Satyam fiasco raises concerns on accounting issues: Citi

NEW DELHI: Global financial services firm Citi on Thursday said Satyam's financial wrongdoings have raised questions on the reliability of accounting statements for companies and highlighted the need to focus on regulations.

"Following the Madoff Ponzi scheme scandal in the US, Satyam's accounting scandal in India (touted as Indias Enron) has brought to the fore questions on the reliability of accounting statements for companies across the country and highlights an urgent need to focus on regulations," Citi said in its economic and market analysis report.

More recently, resignations of a host of directors and senior officials in the corporate sector, particularly in the real estate, have raised concerns over the nature of practices followed by companies and created system-wide doubt," Citi said.

However, it lauded the Indian policy officials for their swift actions to sort out of the crisis-ridden IT firm and said the measures taken by them saved the country's image from more negative implications.

0"Encouraging is the speed at which policy officials have acted to sort out the Satyam issue," it said.

If corrective steps were not taken, the Satyam scandal would have had more negative implications for the India story as a whole, it added.

Citi said the new regulation such as improved disclosure standards and re-auditing are likely. "Moreover, there is also a need for greater shareholder activism," it said.

The government has replaced Satyam's three-member board with a new board, which includes banker Deepak Parekh, former Nasscom head Kiran Karnik, and former SAT presiding officer C Achuthan.