In June, Deloitte Haskins and Sells resigned as the auditor for Byju’s, citing a delay in the submission of financial statements. Additionally, directors GV Ravishankar, Russell Dreisenstock, and Vivian Wu also stepped down from Byju’s board.
According to a report in Mint, the Union Ministry of Corporate Affairs is considering the option of engaging the Serious Fraud Investigation Office (SFIO) to investigate the irregularities at Think and Learn Pvt. Ltd. This includes examining the recent auditor resignation and the delayed financial reporting.
Think and Learn Pvt. Ltd is the parent company of the renowned edtech firm, Byju’s. The ministry has reportedly been assessing the legal aspects and procedures involved in referring the matter to SFIO in recent days.
In June, Deloitte Haskins and Sells stepped down as the auditor for Byju’s, citing a delay in the submission of financial statements. Alongside this, directors GV Ravishankar, Russell Dreisenstock, and Vivian Wu also resigned from Byju’s board.
Following their resignation, Deloitte clarified that they were unable to initiate an audit for the financial statements of FY22 due to difficulties in accessing the financial statements and underlying accounting records. They emphasized that the financial statements for FY22 should have been presented to shareholders at an annual general meeting by September 2022.
According to Section 143 of the Companies Act, if a statutory auditor resigns from an audit assignment and has reason to believe that there is fraud occurring in the company, they are required to report it to the government.
While the Registrar of Companies (RoC) has the authority to inspect the company’s books of accounts, the ministry is considering involving the SFIO for an investigation. The SFIO possesses experts from various fields including accounting, forensic auditing, information technology, banking, law, capital markets, and taxation, which makes it well-equipped for a comprehensive probe.
Crisis management efforts have been underway at Byju’s, as the founder Byju Raveendran recently organized an extraordinary general meeting (EGM) to address the ongoing issues faced by the edtech company. During the meeting, Raveendran informed shareholders about the formation of a Board Advisory Committee (BAC) that will provide advice and guidance to the CEO regarding the board’s composition and suitable governance structure for Byju’s. The BAC will consist of independent directors with credible backgrounds and relevant experience from diverse corporate fields.
At the EGM, shareholders and investor representatives sought updates on various matters including the timeline for the Aakash IPO, the company’s audit, progress regarding the TLB (term loan B) resolution, and the status of long-pending fundraising efforts. Byju’s has been entangled in legal disputes with its term loan B lenders since December last year, and both parties have filed lawsuits against each other in different courts in the United States.
The recently appointed Chief Financial Officer (CFO), Ajay Goel, mentioned that the newly appointed auditor, BDO, has initiated the audit process for Aakash Educational Services, WhiteHat Junior, Think & Learn, and the consolidated group as a whole. However, Byju’s has not yet officially submitted BDO’s appointment to the Ministry of Corporate Affairs (MCA). Goel further stated that BDO has dedicated “significant resources” for conducting the audit.
