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AQ XXXXXXXXXXFOACC Individual Assignment XXXXXXXXXXPage 1 of 3
APU Level XXXXXXXXXXAsia Pacific University of Technology & Innovation XXXXXXXXXX XXXXXXXXXX
Instructions:
1. You should have a minimum of 12 references to substantiate your research and
assignment writing. You are REQUIRED to use APA referencing for this assignment.
2. The assignment should be well-structured and the use of proper paragraphs for topic
separation is encouraged. The assignment should not exceed 2,000 words.
3. The assignment must adhere to academic documentation standards:
▪ Font Type: Times New Roman
▪ Font Size: 12pts
▪ Line Spacing: 1.5-line spacing
4. You are required to submit your assignment via Online submission in Moodle, into the
intake-specific folder “Individual Assignment”.
5. The Turnitin percentage should not exceed 20%. The plagiarism case will be penalized.
AQ XXXXXXXXXXFOACC Individual Assignment XXXXXXXXXXPage 2 of 3
APU Level XXXXXXXXXXAsia Pacific University of Technology & Innovation XXXXXXXXXX XXXXXXXXXX
QUESTION 1
The stock and bond markets are critical components of a capitalist economy. The efficiency,
liquidity, and resiliency of these markets depend on the ability of investors, lenders, and
egulators to assess the financial performance of businesses that raise capital. Financial
statements prepared by such organizations play a very important role in keeping capital markets
efficient. They provide meaningful disclosures of where a company has been, where it is
cu
ently, and where it is going. Most financial statements are prepared with integrity and
present a fair representation of the financial position of the organization issuing them. These
financial statements are based on generally accepted accounting principles (GAAP), which
guide the accounting for transactions. Unfortunately, financial statements are sometimes
prepared in ways that intentionally misstate the financial position and performance of an
organization. Such misstatements can result from manipulating, falsifying, or altering
accounting records. Misleading financial statements cause serious problems in the market and
the economy. They often result in large losses for investors, lack of trust in the market and
accounting systems, and litigation and emba
assment for individuals and organizations
associated with financial statement fraud. Some of the popular financial statement fraud cases
are as follows:
1. The Sunbeam Corporation;
2. Luckin Coffee Inc.;
3. The WorldCom;
4. Satyam Computer Services;
5. Enron Corporation.
REQUIRED:
(a) Choose ONE (1) of the fraud cases above and interpret by discussing comprehensively
the background, perpetrators, modus operandi, and final judgment/verdict of the case.
(20 marks)
(b) Interpret FOUR (4) harmful impacts from the chosen case to the company, shareholders,
and other affected stakeholders.
(20 marks)
AQ XXXXXXXXXXFOACC Individual Assignment XXXXXXXXXXPage 3 of 3
APU Level XXXXXXXXXXAsia Pacific University of Technology & Innovation XXXXXXXXXX XXXXXXXXXX
(c) As a Forensic Accountant, analyze FIVE (5) internal control and governance weaknesses
which resulted in the collapse of the chosen company.
(60 marks)
(Grand Total: 100 marks)
END OF QUESTION PAPER
Answered Same Day Sep 21, 2022

Solution

Tanmoy answered on Sep 21 2022
80 Votes
AQ068-3-3-FOACC        4
AQ068-3-3-FOACC
Table of Contents
Solution A    3
Background    3
Perpetrators    3
Modus Operandi    3
Final Judgement    4
Solution B    4
Solution C    6
References    8
Solution A.
Background
    Satyam Computer Services Ltd was an Indian company which was started in the year 1987. The company was headquartered in Hyderabad by Rama Raju and Ramalinga Raju. During the beginning phases the company was a great success and was being listed on the Indian Stock Exchange. It was listed on the Mumbai Stock Exchange in the year 1991 where the shares were being oversubscribed by 17 times. In the year 2006, Ramalinga Raju was elected as the Chairman of the company and under his leadership the company’s revenue touched 1 billion and surpassed 2 billion by the end of 2008. The company was spread in more than 200 countries globally.
Perpetrators
    The tension began to loom when Satyam Computer Services Ltd began to merge with the company called Maytas. Maytas was a firm which was being managed and directed by Raju’s family. Due to the merger of the two companies, there were rise of several legal issues leading Raju’s
other in trouble. Suddenly, Raju resigned from the position as a chairman and then released a 5-page confession letter. It was investigated and was discovered that there was a fraud of 7000 crores committed by the Chairman of the company.
Modus Operandi
    The modus operandi of getting engaged in such a big scam is to increase the revenue of Maytas in a fictitious manner. Therefore, it was due to the increase in the revenue projection, resulted in an increase in the company’s profitability. It was due to this reason; a lot of investors were being attracted in order to increase the price of shares reach a new height. Both the
other were the company’s promoter and founders. They took this opportunity and also sold their holdings at a much higher price. Hence, they took a profit to the amount of 1200 crores by selling the shares held by them. The
others tried to alter and adjust their books of accounts as well as their bank statement which acted in their favor. It was the Raju
others who used their assets for developing an ERP system for the purpose of accounting. There were several loopholes in the system and therefore it was due to this reason the fictitious invoices and the forged bank statements became a normal practice for the two
others. Hence, it was the projected bank statement which held more money compared to the actual amount. Therefore, they tried to convert the money into a fixed deposit account which amounted to approximately 5000 crores (The Economic Times, 2020).
    Ramalinga Raju created numerous bank statement for inflating the balance sheet with the amount of cash which actually did not exist. It was the global head of the company which conducted the internal audit and created a fake customer identity and forged invoices for inflating the revenue of the company. Therefore, it allowed the company an easy access to loans and had an impression of success which led to an increase in the price of shares. Further, the cash which was being raised by Satyam Computers from the US markets was never considered a part of the balance sheet (Sec.gov, 2011). Yet, this was insufficient for Raju as he went towards creating fake employee records and used the funds and drew salaries in fake names. This resulted in an enhancement in the share price of the company and maintain just the exact amount to be a part of the company. Raju withdrew around $3 million every month in the form of salaries for the employees which actually did not exist (Almeida, 2021).
Final Judgement
    It was the Central Bureau of Investigation (CBI) who took charge of the case and began to investigate. Both the
others were being put behind the bars and were charged with huge amount of penalty (Mint, 2009). Later, Tech Mahindra took over Satyam Computers. Post happening of the scam it was the Indian Government and the Securities and Exchange Board of India (SEBI) who took steps in order to tightened the rules for protecting the rights and money of the investors (Samaddar, 2020).
Solution B.
    The Satyam Scam was a fraud which was...
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