Edtech major Byju’s, which has been mired in several controversies, received a double blow on Thursday. The company’s statutory auditor Deloitte Haskins & Sells resigned stating that the company was delaying filing its FY22 financial results.
Separately, three board members reportedly resigned owing to differences with founder Byju Raveendran on key operational issues.
G V Ravishankar of Sequoia Capital, Vivian Wu of Chan Zuckerberg Initiative, and Russell Dreisenstock of Prosus have reportedly resigned. Byju’s, however, has denied the resignation of the three directors.
Riju Raveendran, Byju Raveendran, and Divya Gokulnath are the other three board members. Byju’s issued a statement announcing the appointment of BDO (MSKA & Associates) as its auditor starting from FY22 for the next five years.
On the board resignations, it said, “Byju’s firmly denies these claims and urges media publications to refrain from spreading unverified information or engaging in baseless speculation,” the company said. Reports suggest that the company has not accepted the resignations of the board members.
What can be damaging for Byju’s is the letter of resignation by Deloitte. In a letter to the board of directors of Think & Learn, the parent firm of Byju’s, Deloitte said, “The financial statements of the company for the year March 31, 2022 are long delayed. We have not received any communications on the resolution of the audit report modifications in the respect of the year ended March 31, 2022, status of the 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.”
Deloitte said that in view of the above, “we are tendering our resignation as statutory auditors of the company with immediate effect”.
Deloitte was appointed as auditor for five years, from April 1, 2020 to March 31, 2025. Byju’s financial results for FY21 were also delayed by around 18 months for which it faced intense scrutiny from the ministry of corporate affairs (MCA). In its report for FY21, Deloitte had advised Byju’s to defer some 40% of revenues to subsequent years since it sold multi-year subscription.
The company is currently embroiled in a legal battle with its lenders in US. In April, its offices in Bengaluru were searched by Enforcement Directorate for alleged violation of Foreign Exchange Management Act.