The statutory auditor of company Byju’s has quit in just 15 months since appointment citing a lack of transparency by the company’s management, in the latest of setbacks for the embattled edtech.
In a letter dated September 3, filed with the Ministry of Corporate Affairs on Friday, MSKA & Associates, an affiliate of BDO International in India, cited several reasons including lack of communication and transparency from the management, which compelled it to resign as Byju’s statutory auditor.
Byju’s has not named a new auditor yet.
MSKA & Associates also demanded a forensic review of the company’s accounts after getting “inadequate details and explanations” regarding the company’s inability to recover dues from More Ideas General Trading LLC, Dubai, a Middle East-based entity floated by Byju’s to do business in the GCC countries.
“There has been an inordinate delay on the part of the management to initiate the forensic review, despite our repeated reminders sent vide various emails,” BDO MSKA & Associates said in the letter.
BDO MSKA & Associates was appointed as the company’s statutory auditor after Deloitte, Byju’s previous auditor, quit citing the delay in the company filing its FY22 financial statements.
‘Lack of transparency’
The auditor has claimed that Byju’s management failed to disclose the whereabouts of $533 million, which was part of the $1.2-billion term loan B raised in 2021. This amount has been a point of contention, as lenders accused the company of concealing it last year.
“We have requested the management to provide us audit trail and confirmation in respect of $533 million, which were part of the borrowed funds from lenders primarily represented by Glas Trust Company LLC, as these were available to the group for investing outside India,” said the auditor.
“This information is required for the purposes of the audit of the consolidated financial statements. Since the company has lost control over certain of its subsidiaries, the management has been unable to provide us sufficient appropriate evidence in respect of these funds, despite repeated reminders,” the auditor added.
MSKA & Associates also said that since Byju’s has lost control of some of its subsidiaries, it won’t have access to those books of accounts, which will hamper the auditor’s ability to prepare consolidated financial statements.
According to the auditor, the management of Byju’s also did not provide details to them for their consideration and evaluation on certain matters, including the notice sent by Byju’s shareholders for conducting an EGM (extra-ordinary general meeting) and insolvency filings made by a few vendors.
“We have therefore reason to believe that the management of the company lacks transparency with respect to providing full information to the auditor for their consideration and evaluation,” the auditor said.
The auditor also said that it had sent multiple emails to the management of Byju’s between January and June this year, requesting information but Byju’s failed to furnish the necessary details.
BDO MSKA & Associates was appointed as the statutory auditor of Byju’s and its wholly-owned subsidiary Aakash Educational Services in June last year, right after Deloitte, Byju’s previous auditor, had quit citing similar reasons. Deloitte had said that Byju’s management had failed to resolve the modifications mentioned in its audit report for FY21.
BDO MSKA & Associates was appointed the interim auditor for Byju’s after Deloitte quit and was reappointed as the company’s statutory auditor at the annual general meeting held on December 20, 2023, for five years.
Mounting troubles
Byju’s, once a high-flying startup commanding a valuation of more than $22 billion, has been rocked with corporate governance and compliance issues, which have come to the fore in the last two years. The company’s investor board members also resigned in June last year due to differences with its management.
Further, multiple operational and financial debtors have taken Byju’s to various courts in the country for unpaid dues.
In July this year, Byju’s was admitted to insolvency by the Bengaluru bench of the National Company Law Tribunal (NCLT) following a plea filed by the Board of Control for Cricket in India (BCCI), seeking to initiate a CIRP for Byju’s parent company, Think and Learn Private Limited (TLPL).
Byju’s dodged a potential “death” after the National Company Law Appellate Tribunal (NCLAT) approved a Rs 158-crore settlement between the edtech firm and the BCCI on August 2. It is undergoing insolvency process following an interim order by the Supreme Court of India on August 14 staying the appellate tribunal’s decision. The company’s management has lost control as the interim resolution professional Pankaj Srivastava has been given charge of the company amid the insolvency proceedings.
On Friday, YourStory reported Byju’s owes over Rs 15,000 crore to a bunch of operational and financial creditors, including its wholly-owned subsidiary Aakash. Byju’s also owes about $101 million (Rs 848 crore) to the Government of India and the Government of Karnataka.
