PC: The Economic Times
In the latest turn of events, Indian educational technology company Byju’s has dug itself deeper into trouble as its auditor, BDO, resigned due to a lack of transparency in the firm and pending legal matters. BDO, appointed for five years from 2022 up to 2027, submitted a resignation letter to the RoC, flagging high-alarmed issues concerning how the company is conducting its operations.
According to reports, Byju’s co-founder Byju Raveendran has termed the resignation of BDO as blackmailing tactics. Responding to the allegations by the auditor, Raveendran said that his firm has been cooperating with the auditor over all its demands. However, BDO had sought a forensic audit even after Byju’s admission into insolvency in July that had created further mess.
The resignation letter from the auditor cited several important issues, including non-cooperation by the management of Byju’s in providing necessary financial information and audit evidence relating to the Financial Year 2022-23. BDO raised concerns on the company’s loss of control over some subsidiaries due to which auditors could not access their financial records because of litigation with lenders. Besides, there were other objectionable issues relating to the liquidation process, shareholder allegations, and a show-cause notice by ED.
This auditor resignation comes in a series of corporate governance challenges for the last couple of years for Byju’s. Resignation by BDO is the second auditor resignation in the last 15 months. Last June, Deloitte had resigned as an auditor to Byju’s and its subsidiary company Aakash Educational Services citing delays in submitting financial statements for FY 2022.
This new development added to the risks associated with Byju’s and placed a question mark on the transparency and governance within the company. The succession of resignations by auditors in quick time underlines the spiraling concerns in the financial and regulatory ecosystem about functionality at Byju’s.
BDO’s resignation brings into sharp question the internal control mechanisms of Byju’s, its financial disclosures, and overall compliance with regulatory norms. It is against this backdrop that the company attempts to regain investor confidence in its financial reporting processes and hopes to address budding uncertainty about the corporation’s governance structure.
In summarywhile Byju’s stands at the crossroads of operational and financial challenges, at the same time, its governance practices have also come under the scanner. The resignation of the auditor has raised once more that in the corporate world, transparency and accountability need to be emphasized to ensure that companies maintain their internal controls and adhere to the regulatory guidelines to retain the trust in them.
