Ethical Issues in Accounting With Real World Examples

GROUP MEMBERS
Atharva Kharat- 137

Chinmay Patil- 138
Surbhi Gujarani- 177
Priya Yadav- 163
Aditya Varpe- 130 ETHICAL ISSUES IN ACCOUNTING
Omkar Sawant- 158 WITH REAL WORLD EXAMPLES
Gaurav Kandarkar- 147
Types of Ethical issues in Accounting and Finance
Under-reporting Income
Under-reporting is a term describing the crime of intentionally
Under-reporting Income reporting less income than was actually received.
Fraudulent Financial Reporting

Fraudulent financial reporting is the intentional misrepresentation of a
Fraudulent Financial Reporting firm’s financial statements with the aim to give investors a mistaken
impression about the firm’s financial performance.
Misappropriation of Assets
Misappropriation of assets refers to the stealing of another
Misappropriation of Assets person’s assets.
Falsifying Documents
It refers to providing some fake legal documents such as passports,
Falsifying Documents Bank account records, Visa, etc.
Omission of Financial Records

When some transactions are completely omitted from the books of
Omission of Financial Records accounts, they are treated as errors of omission.
SATYAM SCAM (2009)
(About- Corporate Governance And Fraudulent Auditing Practices)
How They Got Caught?
 Ramalinga Raju send off an email to

SEBI and BSE.
 he admitted and confessed to inflating
the cash and bank balances of the
company.
Merger of Satyam and Mahindra
 Tech Mahindra acquired Satyam on Penalty

April 13,2009 by owning 46% of  B. Ramalinga Raju resigned and
stake. sentenced him 7 years of
 July 2009, Satyam rebranded its imprisonment and imposed a fine of
services as Mahindra Satyam. Rs. 5.5 crore.
.  Other culprits - Rs. 25 lakhs each
 PWC - $6 million fine by SEC.
HOW AMAZON PAYS $0 IN TAXES
1. Amazon carried forward losses to 2. Amazon spends billions of dollars
cut future tax bills. in Research & Development.
3. Amazon offers its employees stock 4. Amazon received a $129 million
based compensation. tax rebate.

SAHARA GROUP SCAM
INITIAL STAGE SAHARA ‘S TAKE COURT PROCEEDINGS
 Sahara Prime City filed a DRHP  Sahara claimed that the bonds are  Sahara approached high court.
with SEBI for IPO. hybrid products.  High court restricted SEBI’s order
 SEBI detected error in fund raising.  Sahara said to have taken then cancelled the mentioned
 SEBI received complaints about permission from ROC. restriction.
Sahara groups.  SEBI ordered to stop raising  The case went to supreme court.
 SEBI objected on Sahara for money and return the money to  Sahara failed to provide evidence
permission regarding fund raising. the investors with 15% interest. of the source of funds.
COURT PROCEEDINGS SAHARA’S FAILURE COURT DECISION

 SC ordered to deposit money of  SEBI doubted for a case of money  Only a few investors came to claim
OFCD holders with 15% interest laundering. their money.
within 3 months, with SEBI.  Sahara failed to submit the money  Sahara could not prove repayment
 Submission of details of OFCD with 15% interest within 3 months. to others nor their source of money
holders to SEBI.  SC ordered to make payment in 3 for repayment.
 Sahara sent 127 trucks containing installments.  Bank accounts and assets of
details of the holders to SEBI  Sahara paid the 1st installment and Sahara group got freezed.
office. not the other two.
 SEBI rejected second batch of
F INAL COU R T
OR DER
On 26th February 2014, the Chairman of Sahara Group,
Subrata Roy was arrested upon the orders of the
Supreme Court. In November 2017, Enforcement
Directorate charged Sahara Group with the case of money
laundering. Sahara Group has had a shady business for a
long time. But this time, they’ve finally been caught in
sight.
This was not for the first time that Sahara Group was
caught in conducting illegal activities. In 2007-08
subsidiary of Sahara Group SIFC or Sahara India
Financial Corporation was banned on issuing fresh
deposits by RBI since it was caught doing unethical
activities. But Sahara didn’t learn from it and finally ended
up doing a huge scam. up doing a huge scam.
CONCLUSION
Professional and personal ethical values are very important for
01 reducing ethical issues in accounting that can result in diminishing
the reputation and values of accounting profession.
Financial managers assume the duty of care to internal and

02 external users thus should perform their duties with integrity; they
should follow code of ethics required for the profession.
Relying on the law or a set of professional codes may not

03 be always adequate.
Ethics, in general, is made up of smaller parts that all work

04 together to build the moral fabric of society
THANK YOU

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GROUP MEMBERS

Atharva Kharat- 137

Fraudulent Financial Reporting

Omission of Financial Records

 Ramalinga Raju send off an email to

Merger of Satyam and Mahindra

 Tech Mahindra acquired Satyam on Penalty

3. Amazon offers its employees stock 4. Amazon received a $129 million

based compensation. tax rebate.

COURT PROCEEDINGS SAHARA’S FAILURE COURT DECISION

Financial managers assume the duty of care to internal and

Relying on the law or a set of professional codes may not

Ethics, in general, is made up of smaller parts that all work

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