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The Institute of Chartered Accountants of India (ICAI) has referred the matter concerning educational technology (edtech) major Byju’s to its disciplinary committee to decide on further course of action, according to official sources.
The financial reporting review board (FRRB) of the ICAI was examining the financial disclosures of Byju’s.
A person close to the matter stated that the FRRB has raised certain issues, which the disciplinary committee will investigate.
“It was felt that some things needed more investigation. There are three/four areas of concern that the disciplinary committee will further scrutinise,” the person said.
The FRRB, under ICAI, has the authority to review general-purpose financial statements of enterprises and auditor’s reports.
In Byju’s case, the FRRB examined the company’s balance sheet, profit-and-loss account statement, notes on account, and the auditor’s report, among other things.
If the disciplinary committee finds the auditor guilty of professional misconduct, it can impose a maximum penalty of Rs. 5 lakh and also debar the auditor.
Under the present Chartered Accountants Act, ICAI can take action against the auditor and not the audit firm.
Recently, Deloitte Haskins & Sells resigned as the statutory auditor of edtech company Byju’s. Deloitte cited a long delay by the company in furnishing audited financial statements for the year ended March 31, 2022, as the reason for its resignation.
Deloitte did not respond to the email query sent by Business Standard, and an email sent to Byju’s remained unanswered.
ICAI scrutinised the financial disclosures of the edtech company due to a 22-month delay in the submission of its financial reports. The Ministry of Corporate Affairs has also initiated an inquiry against the company.
This scrutiny may also bring the role of the auditor under question as Byju’s has yet to file its results for 2021-22. Even the 2020-21 (FY21) results filed were delayed.
According to the latest available financial report, Byju’s booked losses of Rs. 4,588 crore in FY21, 19x more than the preceding year. The firm earned Rs. 2,428 crore in revenue in FY21.
On July 22, Byju’s auditor Deloitte Haskins & Sells resigned from its role as the company was delaying filing financial results.
In the letter that Deloitte wrote to the company’s board upon resignation, it stated: “The financial statements of the company for the year March 31, 2022, are long delayed… we have not received any communications on the resolution of the audit report modifications regarding the year ended March 31, 2022, the status of the audit readiness of the financial statements, and the underlying books and records for the year ended March 31, 2022, and we have not been able to commence the audit as on date.”
Following the auditor’s resignation, the firm’s top three investors — Prosus, Peak XV Partners, and Chang Zuckerberg Initiative — representatives also resigned. After these resignations, Byju Raveendran addressed shareholders and employees on the issue.
However, after the town hall meeting, there were rumours that “while the shareholders expressed gratitude to Deloitte, they also mentioned that the auditor had been causing delays and complications in the results”, said a source.
Following these developments, the company announced the appointment of BDO as the company’s statutory auditor for the next five years. It also announced the formation of an advisory council on July 13. Former State Bank of India chief and current chairman of BharatPe Rajnish Kumar, and former chief financial officer of Infosys Mohandas Pai have joined Byju’s board advisory committee.
