WorldCom and Satyam: Accounting Scams in the US and India

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The accounting tactic of inflating revenues at WorldCom was also practiced at Satyam. In a bid to show that the company enjoyed a strong financial position, the company reported that as on September 30, 2008, it had cash reserves of US$ 1.2 billion. On December 16, 2008, the company announced that it planned to use these cash reserves to acquire two companies - Maytas Infra and Maytas Properties... Internal Audit WorldCom had an audit committee that consisted of 11 directors, out of which eight were independent. The objective of the audit committee was to review the company's financial statements,

-monitor internal accounting control activities, communicate with the company's external auditors, and review internal accounting control activities. However, media reports claimed that WorldCom's board of directors had failed to fulfill their basic responsibilities...

From 1990 to 2002, WorldCom's independent external auditor was Arthur Andersen (Andersen). It anticipated its relationship with WorldCom as long term and wanted to be considered as a committed member of the WorldCom team...

Between 1999 and 2002, WorldCom's board comprised 50 percent of non executive members. The board members, most of whom were former owners, officers, or directors of companies acquired by WorldCom, included experts in finance, law, and the telecommunications industry...

On June 20, 2002, Cooper and her internal audit team met WorldCom's audit committee and revealed their findings of inappropriate capitalized expenses. The board told Sullivan and Myers to resign immediately. On June 25, 2002, WorldCom announced that its profits had been inflated by US$ 3.8 billion over the previous five quarters...

Exhibit I: WorldCom's Major Acquisitions
Exhibit II: Accounting Discrepancies at WorldCom (in US$ billion)
Exhibit III: Satyam Computers - Stock Price Chart (March 2008 - March 2009)
Exhibit IV: Satyam's Quarterwise Financial Details (June 2007 - September 2008)
Exhibit V: How Satyam Inflated Profits?
Exhibit VI: Fictitious Entries and Unrecorded Transactions in Satyam Accounts(April 2002 to September 2008)
Exhibit VII: WorldCom's Restated Financials
Exhibit VIII: Four Year Financial Summary of Satyam

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