BDO, the auditor for Indian edtech startup Byju’s, has resigned with fast impact, marking the second auditor departure for the embattled startup in a few yr and additional intensifying issues about its monetary well being and governance.
In a scathing resignation letter, BDO subsidiary MSKA highlighted a number of points with Byju’s, together with important delays in monetary reporting, insufficient administration help, and issues over the corporate’s means to get well substantial dues from a Dubai-based entity.
The auditor’s exit comes as Byju’s, as soon as India’s most respected startup with a $22 billion valuation, grapples with a sequence of crises, together with a current Supreme Court choice to renew insolvency proceedings towards the startup.
Deloitte, Byju’s earlier auditor, and the startup’s key board members resigned final yr, citing governance points on the agency.
MSKA, appointed in August 2023 for a five-year time period, mentioned in its resignation letter: “There has been inadequate support from the management of the Company in providing us the books of account, information and explanations sought by us and sufficient appropriate audit evidence to enable us to complete the audit for the Financial Year 2022-23.”
In a press release, a Byju’s spokesperson mentioned BDO’s requests to the agency required “crossing ethical and legal boundaries.”
“The real reason for BDO’s resignation is BYJU’S firm refusal to backdate its reports, while BDO went to the extent of recommending a firm that could facilitate such an illegal activity. Multiple call recordings exist, where BDO representatives explicitly suggest backdating these documents, which BYJU’S refused to do. BYJU’S strongly believes that this is the main reason for their resignation,” Byju’s spokesperson added.
MSKA disclosed that it has filed Form ADT 4, suggesting potential fraud or unlawful actions inside the firm.
The resignation letter additionally highlighted issues about varied ongoing litigation towards Byju’s and its board, together with initiation of liquidation proceedings by lenders, and allegations of oppression and mismanagement by minority shareholders.
MSKA famous cases the place Byju’s didn’t share vital data, akin to notices for EGM and insolvency proceedings, with the auditing crew.
The auditor’s departure provides to the mounting challenges dealing with Byju’s, which has seen its valuation plummet amid missed monetary deadlines, income shortfalls, and conflicts with buyers. Top backers, together with Prosus and Peak XV, have beforehand alleged governance points and sought authorized motion to take away founder Byju Raveendran.
The edtech agency’s troubles have escalated in current months, with the Indian Supreme Court lately placing on maintain a tribunal ruling that had halted insolvency proceedings towards the corporate. U.S. collectors are in search of to get well $1 billion from Byju’s, including to the stress on the once-celebrated startup.
