Among the elements of fraud perpetuated by Satyam's management was creation of more than 6,000 phony invoices that were entered in company ledgers as revenue, income or accounts receivable. "Former senior management at Satyam manufactured scores of false bank statements, confirmations, and supporting documents to reflect payment of the false invoices and created over $1 billion in fictitious cash balances and other interest bearing deposits," the SEC complaint reads. Satyam management utilized "super-user" rights to the computer system to create more than $1 billion in fake invoices.
When notified by PCAOB that an inspection would be made in 2007, the audit team inserted a back-dated management letter and debtor confirmation requests to be include with fiscal 2007 records.
The SEC said despite quality control audits, the PW teams routinely relinquished control of the delivery and receipt of cash confirmation to their clients and rarely questioned their assertions. Former Satyam chairman B. Ramalinga Raju issued a letter in January 2009 that while the balance sheet of Sept. 30, 2008, state the company had more than $1 billion in fictitious cash and bank balances, the actual amount was $66 million. The SEC action says the Satyam engagement team members said they had ceded control to the company because they felt it was honest. A number of disciplinary and legal actions are underway in India.