Top Audit Firm Deloitte Resigns As Auditor For Byju's And Aakash Educational

Deloitte expressed concerns regarding the delayed financial statements and unresolved audit report modifications for the year ending March 2021.

In a statement, Byju's referred to Deloitte's resignation as a "planned transition" and announced the appointment of BDO (MSKA & Associates) as its new statutory auditors. ( Image Source :Getty )

In yet another sign of deepening trouble for the ed-tech firm Byju's, one of the biggest audit firms Deloitte has tendered its resignation as the auditor of the company. In a statement, Deloitte expressed concerns regarding the delayed financial statements and unresolved audit report modifications for the year ending March 2021, as well as the lack of audit readiness for the year ending March 2022. This comes after Byju's faced scrutiny for its delayed financial disclosures last year. 

"The financial statements of the Company for the year ended March 31, 2022, are long delayed. We have also not received any communication on the resolution of the audit report modifications in respect of the year ended March 31, 2021, and the status of 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," said Deloitte in a statement.

"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," Deloitte added.

In a statement, Byju's referred to Deloitte's resignation as a "planned transition" and announced the appointment of BDO (MSKA & Associates) as its new statutory auditors. BDO will also be the statutory auditor of the consolidated group and will audit IPO-bound Aakash Educational Services.

Deloitte's resignation comes at a time when key board members of Byju's also tendered their resignations from the company's board due to differences with founder Byju Raveendran on key operational issues, as per a report by MoneyControl. The report citing sources familiar with the matter said that G V Ravishankar of Sequoia Capital (now Peak XV Partners), Vivian Wu of Chan Zuckerberg Initiative, and Russell Dreisenstock of Prosus have submitted their resignations as non-executive directors of the firm. However, it is reported that their resignations are still pending acceptance.

However, Byju’s in a statment said, “A recent media report suggesting the resignations of board members from Byju’s is entirely speculative. Byju’s firmly denies these claims and urges media publications to refrain from spreading unverified information or engaging in baseless speculation.”

Byju Raveendran, Divya Gokulnath, and Riju Raveendran also sit on the startup’s board.

As per the report by MoneyControl, the resignation of Deloitte has created uncertainty for Byju's as the company's financial results for FY21 revealed irregularities in its revenue recognition practices. Following Deloitte's advice, Byju's had to defer around 40 percent of its FY21 revenue to future years.

According to the report, despite the significant growth experienced by the edtech sector globally during the COVID-19 pandemic, Byju's unexpectedly reported a decline in revenue for FY21. Additionally, the company incurred losses exceeding Rs 4,500 crore during the same fiscal year.