In the more recent turn of events, the technology and education firm Byju has accused its former auditor MSKA and Associates which is a branch of BDO of some malice after the audit firm sought to exit its contract with Byju. Byju has stated that he does not have any issues going by he stated that the resignation is not due to any lack of cooperation but it is due to unethical demands from the auditor.
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Response to Byju’s Auditor Resignation
Byju retaliated within a day of MSKA and Associates tendering their resignation with several unethical demands that the firm made to the firm which Byju rejected. The Indian tech firm alleged that BDO had recommended that financial documents be backdated, which received Byju’s firm refusal.
Responding to PTI, Byju’s co-founder and Chief Executive Officer, Byju Raveendran said that the audit firm had demanded to delay the issuance of several reports. “We were not willing to be a party to any backdating scams We do not have to cover anything up,” responded Raveendran regarding the company.
BDO accused of misleading legal authorities
Raveendran also pointed out that more often it will be the auditors who are the first to know and that in this case, BDO had not informed the court-appointed IRP. “They did not write any message to the IRP, even though the proceedings were familiar to them,” he said.
Ethical Issues that Byju has Alleged to Have Been Subjected to
Specifically, Byju stated that BDO had advised the backdating of reports as well as proposing the concept of forensic audit about a deal with a Middle Eastern partner. This transaction was passed in June but as per Byju’s the audit was not done properly by BDO. Raveendran said that BDO acted unfairly and unjustifiably and that the resignation was to avoid culpability.
Byju’s Enters Insolvency
The tech firm has in the recent past fallen insolvent due to a Supreme Court ruling that was made in a case of an appeal by the US-based lender Glas Trust. Byju’s management while responding to the specific queries by BDO has claimed that they have complied with all requests made to them except for the ‘unethical’ one of backdating financial reports. The management further said that BDO went to the extent of referring another firm, which could presumably help with these unlawful practices.
Audio Recordings’ Assistance to Byju’s Allegations
Byju also said that they have transcripts of calls where BDO officials were advising the backdating of such papers. The firm stated that “The only reason that makes them resign is this unethical request”.
Legal Case against BCCI and its Effects on the Bankruptcy Process
Through their correspondence, Byju’s management pointed out that insolvency took place on July 16 with the appointment of an IRP after legal woes about the Board of Control for Cricket in India (BCCI). A day later on the 17th of July, BDO demanded additional explanation about a few historical transactions with a Middle Eastern counterpart.
However, the company noted that BDO did not include the IRP in this email while the IRP had Byju as of that date while the board thereof had been disposed of. The suspended board was given 45 days to provide these clarifications and when they failed to respond after the expirythe 45 days, BDO resigned.
Employees’ perception of lack of communication as a problem faced by BDO
The committee of creditors in their first meeting on September 3 was informed by the IRP, according to media reports, that it tried to get in touch with BDO to convey amendments in the law during the 45 days but no response was received. Byju’s management saw that there was no input from BDO and this made the management ask itself some questions about the auditor.
Prospects on the Road Map for Byju’s
While Byju goes for insolvency proceedings and handles these other allegations against a previous auditor, this business is unwilling to waver. That is why Byju has recordings and legal proof that he/she is confident that BDO’s resignation was a deliberate attempt to stay away from a situation the audit firm contributed to making.
Conclusion
Byju’s, the most recent company to enter the Unicorn club, is the largest Edtech business globally, and so, the question that arises is, “What is next for Byju’s”?
This resignation and the allegations have introduced tensions in the previous employment status of Byju with its auditor. Even though insolvency proceedings have been initiated against the tech giant and legal cases are still pending it is not willing to give in. Byju wants the world to understand that he’s ethical and behaved as legally as possible while raising questions over the conduct of MSKA and Associates, a BDO wing.
