BYJU’S, the edtech decacorn, has found itself in more trouble as the Institute of Chartered Accountants of India (ICAI) has reportedly referred the matter concerning the company to its disciplinary committee. The ICAI’s Financial Reporting Review Board (FRRB) has flagged certain issues in BYJU’S financial statements, which will now be examined by the disciplinary panel, according to Business Standard.
FRRB Reviews BYJU’S Financial Statements
The FRRB reviews financial statements and auditor’s reports of Indian companies, including BYJU’S balance sheet and profit. The disciplinary committee will assess concerns raised by the board’s examination.
Potential Consequences for Auditor’s Misconduct
If the panel finds the auditor guilty of professional misconduct, they could face fines of up to INR 5 Lakh or even a ban in egregious cases. Notably, ICAI can take action against the auditor under the Chartered Accountants Act, but not against the audit firm itself.
Deloitte’s Resignation and Continued Financial Delays
In June, Deloitte Haskins & Sells resigned as BYJU’S statutory auditor. The reason was the startup failure to release audited statements for the financial year ending March 31, 2022. Due to the ongoing delay in filing financials, the Ministry of Corporate Affairs (MCA) has launched an investigation against BYJU’S.
BYJU’S Assurances and Valuation Concerns
In a recent board meeting, BYJU’S assured investors about submitting audited financial statements for FY22 by September 2023. They also provided a timeline of December 2023 for filing FY23 financials. However, the delays in financials have prompted Peak XV Partners to consider reducing the edtech giant’s valuation. Peak XV cited a lack of visibility into the company’s audited financials for FY22 and FY23 as a factor for reevaluating its BYJU’S investments. Amid an ongoing cash crunch, the startup has faced other challenges, including legal disputes with lenders, director resignations, and investigations from government authorities. These challenges have led to the company vacating some of its offices in Bengaluru.
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