- In the past year, edtech major Byju’s has laid off over 3,000 employees, been raided by authorities, sued by lenders, countersued those lenders, and seen its lending partners suspend ties with it
- Now, even as rumours abound that three members of its board have resigned, Deloitte—its statutory auditor—has tendered its resignation owing to the firm’s “long-delayed” FY22 financials
- In its letter, Deloitte also states the company’s failure to resolve the modifications mentioned in Deloitte’s audit report of the company for FY21
- These issues, which have been buried under all the company’s recent problems, are still hurting the company
Businesses often hit roadblocks, but what’s happening at edtech company BYJU’S is more than a stumbling block. In fact, it’s nothing short of a raging fire.
On Thursday, it was reported that three members of the company’s board—Vivian Wu of the Chan Zuckerberg Initiative, GV Ravindran of Peak XV Partners (formerly Sequoia Capital India and SEA), and Russell Dreisenstock of Prosus Ventures—had tendered their resignations. However, BYJU’S has denied the news.
The same evening, it emerged that Deloitte, the company’s statutory auditor, had tendered its resignation from BYJU’S and its subsidiary, Aakash Educational Services.
“We have not received any communication on the resolution of the audit report modifications in respect of the year ended March 31, 2021, the status of audit readiness of the financial statements and the underlying books and records for the year ended March 31, 2022, and we have not been able to commence the audit as on date,” Deloitte noted in a regulatory filing.
Think & Learn Pvt Limited, the parent entity housing and its subsidiaries, had appointed Deloitte as the statutory auditor in April 2020 for a period of five years, ending in March 2025.
It is to be noted that BYJU’S is yet to file its financials for FY22. The edtech firm had filed the FY21 financials with regular accounting bodies in India in September 2022, nearly 18 months after the financial year ended.
In its audit report, dated August 22, 2022, on BYJU’S consolidated annual financial statements for the year ended March 2021, Deloitte expressed an adverse opinion on the company’s financials and its internal financial controls due to material weakness in its financial reporting.
According to the report, as per BYJU’S internal accounting policies prior to the year ended March 2021, the company recorded the sale of its multi-year plans and courses under “Sale of educational tablets & SD cards”, and did so even for products sold to customers through financing from its lending partners. So, while customers would continue paying for the course over a period of time, BYJU’S recorded the entire sale in the first year itself.
Soon after the news of Deloitte broke, BYJU’S appointed MSKA & Associates, the audit arm of accounting company BDO, as statutory auditors for BYJU’S and Aakash starting from the year ended March 2022.
These developments follow a series of crises at the Bengaluru-headquartered company—mounting losses, continued layoffs, being sued by lenders over a $1.2-billion term loan B (TLB), raids by authorities, and reports of toxic work culture, and more.
BYJU’S lenders declared the company in default and move to reclaim what it owes. They even banded together to file a lawsuit against BYJU’S in May, with the company filing a counter-suit earlier this month. This led to an ugly situation, where the company’s—and consequently the Indian startup ecosystem’s—reputation and credibility came under scrutiny on a global stage.
Moreover, BYJU’S was pulled up by the Ministry of Corporate Affairs in August 2022, with the ministry asking why the company had delayed the filing of its annual returns. It is also under the scanner of the Institute of Chartered Accountants of India, whose president, Debashis Mitra, had earlier acknowledged issues around the “financial disclosures” of the company.
Once the most sought-after edtech company, especially during the COVID-19 pandemic, BYJU’S now finds itself in a big soup.
To read more about the mess that BYJU’s is in and why Delottie ditched the firm, click here.
