Monday, February 9, 2009

'We rarely have accounting scandals where the cash is misrepresented'

Inflated cash and bank balances, most shocking in Satyam

Could analysts have unearthed the malaise in the reported statements of Satyam? Or, at least, what lessons can they take away from this episode and apply to other statements? Pose these questions to Mr Siva Nathan, Associate Professor, School of Accountancy, Robinson College of Business, Georgia State University, Atlanta, US, and this is what he has as answer: “I have looked at the Satyam financial statements carefully after the scandal broke. Looking at the same in hindsight I have made the following observations: Satyam reported operating margin of 24 per cent of revenues. Satyam generally quotes lower rates than competitors.”

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