BYJU'S faces SFIO probe for financial reporting compliance failure, governance lapses: Report
The alleged governance and compliance lapses at BYJU’S have attracted the attention of investigating agencies as they seek to ascertain the underlying causes and their potential impact on India's startup ecosystem, said a report.
Edtech major is reportedly under investigation by the Serious Frauds Investigation Office (SFIO) regarding alleged compliance failures in financial reporting and governance lapses.
This investigation follows the departure of Deloitte as its auditor and the resignation of three prominent Board members amid conflicts with creditors over a $1.2-billion term loan B.
The Hindu Business Line reported that SFIO's investigation into BYJU’S is in addition to the ongoing review of the edtech company's financial statements for 2019-20 and 2020-21 by the CA Institute's Financial Reporting Review Board.
SFIO, a multi-disciplinary organisation under the Ministry of Corporate Affairs (MCA), comprises experts in fields including accountancy, forensic auditing, banking, law, information technology, investigation, company law, capital markets, and taxation.
The report further noted that the alleged governance and compliance lapses at BYJU’S, despite being an unlisted entity, have attracted the attention of investigating agencies as they seek to ascertain the underlying causes and their potential impact on India's startup ecosystem.
Responding to YourStory's queries, BYJU'S legal advisor, MZM Legal LLP, said the company is not aware of any such discussions.
"We are confident in our compliances and are prepared to address any queries or concerns raised by the authorities in a timely responsible and co-operative manner," it said.
This report comes a few days after BYJU’S proposed the establishment of a Board Advisory Committee (BAC) to guide the CEO regarding Board composition and the governance structure of the company, during an extraordinary general meeting (EGM).
Last month, Peak XV Partners' GV Ravishankar, Prosus' Russell Dreisenstock, and Chan Zuckerberg Initiative's Vivian Wu—three key board members of BYJU'S—officially resigned from the board of the edtech firm.
During an official address to the company's employees last month, Co-founder and CEO Byju Raveendran shared that the company is presently engaged in actively expanding and diversifying its board.
Meanwhile, during the EGM, BYJU'S CFO Ajay Goel, reiterated the ongoing engagement with the newly-appointed auditor, BDO, for the audit process. The company aims to meet the previously communicated timelines, with the FY22 audit targeted for the end of September and the FY23 audit expected to conclude by the end of December.
Last month, Deloitte Haskins & Sells officially stepped down as BYJU’S and Aakash’s statutory auditors, attributing the resignation to the delay in the company filing its FY22 financial statements. These financial statements were expected to be presented to shareholders during an annual general meeting by September 2022.
In FY21, the edtech giant reported a loss of Rs 4,564.38 crore, which was larger than its FY20 loss of Rs 305.5 crore.
(The copy was updated to add a comment from BYJU'S' legal advisor.)
Edited by Kanishk Singh
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