The auditing firm informed the company’s board of directors of his resignation as statutory auditor, even though he had been appointed for a five-year term ending in fiscal year 27.
This decision will affect the audit of the company’s accounts for fiscal year 23.
“The real reason for BDO’s resignation is Byju’s steadfast refusal to retract its reports, while BDO went to the extent of recommending a firm that could facilitate such illegal activity,” the edtech company said in a statement.
ET reported that MSKA decided to resign due to lack of cooperation from management, difficulty in obtaining the numbers and information necessary for a thorough investigation, and the emergence of a problem that needed to be reported to the MCA under the Companies Act.
MSKA & Associates has become the second audit firm to exit Byju’s in just over two years, following the resignation of Deloitte Haskins & Sells on June 23, 2023. Deloitte had cited a significant delay by the edtech company in providing audited financial statements for the fiscal year ended March 31, 2022.
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In the resignation letter, MSKA & Associates also highlighted a suspicious transaction involving Dubai-based reseller More Ideas General Trading LLC, which had been reported to the Ministry of Corporate Affairs (MCA) on September 2. This transaction relates to the recovery of approximately Rs 1,400 crore from the reseller. “With regard to the transactions with our Middle East partner in respect of which BDO had sought clarifications in its email dated July 17, we wish to make it clear that the Suspended board and Byju’s management, had taken the proactive step of organizing a forensic audit“fully transparent and overseen by BDO, to ensure there were no issues long before their July 17 email,” the edtech said, noting that the forensic analysis could not be completed due to the start of the insolvency proceedings July 16, 2024.
Byju’s problems
- The National Company Law Tribunal (NCLT) on June 16 ordered initiation of insolvency proceedings against Byju’s, following a petition by BCCI seeking Rs 158 crore in arrears over a sponsorship deal.
- Founder Byju Raveendran seemed to be on the verge of resolving this dispute with BCCI following the National Company Law Appellate Tribunal (NCLAT) approval. However, on August 14, the Supreme Court stepped in by staying the NCLAT order that had approved the deal.
- The auditor’s recent resignation comes at a time when the Bengaluru-based education technology company is facing legal battles with lenders, loan defaults and valuation downgrades by its existing investors.
- This year in April, Byju India CEO Arjun Mohan left the edtech company just over six months after taking over the role.
- Despite pressure from a group of investors to remove Byju Raveendran from day-to-day management, he remains CEO and is focusing on the company’s Indian operations following Mohan’s departure.
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