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Venture capital Sequoia Capital’s regional arm in South and Southeast Asia is evaluating special audits of various investments in the region in the light of charges of financial distortion at firms such as Zilingo and GoMechanic.

Recently, EY submitted to it a due diligence report on its portfolio company GoMechanic that violated accounting standards in order to overstate revenue and divert funds, and other potential investors had exposed bookkeeping indecency. The gaffe was accepted by the startup’s co-founder, Amit Bhasin, in a public statement.

According to Tracxn, Sequoia was GoMechanic’s largest shareholder with a 27% stake and has been backing the company since 2019.

Sequoia issued a joint email statement with other investors, claiming that they were unaware of the bookkeeping issues.

Bloomberg reported that the firm will work with Ernst & Young on some of these audits and will boost budget allotment to assist investee companies to put governance guardrails in place, according to people familiar with the decision who requested anonymity.

The source added that in some cases, Sequoia Capital India will also be more careful when taking board seats at companies and might change junior members from their team on the boards with more senior partners.

This is a departure from Sequoia’s previous practice of limiting due diligence to companies before investing, as per the source.

YourStory has not been able to independently verify this report.

Sequoia Capital India and Southeast Asia is the regional arm of the Silicon Valley fund that backed Google and Apple Inc.

According to the source, the firm last year delayed announcing the raising of $2.85 billion across three funds by almost a month, after alleging irregularities at some of its portfolio firms.

Sequoia Capital India has invested in more than 400 startups.