Byju's auditor Deloitte resigns amid 'long delayed' FY22 financials, replacement announced

Edtech major Byju's on Thursday appointed BDO (MSKA & Associates) as statutory auditors as Deloitte Haskins & Sells exited as Byju's auditor with immediate effect amid a legal battle and following an investor slashing the valuation of the edtech firm.

Deloitte, which was slated to audit Byju's until 2025, has stepped down with "immediate effect" mid term, due to "long delayed" financial statements by the company, according to the auditing firm's resignation letter to the company.

Byju's said in a statement it has appointed BDO as its new auditor, adding that this will help it "uphold the highest standards of financial scrutiny and accountability."

Deloitte, one of the world's largest auditing firms, said there was a "significant impact" on its ability to perform the audit according to necessary standards and that it has "not received any communication on the resolution of the audit report modifications" for 2021-22.

"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. Under this appointment, BDO will cover the holding company - Think and Learn Pvt Ltd, its material subsidiaries such as Aakash Education Services Limited as well as the overall group consolidated results. This comprehensive audit coverage will provide a holistic view of Byju's financial performance and ensure transparency across the organisation," said Byju's in a statement.

Byju's expressed its "sincere gratitude" to the outgoing auditors, Deloitte Haskins & Sells, "for their invaluable professional support over the last six years". "The meticulously planned transition timeline ensures a seamless integration of the new auditor into the existing audit framework, affirming a comprehensive and independent examination of Byju's financial statements. The audit of most subsidiaries has already been completed, setting a positive precedent for the ongoing collaboration with the new auditors," said Byju's in a statement.

In a letter to the board members of Think & Learn Private Limited, the parent company of Byju’s, Deloitte said it hasn't been provided certain financial statements it sought.

“The financial statements of the Company for the year March 31, 2022 are long delayed… we have not received any communications on the resolution of the audit report modifications in the respect of the year ended March 31, 2022, status of the audit readiness of the financial statements and the underlying books and records for the year ended March 31, 2022 and we have not been able to commence the audit as on date," said Deloitte.

The letter further added that this delay will have a significant impact on their ability to plan, design, perform and complete the audit in accordance with the applicable auditing standards.

“In view of the aforesaid, we are tendering our resignation as statutory auditors of the Company with immediate effect,” said the company.

Meanwhile, a report said three board members of Byju's - Peak XV Partners's (earlier Sequoia Capital India) GV Ravishankar, Prosus' Russell Dreisenstock and Chan Zuckerberg Initiative's Vivian Wu have resigned from the board.

A Byju's spokesperson called the news of the resignations "entirely speculative". The company firmly denies these claims, the spokesperson said, adding significant developments or changes within the organisation are shared through official channels.

The departures, if confirmed, would mean Byju's board now only comprises of the founder's family - Chief Executive Byju Raveendran, his wife Divya Gokulnath, and brother Riju Raveendran.

Byju's was valued at $22 billion last year, but saw its valuation slashed to $8.4 billion earlier this year by Blackrock, a minor shareholder in the company.

Byju's is also locked in a dispute with lenders, who allege the company hid $500 million, leading it to sue Redwood management, one of its lenders.

The edtech firm skipped a $40 million repayment due earlier this month.