In a strong response to the recent resignation of its auditor, BDO (MSKA & Associates), Byju’s has made serious allegations against the firm, claiming it engaged in unethical behavior and sought to manipulate the audit process. The edtech giant, which is already grappling with significant financial and legal challenges, has accused BDO of attempting to compromise the integrity of the audit by suggesting the backdating of financial reports.
According to Byju’s statement, there is substantial evidence, including multiple call recordings, where BDO representatives allegedly proposed backdating documents, a suggestion that Byju’s unequivocally rejected. The company maintains that its commitment to ethical standards and transparency was the true reason behind BDO’s resignation, rather than the financial and governance concerns publicly cited by the auditor.
BDO’s resignation came after the firm raised several serious concerns about Byju’s financial health. The auditor expressed doubts about Byju’s ability to recover a substantial sum of Rs 1,400 crore from a Dubai-based reseller, More Ideas General Trading LLC. BDO also highlighted issues such as delays in financial reporting and a lack of adequate support from Byju’s management. Additionally, BDO pointed to ongoing litigation and liquidation proceedings initiated by creditors as significant red flags.
Byju’s has criticized BDO for its handling of the situation. The company claims that BDO sought clarifications on various transactions from Byju’s suspended board shortly after the company entered insolvency proceedings on July 16, 2024. Byju’s asserts that BDO failed to engage with the appointed Insolvency Resolution Professional (IRP), the entity responsible for managing the company during insolvency. The company alleges that despite repeated attempts by the IRP to communicate with BDO, the auditor did not respond, which contributed to misunderstandings and ultimately led to BDO’s resignation.
Moreover, Byju’s has stated that it had proactively initiated a forensic audit of its transactions with the Dubai-based partner before BDO raised the issue. However, this audit was paused due to the insolvency proceedings. Byju’s, which has seen its valuation plummet from a peak of $22 billion, now faces a multitude of challenges, including legal battles and mounting pressure from creditors.
In the wake of these events, Byju’s has reiterated its commitment to ethical conduct and transparency. The company has expressed its willingness to cooperate with any future audits conducted under the oversight of the Insolvency Resolution Professional. Byju’s remains focused on maintaining its ethical standards and ensuring that its financial practices are transparent, even as it navigates through this turbulent period.
