1. Ethics in Finance Presented by- Nikhil Jamnare Roll No.19 Pranav Soman Roll No.53 Vijaykumar Pammi Roll No. 35 Hardik Sampat Roll No.45 Ashesh Joshi Roll No.21 Group No.04

2. Characteristics of Management Prone to Fraud Unduly aggressive financial Targets Domination by person or group without controls Aggressive accounting practice to keep stock prices high Pressure to reduce tax liabilities Major performance related compensation Non-Financial personnel involved in accounting matters

3. Ethical issues in Finance Financial statements Financial Markets ◦ Insider Trading Hostile Takeovers

4. Fraud in Financial Statements Fictitious Revenues Concealed Liabilities and Expenses Fraudulent Asset Valuations Improper or Fraudulent Disclosures or Omissions  Creative accounting – form of fraudulent financial reporting so as to provide misleading information.

5. Duties of an Auditor To give an accurate statement to the members about the state of affairs of a company To meet the objectives of the Companies Act 1985 and also the Articles of Association To be reasonably skillful and careful in identifying the true nature of the accounts

6. Ethical Audit An audit that assess a business’s structures, procedures, systems and policies. It measures the extent to which the activities of a business comply with the standards it has publicly declared to its external customers It measures business conduct against varied moral standards of the community.

7. Objectives of Ethical Audit To provide a critical assessment of functioning of business To investigate into acquisition or restructuring operations To determine the type of training necessary for employees To establish ethical conduct of business To enhance, measure and promote the quality that increases business performance by assessing them against the ethical business objective To improve the quality of governance by evaluating the performance and ensuring that financial information is both available and reliable

8. Ethical Issues in Financial Markets Deception: act of misrepresenting relevant information Churning: Excessive or inappropriate trading for clients account by a broker who has control over the account with intent to generate commissions rather than to benefit client Unsuitability Unfairness in Markets

9. Insider Trading Refers to trading on price sensitive information by company employees or individuals closely connected with the firm This information has not been disclosed to other market participants

10. Ethics & Insider Trading It violates equality of opportunity Does not give a level playing field between insiders and outsiders Might harm exchange as a whole because investors might not be willing to trade on exchange that does not give shareholders their rights.

11. Hostile Takeovers Are those that elicit opposition from the boards or employees of Target company Reasons for opposition are as follows:  Disagreements over price  Protecting their own interests

12. NSEL CRISIS  Joint Venture between FTIL & NAFED  Commencement – 15th OCT’2008  H.O.:MUMBAI  5600 crore rupees scam!!!  An outreach in 16 states trading in 52 commodities  What triggered the scam?  Permission to retread without taking delivery of goods

13. WHAT WENT WRONG?  31 st July 2013 NSEL was stopped from carrying out new contracts  Investors protested on 28 th august 2013  Filing of FIR by PANKAJ RAMNARESH SARAF Against NSEL  Action by economic offence wing  Police arrest of MD ANJANI SINHA,ASSISSTANT VICE PRESIDENT AMIT MUKHERJEE & other borrowers  Attachment of property of defaulters  Fudging of documents by NSEL officials FURTHER STEPS EFFECTS OF THE SCAM  Derailing of the commodity market  Erosion of investor confidence  Liquidation by Retail & Institutional players

14. List of Big scams in India

15. Speak Asia  Promoter : Sumiran Pal & two other masterminds  Affects – 2.4 million Indians  Scam amount – 2200 crore  Scam – Getting investment by conducting marketing research in the name of big companies

16. Thank you