BYJU'S may face probe as MCA considers involving SFIO for auditor resignation, delayed financials: Report

Edtech major BYJU'S may face an investigation as the Ministry of Corporate Affairs (MCA) is contemplating engaging the Serious Fraud Investigation Office (SFIO) to scrutinise the resignation of its auditor and the delayed financial reporting by its parent company, Think & Learn Private Limited, according to a report.

Over the past few days, the ministry has examined the legalities and procedures involved in referring the matter to SFIO, Mint reported.

YourStory could not independently verify the report and has reached out to BYJU’S for a comment.

SFIO, a multi-disciplinary organisation under MCA, comprises experts in accountancy, forensic auditing, banking, law, information technology, investigation, company law, capital markets, and taxation fields.

Last month, Deloitte Haskins & Sells officially stepped down as BYJU’S and Aakash’s statutory auditors, attributing the resignation to the delay in the company filing its FY22 financial statements. These financial statements were expected to be presented to shareholders during an annual general meeting by September 2022.

According to the Mint report, the government's regulatory response to the alleged compliance defaults within the edtech firm is likely to be influenced by the absence of any mention of ‘non-cooperation by the management’, ‘financial irregularities’, or ‘fraud’ in Deloitte's resignation letter to the company's board.

Moreover, Deloitte thanked “the management and other staff members” of Think & Learn Private Limited for “the cooperation extended to us during our tenure as auditors of the company”.

SFIO is assigned the task of investigating a company's affairs in several situations. These include when the Registrar or inspector under section 208 of the Companies Act, 2013 submits a report, when a company passes a special resolution indicating the necessity of an investigation, when it is deemed to be in the public interest, or when a department of the Central Government or a State Government requests an investigation.

This report comes a few days after BYJU’S proposed the establishment of a Board Advisory Committee (BAC) to guide the CEO, regarding Board composition and the governance structure of the company, during an extraordinary general meeting (EGM).

During the EGM, BYJU'S CFO Ajay Goel reiterated the ongoing engagement with newly-appointed auditors BDO for the audit process. The company aims to meet the previously communicated timelines, with the FY22 audit targeted for the end of September, and the FY23 audit expected to conclude by the end of December.