Byju's has auditor troubles yet again

While the Byju’s may have gone into the Corporate Insolvency Resolution Process (CIRP), the true financial position of the company is yet to see daylight. Following the appointment of MSKA & Associates as Statutory Auditors in December last year for a period of 5 years, the BDO affiliate has now resigned. The audit firm issued an audit report for the year ended March 31, 2022, on November 1, 2023. The auditors were brought in to fill in the casual vacancy for the financial year 2021-22 arising out of the previous auditor Deloitte resigning from the audit responsibilities.

Even as the financial statements for the year ended March 31, 2023, are yet to be signed off by an auditor, MSKA & Associates have cited a lack of support by the management of the company in providing the books of account, information and explanations to provide evidence to complete the audit. Since the beginning of the year according to the auditors, no less than 13 emails were sent to the management of the company seeking details including one to the Board of Directors. An entity - “More Ideas General Trading LLC, Dubai ("MI")” to which Think and Learn has outstanding, the auditors said that inadequate details and explanations regarding the company's inability to recover the dues had made them seek a detailed forensic review of the transactions. However, there was an inordinate delay on the part of the company to initiate the forensic review. Even with respect to litigated $533 million funds which Glas Trust Company LLC has been contesting in the US against Byju's Alpha, the borrower, to locate the funds - MSKA auditors have alleged in spite of requests to the management to provide an audit trail and confirmation in respect of $533 million, the management has not been able to do it

The auditors also pointed at the company’s management not sharing adequate information on the various litigations initiated and notices received from statutory authorities against the Company and the Board of Directors. “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,” said a letter to the board by the auditors

The erstwhile management/founders of Byju’s have blamed the auditors for misconduct and alleged that “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” citing the existence of call recording with BDO representatives suggesting backdating documents. The statement by Byju's founders said that in the virtual board meeting of FY22, the questioned Dubai entity, the same foreign transactions were greenlighted resulting in an audit report which was clean.

“A BDO senior partner has also confirmed on video that after conducting thorough due diligence, they have found no evidence of fraud or malpractice in our international transactions,” the statement further said.