This is quite funny. The CEO of Satyam allegedly made up the number of employees. He publicly stated the number of employees was 53,000. It now appears the real number of employees was closer to 40,000. How does that happen?
(courtesy of Business Week)Further, Chairman and CEO Raju allegedly made up fictitious employees and collected their paychecks. He actually cashed paychecks up to $4 million per month from these fake employees (Financial Times).
This reminds me of a story. When I was an audit intern for Touche Ross & Co. when I was in college, I worked on the audit of a construction company. While performing an audit test on payroll, I noticed that week after week, certain payroll checks were signed by the same green pen in the same handwriting. I investigated further and we found out that it was a group of fake employees. After that, the audit senior made me sit near the window so the rest of the team wouldn't be exposed to any acts of retribution.
At least he is in custody. Why isn't Bernie? Perhaps tomorrow I will return to Madoff. Where has he been all week?
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I find this to be very interesting. Another level of fraud could be that it is easier to layoff employees that do not exist to show investors you are being proactive and streamiling the organiztion by operating more efficiently.
ReplyDeleteIt may be a reach but I wonder if this strategy has ever been implemented?
Are you sure you have no experience at this? It is a bit much to think of laying off non-existence employees, maybe we should ask Madoff?
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