- Byju’s calls for a forensic audit of BDO’s resignation to be conducted by insolvency professional.
The resignation of BDO Global, Byju’s auditor, marks a significant moment in the ongoing turmoil surrounding the Indian edtech giant.
Byju’s announced on Saturday that BDO’s subsidiary, MSKA, had stepped down due to a lack of adequate support from the company’s management in providing essential audit documentation for the financial year 2022-23.
The resignation follows the departure of Byju’s previous auditor, Deloitte, last year, which cited governance issues as its primary concern.
The crux of BDO’s resignation stems from its inability to obtain necessary information and explanations needed to complete the audit.
In its resignation letter, MSKA explicitly pointed out the inadequacy of support from Byju’s management. However, Byju’s has responded by asserting that the requested documents were directed to a suspended board of directors.
Contentious legal dispute
The board was suspended after Byju’s entered insolvency proceedings on July 16, 2024, due to a contentious legal dispute with the Board of Control for Cricket in India (BCCI), which subsequently led to the appointment of an Insolvency Resolution Professional (IRP).
In a statement, Byju’s clarified that the request for documentation came from BDO at a time when the board was not operational, and thus, the firm contends that the inquiry should have been directed to the appointed IRP.
Furthermore, Byju’s has called for a forensic audit of BDO’s resignation to be conducted by the insolvency professional, highlighting the company’s intent to address any discrepancies in the audit process.
Byju’s, once valued at $22 billion in 2022 and backed by investors such as General Atlantic, has experienced a dramatic decline in its market standing, primarily due to regulatory challenges and are in dispute with US banks regarding $1 billion in unpaid dues.
The situation has not only led to insolvency proceedings but has also resulted in a freeze on the company’s assets.
The departure of BDO, following Deloitte’s earlier exit, raises critical concerns about the governance and financial management of Byju’s.
As the company navigates these turbulent waters, it faces the daunting task of restoring investor confidence and addressing the myriad challenges that have culminated in its current financial predicament.