Presented by: Jay patel

What is Ethical?
It refers to the basic principles of moral values that are

expected to be followed by every citizen in a civilized society Any of the organization whether manufacturing or service oriented needs to abide by ethical principles so that entire nation is benefited E.g. 1. Religious books 2. Culture 3. Law

What is Unethical?
Unethical is just opposite to ethical, i.e. when someone goes against rules, becomes immoral, does not follow any norms, etc is unethical.
It can be divided into three category. By organization By employees By regulating agencies

For understanding the unethical practices done by various organizations, we have opted Satyam as an example

THE SATYAM FRAUD

INTRODUCTION
IT WAS FOUND IN 1987 BY B.RAMALINGA RAJU. 4th largest growing IT company

in India. 9% market share 53,000 employees Revenue $2.1 billion First Indian company to be listed in three international exchanges: NYSE, DOW and EURONEXT

Services offered by Satyam

Software development, ERP, Outsourcing, CRM, Consulting IT Healthcare Bio Tech Telecom and Media

Banking and Finance

UNDERSTANDING THE SCAM!

THE BALANCE SHEET AS OF SEPTEMBER 30, 2008 SHOWED INFLATED (NON-EXISTENT) CASH AND BANK BALANCES OF RS. 5040 CRORE (AS AGAINST RS. 5312 CORE REFLECTED IN THE BOOKS) AN ACCRUED INTEREST OF RS. 376 CRORE WHICH IS NON-EXISTENT AN UNDERSTATED LIABILITY OF RS.1230 CRORE ON ACCOUNT OF FUNDS ARRANGED BY BR RAJU.

FRAUD

AN OVERSTATED DEBTORS POSITION OF RS. 490 CRORE

(AS AGAINST RS. 2651 CRORE REFLECTED IN THE BOOKS) FOR THE SECOND QUARTER SATYAM REPORTED A REVENUE OF RS.2700 CRORE AND AN OPERATING MARGIN OF RS.649 CRORE (24% OF REVENUES) AS AGAINST ACTUAL REVENUE OF RS.2112 CRORE AND AN ACTUAL OPERATING MARGIN OF RS.61 CRORE (3% OF REVENUES) THIS HAS RESULTED IN ARTIFICIAL CASH AND BANK BALANCES GOING UP BY RS. 588 CRORE IN Q2 ALONE.

Conclusions
IT CONCLUDES THAT UNETHICAL PRACTICE WAS

MADE BY RAMALINGA RAJU FOR MANIPULATING ACCOUNTS JANUARY 7TH, 2009 IT WAS LIKE RIDING A TIGER , NOT KNOWING HOW TO GET OFF WITHOUT BEING EATEN SATYAM COMPUTERS WERE BANNED. SOLD OF SHARES. RESIGNATION BY RAMALINGA.

ACQUISITION BY MAHINDRA GROUP

ALL WELL THATS END WELL

ANAND MAHINDRA NEW OWNER OF SATYAM POST RS2890 CRORE AS TAKEOVER JULY 2009, SATYAM REBRANDED ITS SERVICE AS MAHINDRA SATYAM.

Recommendations
Investors:

They must ensure that the share value which is listed is genuine and as per its financial status.
Board:

They must monitor the ethical policies and the way they are being maintained in the company.
Government:

a. Government should always play an active role in the company affairs because the company runs with the public money. b. The government must frequently check the companys performance in the market and take necessary steps in curtailing any malpractices or falsification.

Contd
Accounting Standards:

Auditors main responsibility is to check fairness and trueness of financial statements which can be done with the help of proper audit tools.
Ethics of company:

a. Proper code of conduct updated on regular basis should be implemented. b. Every company should have a fraud detection mechanism. c. Good corporate governance.