Satyam- Part II

A-Satyam- auditors' insights !!

I happened to meet a friend who works at one of the Big Four [i dun wanna term it Big Three so soon].. So here we were at CCD, and sharing a conversation over hot coffee. I personally thought it to be weird for a guy to discuss finance with a woman at a coffee shop!
Nonetheless, we arrived at the point of Satyam, and I got to know what the auditor circle actually thinks of this whole saga. Here's a bit of that auditor gyaan for you [grab a coffee, u may fall asleep]

" PwC as auditors had to verify every FD receipt as per the regulation. "
Something Mr Vadlamani and Co apparently did not seem to find important while handling the onerous task of fudging the already fudged books.
" Now Raju went and got a FD receipt for a paltry Rs.1000 crore. When auditors ask for it, Lo and Behold! " But wait, did miss something, Raju was riding the Tiger worth 7000crore,right?

"Raju and Co went to the bank,told them -'Oh you know what, we lost our receipt, can u issue a duplicate?'-the bank obliges to the request of a prestigious client. Gives them another receipt. "

This my friends was the second Rs1000 cr. Thats how they turned it into Rs7K Cr.

Question, What did PwC do here? "they did not check for TDS that the banks should have cut on interest earned on every Rs1000 Cr deposit."


Hmmm... with some insight, i bumped into another auditor friend [this guy works for a decent auditing firm, though not exactly of Deloitte or E&Y stature] This time, it was over Beer! And when all job related frustrations were puked out, we returned to some sanity and discussed..of many things...u guessed it...Satyam.
His view : Satyam had cash. So there was no artificial cash as told by my friend from the Big 4.

" They siphoned out money to fund projects in many of their group companies- Maytas included"
Ok but what about the missing cash?
"Satyam jacked up its headcount by almost 13000 employees, imagine where all this money must have been going.. and to show that you had cash, they might have done the needful to forge bank documents too"

The rest, most of us already know- The proposed Maytas deal was, as admitted by Raju, an attempt to plug the hole in the Balance Sheet, as real estate valuations are difficult to arrive at.

When Enron Collapsed, Arthur Anderson became a thing of the past too. The Big Five became Big Four. But soon after, we learnt of the Worldcom scandal. Maybe I am one of the sceptics, but I am keeping my fingers crossed- The Satyam PwC saga may unleash bigger names. Rumour has it that Reliance may be in the news for all the wrong reasons pretty soon.

Like David Fleischer at Goldman Sachs asked post Enron bankruptcy, I ask "What's next?"