Corporate fraud reports a 45 per cent increase in India: ASSOCHAM-Grant Thornton; companies related to real estate and infrastructure sector (52%) are considered to be the most vulnerable

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Corporate fraud reports a 45 per cent increase in India: ASSOCHAM-Grant Thornton

15 January 2015


Dian corporate frauds arising out of corruption, money laundering, tax evasion, window dressing, financial reporting fraud and bribery have increased by over 45% in the last two years due to weakness in internal controls, scarcity of resources at disposal and over-riding powers of the senior management, according to an ASSOCHAM-Grant Thornton study. The joint survey by ASSOCHAM and Grant Thornton revealed that the companies related to real estate and infrastructure sector (52%) are considered to be the most vulnerable to fraud related incidences followed by financial services (34%), telecom (5%), manufacturing (3%), electronics and IT/ ITeS (2%), Hospitality and tourism (2%). Over 65% of our survey respondents agreed to witness a rising trend of wilful defaults and frauds. The survey observed that the lurking risk of frauds has been dissuading global companies from investing in India, points out the survey. Procurement frauds, payrolls frauds, asset misappropriation, financial misstatement, corruption, bribery, tax evasion, piracy, intellectual Property (IP) fraud, kickbacks, accounting frauds, counterfeiting, white-collar crimes etc are swiftly threatening business in both the private and public sectors, adds the report.

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India’s Satyam Scandal: Evidence the Too Large To Indict Mindset of Accounting Regulators is a Global Phenonmenon


Pai, Kalpana1
Tolleson, Thomas D.1

Review of Business & Finance Studies. 2015, Vol. 6 Issue 2, p35-43. 9p.


This paper examines the capture of government regulators using the case of Satyam Computer Services Ltd., one of India’s largest software and services companies, which disclosed a $1.47 billion fraud on its balance sheet on January 7, 2009. The firm, which traded on the New York and Bombay Stock Exchanges, was required to file financial reports with the SEC. Price Waterhouse of India, the local member of PricewaterhouseCoopers (PWC), served as its auditor. After news of the scandal hit the airwaves, Price Waterhouse of India issued a press release and stated that its audit was conducted in accordance with applicable auditing standards and was supported by sufficient audit evidence. Because Satyam shares were quoted on Wall Street, SEC rules prohibited auditors from having business relations with their clients. U.S. regulators failed to take action against PWC. Is this lack of enforcement related to PWC’s size and the impact that the failure of a Big 4 firm would have on the global financial marketplace? We question whether government regulators have been captured by the key market players in the auditing services market. One outcome of this “capture” is moral hazard, which implies that the Big 4 accounting firms, or their local affiliates, may place less emphasis on quality audits. Such an approach to the audit function places the selfinterests of the audit firm above the public interest. We also question whether foreign companies that are listed on US Stock Exchanges fall under the purview of US Laws and if these companies and their auditors face the same regulatory scrutiny as publicly-traded US Corporations. In addition, the paper provides suggestions to protect the public interest while citing lessons learned from this scandal.

Aging Japanese Prove Rich Pickings for Investment Fraud

Aging Japanese Prove Rich Pickings for Investment Fraud

By Masaaki Iwamoto – Jan 21, 2015

A growing number of retirees in Japan are falling victim to fraud, underscoring a downside of promoting personal investment in the world’s most aged nation. Combating the problem is a rising challenge for the government of Prime Minister Shinzo Abe, as it encourages Japanese households to shift more of their 1,654 trillion yen ($14 trillion) in assets out of savings accounts and into investments that boost the economy. Continue reading

Escaping Detection: Why Auditors Do Not Find Fraud

Posted by CHEN Liting, Year 3 undergrad at the School of Business, Singapore Management University

Escaping Detection: Why Auditors Do Not Find Fraud

June 25, 2013

This article was originally printed in Valuation Strategies, a magazine published by Thomson Reuters.

Even with all the publicity surrounding the issue of financial fraud in the last decade, most auditors, investors, and other professionals still do not “get it” when it comes to detecting fraud. Traditional financial statement audits were never designed to detect fraud. Continue reading