Byju's statutory auditor Deloitte Haskins & Sells quit with "immediate effect" on Thursday citing a long delay in the edtech startup's financial statements for the year ended March 31, 2022.
Deloitte, which was appointed as Byju's auditor till 2025, said it has not been able to commence the audit as on date. "As a result, there will be significant impact on our ability to plan, design, perform and complete the audit in accordance with applicable auditing standards," Deloitte says in its resignation letter.
"In accordance with the Companies Act, 2013, the audited financial statements for the year ended March 31, 2022 were due to be laid before shareholders in the Annual General Meeting by September 30, 2022. We have also not received any communication on the resolution of the audit report modifications in respect of the year ended March 31, 2021, status of audit readiness of the financial statements and the underlying books and records for the year ended March 31, 2022," the letter says.
Following the auditor's resignation, Byju's, in a statement, said it has appointed BDO (MSKA & Associates) as its new auditor for the year commencing from FY22 for the next five years. "BDO's extensive experience working with multi-national clientele underscores their expertise in navigating the complexities of consolidation, particularly relevant to Byju's given its multiple global acquisitions in the past three years," the edtech giant says.
BDO will audit Byju's holding company – Think and Learn Pvt Ltd, its material subsidiaries such as Aakash Education Services as well as the overall group consolidated results. "The comprehensive audit coverage will provide a holistic view of Byju's financial performance and ensure transparency across the organization," the company says.
Along with Deloitte, Byju's investor board members from Prosus and Peak XV have resigned. In a statement to Fortune India, Byju's said. "The management has been engaging with investors in constructive discussions on the reconstitution of the board at BYJU'S, including the induction of independent directors. The need for reconstitution arose as few investors had to vacate the board seat due to their shareholding falling below a minimum required threshold as per our SHA."
"We want to reassure all stakeholders that we are actively working towards constituting a diverse and world-class board commensurate with the company's size and scale," the edtech platform said.
Byju's, once valued at $22 billion, went on an acquisition spree over the past few years. The edtech firm spent $2.5 billion on acquisitions that included Aakash Educational Services, U.S.-based Epic, kids' coding platform Tynker, professional education firm Great Learning and exam prep platform Toppr.
Earlier this month, the edtech major said it plans to launch an initial public offering (IPO) of Aakash Education Services by mid-2024. The company acquired Aakash Institute in April 2021 for nearly $1 billion.
In April, the Enforcement Directorate (ED) conducted searches at the home and offices of Byju's founder Byju Raveendaran under the provisions of the Foreign Exchange Management Act (FEMA). In an email to employees following ED's search, Raveendran said the information requested by and furnished to the ED officers in connection with the FDI raised, overseas investments made, and cross-border transactions relating to marketing and branding activities by Byju's has previously been submitted by the company's authorised representatives.
Byju's made a number of overseas acquisitions by investing an amount of around ₹9,000 crore over the years as part of its growth strategy, Raveendran said. "These acquisitions have been instrumental in expanding our reach and impact. In order to fund these acquisitions, we have remitted some of our funding overseas," the edtech startup's CEO said.