Review of Accounting Ethis: - Assignment Example

4. Analyze the accounts impacted and / or accounting guidelines violated and the resulting impact to the business operation. 5. As a CFO, recommend which measures could have been taken to prevent this ethical breach and how each measure should be implemented in the future. 6. 6. Use at least four (4) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources Introduction The principles of business ethics help companies to increase their positive outcome, while lessening the ill impacts of their business activities on the general public.

Even if, business ethics are frequently used as a substitute of corporate social responsibility, it is important to note that business ethics are chiefly associated to business decisions that the society considers as right or wrong. The implication of accounting ethics in the interest of the society is larger than before in the contemporary aggressive business environment. The concept of accounting ethics had developed recently after the occurrence numerous high profile corporate scandals that resulted in the collapse of organizations like Enron and Worldcom.

Governments have also been endeavouring to increase the regulation and monitoring of companies in order to ensure the safety and protection of interests of the common investors and the preservation of business ethics as well as social responsibility in the business environment. It is now obligatory for publicly listed companies to issue their audited annual accounting reports, consisting of full financial information of the company. The primary objective of business ethics monitoring consists of the formulation of regulatory policies that aims to safe guard the interests of the society as a whole.

Thus, in comparison to the past, the present business and regulatory environment is relatively more conductive to ethical behaviour. In this study, we would focus on the recent accounting fraud in Satyam Computer Services. Satyam Computer Services Ltd. and the Accounting Scandal The company was instituted in India in the year 1987 by B. Ramalingla Raju, the founder and chairman of the company. The company operated in information technology as well as business process outsourcing across a number of industries.

From the year 2003 to 2008, the company performed really well in terms of finance as well as business. It realised a decent yearly compound growth rate during that five-year period and its revenue during 2008 was over $2 billion. However, during the later parts of 2008, it was found that the Chairman of the company had actually tunnelled the profits of the company by means of self-dealings. As a result, the main loses in this case were the small investors while the promoters of the company benefitted illegitimately.

As a result of the disclosure of the accounting scandal, companies like Merrill Lynch as well as State Farm Insurance discontinued their associations with Satyam. Additionally, the share price of the firm fell to an all time low owing to the scandal. Following this the board of the company was dissolved and new nominal directors were hired by the Company Law Board. Nevertheless, the business operations of Satyam were acquired by Tech Mahindra during April 2009 to form a company named ‘Mahindra Satyam’.

 The Satyam case was contradictory to the Enron Scandal where