Edtech firm Byju’s on Saturday hit back at its auditor MSKA and Associates, an arm of BDO, hours after it resigned citing inadequate support, alleging that the audit firm made unethical requests and did not follow set procedures.
Claiming that the resignation is more of optics, Byju’s alleged that BDO had suggested backdating of reports, which the company refused to be party to.
Speaking with PTI, Byju’s co-founder and CEO Byju Raveendran said the auditors are the first to know about insolvency proceedings but they did not inform the court-appointed insolvency resolution professional (IRP) about it.
“They asked us to do multiple backdating of reports. All that happened recently. We did not agree. We have nothing to hide,” said Raveendran. He said the auditors asked for a forensic audit of the transaction with a Middle East-based partner that was approved in June but the auditors did not make any progress on it.
“This is escaping… baseless and they did it at a time when we were not on the board. We are still not on the board. They should have informed the board. In the past 45 days, they have not communicated anything to the board. It is not just baseless, it is legally untenable whatever they have done. Auditors are the first ones to know about IRP but they have not communicated anything to the IRP,” Raveendran said.
Byju’s is undergoing insolvency following a Supreme Court order based on an appeal filed by US-based lender representative Glas Trust.
Byju’s management in a separate statement said the company has complied with every request made by BDO, except those that would require “crossing ethical and legal boundaries”.
“The real reason for BDO’s resignation is Byju’s firm refusal to backdate its reports, while BDO went to the extent of recommending a firm that could facilitate such an illegal activity. Multiple call recordings exist, where BDO representatives explicitly suggest backdating these documents, which Byju’s refused to do. Byju’s strongly believes that this is the main reason for their resignation,” the management of Think and Learn, which owns the edtech firm, said in a statement.
Byju’s management said the company entered insolvency proceedings on July 16, due to a legal dispute with the Board of Control for Cricket in India (BCCI), triggering the appointment of an IRP.
The company’s board was suspended following the insolvency proceedings. “Just a day later, on July 17, BDO sent an email to the suspended board of Byju’s seeking certain clarification regarding historical transactions that Byju’s had undertaken with a partner based in the Middle-East,” the statement said.
Byju’s management said the audit firm in the same email on July 17 threatened to resign if they did not receive the requested clarifications within 45 days.
“Notably, BDO failed to mark the IRP in this email, despite being aware that as of that date, the IRP was in control of Byju’s and the board had been suspended. BDO eventually resigned after the 45-day window expired, citing the suspended board’s failure to provide the requested clarifications,” it said.
As per the statement, during the first meeting of the committee of creditors on September 3, the IRP explicitly noted that he had repeatedly reached out to BDO for a clarification during the last 45 days but received no response.
“BDO’s lack of communication with the IRP is surprising and suspicious,” the statement added.
From: financialexpress
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