To learn more about Wheelhouse Advisors, please visit our web site at

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