Audit and Assurance Service: Role of Management and Auditors in the Collapse of Satyam

Running head: AUIDIT AND ASSURANCE SERVICE
Audit and Assurance Service
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1AUIDIT AND ASSURANCE SERVICE
Table of Contents
Introduction:................................................................................................................ 2
Purpose of statement by Mr Medcraft:........................................................................2
Objective of Satyam Audit:..........................................................................................3
Extent of meeting the audit objective:.........................................................................3
Evaluation of Satyam Company Management and Role of Auditors:..........................4
Background to case:................................................................................................4
Beginning of problems:............................................................................................4
Role of management:..................................................................................................5
Unethical governance flaws:....................................................................................5
The case of insider trading:.....................................................................................6
A charge of falsified accounting records and fake accounting:................................6
Lax board of Satyam:.............................................................................................. 7
Role of auditors...........................................................................................................8
Fake performance of Audit:.....................................................................................8
Conclusion:................................................................................................................. 9
Reference List:..........................................................................................................10

2AUIDIT AND ASSURANCE SERVICE
Introduction:
Fraud is regarded as the worldwide phenomenon that creates an impact on all
the sectors of the economy, fraud includes wide range of illegal practices and acts
that consists of the deception of misrepresentation. In other words, mistakes cannot
be termed as fraud (Vasarhelyi and Halper 2018). Fraud refers to the group of
unscrupulous people that manipulates or influence the activities of the business with
the purpose of making money. The current report is based on the analysis of the role
of management and auditors in true presentation of books of accounts. The report
will placing emphasis on the collapse of Satyam from the failure of auditors and
management of the company.
Purpose of statement by Mr Medcraft:
Mr Medcraft was the formed charman of Australian Securities and Exchange
Commission and is largely concerned regarding the roles and responsibilities of the
auditors at the time of performing auditing functions. Mr Medcraft has issued
cautioned that another auditing scandal may be at the horizon if the auditors does
not assure the true and fair view of the financial statement (William, Glover and
Prawitt 2016). Mr Medcraft has expressed his uncertainties relating to the fair
presentation of financial statements. As per Mr Medcraft there numerous instances
where major auditing firms such as KPMG, Deloitte, PWC and E&Y have failed to
offer sufficient amount of assurance that the books of accounts are free from any
material misstatement. Mr Medcraft has identified a lack of professional scepticism
and usually lacked challenges.
Over the span of six years Mr Medcraft has performed several in depth
intensity surveillance with more than hardens have been investigated and

3AUIDIT AND ASSURANCE SERVICE
imprisoned close to 80 individuals. According to Mr Medcraft there is a need for
higher level of tougher actions against the corporate frauds rather than simply
imposing civil penalties (Wright 2017). A statement made by Mr Medcraft there is a
serious lack of professional scepticism among the auditor’s roles and responsibilities.
According to Mr Medcraft Australian organizations require impose severe auditing
principles as this would help in avoiding the stains on the auditing profession.
Objective of Satyam Audit:
Audit forms the vital aspect of business and Satyam is not exempted from
this. The audit report consists of the auditor’s opinion that is associated to the
financial report. The organizations are forced to adhere with the required auditing
standards in the preparation of audit report. The chief objective of performing
Satyam audit is to provide the financial report users with the required information
necessary to understand business performance.
There were several forms of users of financial report for Satyam. These
usually consists of the auditors, customers, shareholders, lenders and creditors (Roy
2015). The auditor’s report of PWC asserted that Satyam books of accounts are free
from material misstatement and error however in actual scenario the auditors
reported differed drastically. Ever since the year 2000, PWC was the principal
auditor of Satyam and provided a falsified financial statement. PWC was ethically
successful in performing the audit accountabilities in relation to required standards of
audit.
Extent of meeting the audit objective:
The opinion of auditors and vital audit subject was completely different from
the actual state of affairs presented in the financial report. Findings suggest that