Byju's Auditor BDO International Resigns

Byju's Auditor BDO International Resigns

The resignation comes after Deloitte exited a year ago

Ed-tech company Byju's has stated that its auditing firm, MSKA Associates, an affiliate of BDO International, has resigned, as Byju's refused to backdate its financial reports. As the statutory auditor, MSKA informed the company's board of its resignation, although it had been appointed for a five-year term, which would end in FY27.

It is the second auditor to step down from the embattled firm since June 2023, when Deloitte Haskins & Sells left citing governance concerns.

Timeline of events:

- Amid the tiff with US lenders over the $1.2 billion term loan, in June 2023, three members of Byju's board - early backer GV Ravishankar, Managing Director at Peak XV Partners, Russell Dreisenstock of Prosus (previously Naspers) and Chan Zuckerberg Initiative's Vivian Wu, stepped down.

- Around then, statutory auditors Deloitte resigned citing a long delay by the latter in furnishing audited financial statements for the year ending 31 March 2022.

- Thereafter, Byju's appointed BDO (MSKA & Associates) as its statutory auditors for the year commencing FY22 for the next five years.

- Byju's annual general meeting was held in December 2023. The investors told the founder Byju Raveendran to ensure transparency on company financials. Resolutions for Byju's audited financials for fiscal 2022 and the reappointment of auditor BDO were passed during the meeting.

- Between December 2023-June 2024, the audit process was initiated, and multiple follow-ups were done with the ed-tech firm.

- The auditors repeatedly warned about the management's failure to recover Rs.1,400 crore from the Dubai-based reseller while paying out Rs.300 crore in sales commissions, even as the debt-laden firm faced a severe fund crunch.

- In July, the statutory auditor had to start proceedings under Section 143(12) of the Companies Act, 2013, suspecting fraud, and informed the board, as the auditor must inform the Registrar of Companies (RoC) of any suspected fraud.

- In January 2024, Byju's parent company, Think & Learn Pvt Ltd, reported a consolidated loss of Rs.8,245 crore on operating revenue of Rs.5,014 crore for the fiscal year ended 31 March 2022, in a regulatory filing of the results that it made after multiple missed deadlines over the past year.

- On 16 June, the National Company Law Tribunal (NCLT) ordered the initiation of insolvency proceedings against Byju's, on a petition by the Board of Control for Cricket in India (BCCI) claiming Rs .158 crore in arrears over a sponsorship deal.

- The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) approved the settlement between the two entities. However, on 14 August, the Supreme Court stayed the order, but later allowed the functioning of the CoC.