Audit firm Deloitte has resigned as auditors of BYJU'S citing a delay in submission of financial statements while almost simultaneously three of the edtech firm's board members have quit in what is being seen as a deepening crisis at the decacorn.
Deloitte Haskins & Sells, which was slated to audit BYJU'S until 2025, stepped down with "immediate effect" mid-term stating that "the financial statements of the company are long delayed.
In a letter sent to the board of Think & Learn Pvt Ltd (known as BYJU'S), Deloitte said it has not been able to start an audit due to the delays and that will have a "significant impact" on its ability to "plan, design perform and complete" the audit as per standards.
BYJU'S in a statement said it has appointed BDO as its new auditor, adding this would help it "uphold the highest standards of financial scrutiny and accountability.
Separately, three of BYJU'S board members, including G.V. Ravishankar, M.D. of early-backer Peak XV Partners (formerly Sequoia Capital India), Russell Dreisenstock of Prosus and Chan Zuckerberg's Vivian Wu have resigned, sources said.
The reasons for the resignation of the directors were not immediately known. The BYJU'S board now comprises the founder family - chief executive Byju Raveendran, his wife Divya Gokulnath, and brother Riju Raveendran.
When contacted, a BYJU'S spokesperson said that media reports suggesting the resignations of board members from BYJU'S are entirely speculative.
"BYJU'S firmly denies these claims and urges media publications to refrain from spreading unverified information or engaging in baseless speculation. Any significant developments or changes within our organization are shared through official channels and announcements.
"We request media outlets to rely on verified sources and official statements for accurate information regarding BYJU'S," the spokesperson said.
The developments have come at a time when the company is dealing with a $1.2 billion loan payment issue.
BYJU'S, which skipped a $40 million repayment due earlier this month, has sued its lenders over alleged harassment in the recovery of the loan.
In a letter to the BYJU'S board, Deloitte Haskins and Sells said that it is resigning as auditor of Think & Learn three years prior to the expiry of its contract due to a long delay in the edtech firm's financial statement for the fiscal year ending March 31, 2022, the audit firm said in a regulatory filing.
The edtech firm separately announced that it has appointed BDO (MSKA & Associates) as its statutory auditors for the year commencing from the financial year 2022 for the next five years.
Deloittee said it frequently wrote to BYJU'S managing director Byju Raveendran with a copy to the board of directors but it has not been able to commence the audit as on date and hence decided to quit.
"We have not been able to comment on the audit as on date. As a result, there will be a significant impact on our ability to plan, design, perform, and complete the audit in accordance with the applicable auditing standards. In view of the aforesaid, we are tendering our resignation as statutory auditors of the company with immediate effect," Deloittee Haskins & Sells said in a letter to the Byju's board.
Deloitte has been working with BYJU'S since 2016 and it was re-appointed as statutory auditor of Think and Learn Private Limited, which operates under BYJU'S brand, for a five-year period starting April 1, 2020.
"The financial statements of the company for the year ended March 31, 2022, are long delayed. In accordance with the Companies Act, 2013, the audited financial statements for the year ended March 31, 2022 were due to be laid before shareholders in the Annual General Meeting by September 30, 2022," Deloitte said.
The audit firm said that it had written an email to Byju Raveendran with a copy to the board of directors on September 30, 2022, and November 5, 2022, and thereafter to the board on November 12, 2022, December 24, 2022, and a letter on March 29, 2023, for statutory audit for the year ended March 31, 2022.
The audit firm said that it did not receive any communication on the resolution of the audit report modifications for the financial year 2021 and the status of audit readiness of the financial statements and related documents for FY 2022.
Sources privy to the development at BYJU'S on the condition of anonymity said that the company's audit process got delayed as it was waiting for a new chief financial officer to take charge.
BYJU'S new group CFO Ajay Goel joined the company about a month ago and the company is now set to start the audit process from next week onwards.
"BDO's experience as an auditor for BYJU'S subsidiaries ensures their familiarity with the organization's operations, enabling a streamlined completion of the group-level audit anticipated to be finalized in the upcoming quarter," BYJU'S said.
BDO will cover the holding company - Think and Learn Pvt Ltd, its material subsidiaries such as Aakash Education Services Limited as well as the overall group consolidated results.
"This comprehensive audit coverage will provide a holistic view of BYJU'S financial performance and ensure transparency across the organization," BYJU'S said.
It said that the selection of BDO as BYJU'S auditors was finalised after a rigorous selection process by Goel.
"We have chosen BDO as our auditors with great confidence following a well-structured selection process. Their exceptional capabilities and expertise in providing audit services to globally diversified large-scale companies make them the perfect fit for our organisation. We are excited to collaborate with BDO to uphold the highest standards of financial scrutiny and accountability," Goel said.
BDO at present audits firms like ICICI, Cisco, IndusInd Bank etc and is considered to be among top five global audit firms in terms of turnover.