Embattled edtech startup Byju’s has informed the company’s board that MSKA & Associates (BDO) has resigned as a statutory auditor with immediate effect.
BDO resigned amid concerns over ‘financial’ and ‘governance’ issues. The exit comes more than a year after Deloitte, the edtech company’s previous auditor, stepped down, citing problems with financial reporting.
Byju’s board had first appointed MSKA & Associates on August 2, 2023. Subsequently, it was reappointed on December 20, 2023, as the company’s statutory auditor during the annual general meeting for five years, spanning from FY23 to FY27. This will affect the firm’s audit for FY23 accounts.
In its resignation letter, BDO highlighted several issues, including delays in financial reporting, lack of support from management, and concerns over recovering outstanding dues from a Dubai-based entity.
“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,” Byju’s said in the statement.
BDO highlighted an allegedly suspicious transaction involving Dubai-based reseller More Ideas General Trading LLC, which had been reported to the corporate affairs ministry on September 2. The transaction involves the recovery of about ₹1,400 crore from the reseller.
“Regarding the transactions with our Middle East partner in respect of which BDO had sought clarifications in its email of July 17, we wish to make it clear that the suspended board and management of Byju’s, had taken the proactive step of arranging a forensic audit, fully transparent and supervised by BDO, to ensure that there were no issues well before their email on July 17,” Byju’s said, highlighting that the forensic audit could not be completed due to the initiation of the insolvency process.
During the first meeting of the Committee of Creditors held on 3 September 2024, the IRP explicitly noted that he had repeatedly reached out to BDO for clarification during the last 45 days but had received no response, said the company in its statement.
“BDO’s lack of communication with the Insolvency Resolution Professional (IRP) is surprising and suspicious,” it noted.
Byju’s insolvency petition
On July 16, the Bengaluru bench of NCLT ordered initiation of insolvency proceedings against Byju’s, on a Board for Control of Cricket in India (BCCI) petition claiming Rs 158 crore
Founder Byju Raveendraapproached the NCLAT and was close to settling the dispute with BCCI after approval by the appellate tribunal . However, on August 14, the Supreme Court stayed the NCLAT order that had approved the settlement.
The apex court also allowed the constitution of a committee of creditors (CoC) on August 21.
