Satyam's computer was an IT service and its cost needed to be accurately calculated which include salaries
Question:
Satyam's computer was an IT service and its cost needed to be accurately calculated which include salaries and related expenses of technical associates, communication costs, etc. Revenue and the related costs for these projects are recognized on a proportional performance basis, with revisions to estimates reflected in the period in which changes become known. Provisions for estimated losses are made during a period in which loss becomes probable and can be reasonably estimated. Revenue from BPO services is also on time-bound fixed-price engagements under which revenue is recognized using the percentage completion method of accounting. Amounts included in the financial statements of Satyam Computers have accrued profits and recoverable costs as current assets and excess in accrued costs and profit in current liability.
Legal and Regulatory Environment
Satyam Computers are subject to NYSE listing standards, although, as they are a foreign private issuer, those standards are different from those in the US companies.
They need to establish an audit committee, compensation committee, etc
Prove a certification by the chief executive officer of any material non-compliance with corporate governance rules
Provide written affirmation to the NYSE concerning their corporate governance practices Provide the difference between the practices of their company and those of US companies
As a result of the listing of their ADSs on the NYSE Euronext, they and their shareholders are subject to reporting requirements of the NYSE Euronext and Dutch financial markets supervision acts.
Satyam Computers are also required to conduct annual general meetings with shareholders within 6 months after the end of each fiscal year and conduct an extraordinary general meeting of shareholders whenever necessary.
At Least 21 days before the date of the annual general meeting of shareholders, they must distribute to their shareholders their audited balance sheet and profit and loss account and the related reports of boards and auditors, together with a notice convening the annual general meeting. Under the companies act, they must file the annual sheet and balance sheet and annual profit/ loss presented to shareholders within 30 days of the conclusion of the AGM with the registrar of companies in Andhra Pradesh.
Environment/ESG issues
Satyam Computers are an IT service firm so they have limited use of physical infrastructure or facilities and do not have any manufacturing operations. Therefore they tend to produce less greenhouse gas emissions, pollution, or environmental waste and have low land and water use. They have data centers that face environmental issues due to large energy consumption. Mitigating factors include greater environmental risk awareness, which has led data centers to use environment-friendly buildings. They are more exposed to social risks like criticism over labor management, such as poor working conditions and lax occupational safety standards especially in Asian countries.
The Requirement
UNDERSTAND THE INDUSTRY AND ENVIRONMENT OF THE COMPANY
The students are required to create Understanding of the Entity and Its Environment, Including the Entity's Internal Control
The student will identify the Entity and Its Environment Industry, Regulatory, and Other External Factors
Industry Factors:
Relevant industry factors include industry conditions such as the competitive environment, supplier and customer relationships, and technological developments. Examples of matters the auditor may consider include:
The market and competition, including demand, capacity, and price competition.
Cyclical or seasonal activity.
Product technology relating to the entity's products.
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young