There could be more trouble ahead for edtech giant BYJU’S, as the Ministry of Corporate Affairs (MCA) is reportedly considering involving the Serious Fraud Investigation Office (SFIO) to investigate the circumstances surrounding Deloitte’s resignation as BYJU’S auditor and the delayed financial reporting.
SFIO’s multidisciplinary expertise and MCA’s considerations
The MCA has reviewed the legalities and procedures to potentially refer the matter to the SFIO, according to sources familiar with the development. The SFIO, as a multidisciplinary agency, brings together experts in various fields such as accountancy, forensic auditing, banking, law, capital markets, taxation, and IT.
Reasons behind SFIO consideration and Deloitte’s resignation
The MCA’s consideration comes after Deloitte, one of the big four auditing firms, cited its inability to start an audit for BYJU’S FY22 financial statements due to delays in accessing the relevant documents and underlying books of accounts. Deloitte’s resignation mentioned that these financials should have been presented by September 30, 2022.
BYJU’S response and government’s regulatory response
BYJU’S CEO Byju Raveendran and CFO Ajay Goel reassured investors that new auditors BDO have begun the audit and will present the FY22 financials by September 2023, with FY23 financials expected by December. Notably, Deloitte did not mention any instances of financial irregularities in its resignation, a significant factor in the government’s regulatory response to alleged compliance defaults. The government can initiate an SFIO investigation against BYJU’S under the Companies Act, 2013, based on Section 212 of the act.
