In the midst of growing tensions surrounding the edtech giant Byju’s, including the resignation of Deloitte, the company prompted its newly appointed CFO, Ajay Goel, with finding a replacement. Deloitte had been the statutory auditor for Byju’s, the world’s most valuable startup, since FY16, but their relationship deteriorated, leading to the resignation. Deloitte cited delays in financial statements and a lack of response from Byju’s regarding the resolution of the audit report for the year ending March 31, 2021.
The departure of an auditor is concerning, and in this case, it was expected due to the strained relationship between Byju’s and Deloitte. According to insiders cited in Moneycontrol’s report, there were allegations that Deloitte treated Byju’s unfairly. Sources revealed that Deloitte abruptly changed the firm’s revenue recognition practice last year. Additionally, Deloitte billed Byju’s 20 per cent more in man-hours compared to the previous year, with the audit requiring an extra 3,000-3,500 hours of work to revise the revenue recognition for FY21. The statutory audit fees charged by Deloitte to Byju’s rose from Rs 73 lakh in FY20 to Rs 4.5 crore in FY21, as per regulatory filings.
Experts explained that the increased workload and fees were a result of Byju’s business model changes and acquisitions during the pandemic. Deloitte also expressed concerns about weak internal controls and discovered discrepancies within Byju’s financials, leading to delays in signing off on the company’s financial statements.
Insiders also revealed a strained relationship between Byju’s and Deloitte, with Byju (the founder) wanting to prioritize concluding the TLB (term loan B) negotiation process before commencing the audit.
Byju’s is expected to begin the audit process for its FY22 (2021-22) earnings next week, according to sources.
Also Read: Byju’s CFO Prompted to Find New Auditor For the Company
