Deloitte, Byju's and questions without answers

A sudden exit of Deloitte, and an equally swift appointment of a new auditor by Byju's raises a series of unanswered questions

By Rajiv Singh Forbes India Staff

Published: Jun 23, 2023 02:11:33 PM IST

Updated: Jun 23, 2023 04:46:53 PM IST

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Byju’s appoints BDO as its new auditor Image: Indranil Aditya/Bloomberg via Getty Images

Deloitte starts its ‘resignation letter’ to the board of directors of Byju’s by pointing out a set of dates and years. It sent emails to Byju Raveendran and the board of directors on September 30 and November 5 last year. More mails were sent on November 12, December 24, and March 29 of this year. The subject of all this correspondence was FY22 audit. “The financial statements of the company for FY22 are long delayed,” the auditor underlines.

The first question to Deloitte is: There was a delay—around 18 months—in filing the audited results of FY21 as well. Did that not bother you? Did that not sound a warning bell? Were the board members informed about the FY21 delay as well?

Now the second point raised by the auditor. There were audit report modifications for FY21, and Deloitte points it out in the resignation letter. “We have not received any communication on the resolution of the audit report modifications,” Deloitte states.

The second question to Deloitte is: Is a delay in the resolution of FY21 modifications not alarming? We are into the first quarter of FY24, and the auditor is now expressing its concern about delay in FY21 modifications! Is it too little too late? Why wait for so long to press the alarm button?

Also read: Aakash IPO coming next year: Byju's

Now, let’s talk about Byju’s swift move in appointing a new auditor. It highlighted the credentials of the new player BDO. First, it’s one of the globally renowned audit firms trusted by Fortune 500 companies. Second, BDO has extensive experience in working with MNC clientele. “(This) underscores their expertise in navigating the complexities of consolidation,” the media release highlighted.

With a new auditor in place, Byju’s needs to answer the following questions. First, is Deloitte not a globally renowned audit firm? Second, does it not have extensive experience in working with MNCs? Third, did Deloitte fail in understanding Byju’s operations? After all, Byju’s points out that BDO was an auditor for Byju’s subsidiaries, which made them familiar with the organisation’s operations. If so, what was Deloitte doing all these years? They came on board on April 1, 2020, and were appointed till March 2025. So in a little over three years of their stint, did Deloitte fail in understanding what was going on at Byju’s? Byju’s mentions in the media release that audit of most of the subsidiaries has been completed. The question, though, is who really completed those audits.