What is the Satyam scam about?

It is about corporate governance and fraudulent auditing practices allegedly

in connivance with auditors and chartered accountants. The company
misrepresented its accounts both to its board, stock exchanges, regulators,
investors and all other stakeholders.
Is this an accounting fraud, a market
manipulation/fraud or both?
It is a fraud, which misled the market and other stakeholders
by lying about the companys financial health. Even basic
facts such as revenues, operating profits, interest liabilities
and cash balances were grossly inflated to show the company
in good health.
Who is to blame here? The promoters?
The promoters are primary culprits, although it is almost impossible to
misrepresent such facts without the connivance of the auditors and some
executive board members. Independent directors, it seems, were kept in the
dark about the actual books of accounts.
What about the auditors?
The role of external third party auditors, who were tasked to ensure that no
financial bungling is undertaken to carry out promoters interest or hide facts,
have also been brought to question.

Anatomy of a fraud
1. Maintaining records
Raju

maintained thorough details of the Satyam's accounts and minutes of

meetings since 2002.
Raju stored records of accounts for the latest year (2008-09) in a computer server
called "My Home Hub."

2. Fake invoices and bills

Details of accounts from 2002 till January 7, 2009 the day Raju came out
with his dramatic, five-page confession - were stored in two separate Internet
Protocol (IP) addresses.
Fake invoices and bills were created using software applications such as
'Ontime' that was used for calculating hours put in by an employee
A secret programme was allegedly planted in the source code of the official
invoice management system creating a user id 'Super User' with the power to
hide or show the invoices in the system.
3. Web of companies
A web of 356 investment companies was used to allegedly divert funds from
Satyam.
These companies had several transactions in the form of inter-corporate
investments, advances and loans within and among them.
One such company, with a paid up capital of Rs 5 lakh, had made an
investment of Rs 90.25 crore and received unsecured loans of Rs 600 crore.

4. Why did he need the money

The cash so raised was used to purchase several thousands of acres of land across Andhra Pradesh to ride a
booming realty market.
It presented a growing problem as facts had to be doctored to keep showing healthy profits for Satyam that
was growing in size and scale.
Every attempt made to eliminate the gap failed.
As Raju put it, "it was like riding a tiger, not knowing how to get off without being eaten."
Cashing out by selling Maytas Infrastructure and Maytas Properties to Satyam for an estimated Rs 7,800
crore was the last straw. The attempt failed and Raju made the stunning confessions three weeks later.