Byju's auditor BDO Global exits amid bankruptcy, alleges ‘lack of transparency’

Byju's BDO Global resignation: Byju Raveendran-led beleaguered edtech giant Byju's has faced yet another set back with the resignation of its audior, BDO Global, after the company failed to provide the necessary documents subsequent to the beginning of bankruptcy proceedings. This is another jolt to a company already mired in governance and financial controversies.

Byju's said on Saturday that BDO Global resigned after the company refused to provide some key documents sought during the insolvency proceedings, according to a report by news agency Reuters. The edtech firm justified its stand by saying those materials had been sought from the board of the company which had been suspended owing to insolvency in progress. Byju's further contended that the requests by BDO ought to have been addressed to the court-appointed insolvency professional, who is currently managing the firm.

The company, once valued at $22 billion and backed by General Atlantic, saw its fortunes fall dramatically after legal disputes with US banks that are demanding it pay up the $1 billion it owes in dues in a situation that triggered the insolvency proceeding and saw some of its assets frozen.

'Lack of transparency'

According to a report by YourStory, BDO MSKA & Associates, part of international audit firm BDO International in India, resigned as the auditor of Byju's, citing grave concerns about a lack of transparency in the books of the company. The auditor, in its resignation letter filed with the Ministry of Corporate Affairs, said it had no option but to resign as the management of Byju's did not provide necessary details despite repeated requests, the report said.

Auditor BDO MSKA & Associates pointed at a lot of ills: a lack of communication, delays in launching a forensic review, and discrepancies surrounding $533 million out of its $1.2 billion term loan raised last year. The auditor apprehended the fact that the company was concealing the whereabouts of the money in question. Due to several e-mails sent between the period of January to June 2024, the auditor did not get sufficient explanation, which, in turn complicated their job of auditing the consolidated financial statements of the company.

The situation only turned worse as the management of Byju's gradually lost control over some of its subsidiaries, which eventually hindered access to critical financial data. In addition, the auditor even cited that the management did not disclose certain vital information, which included shareholder communications, insolvency filings by vendors, and an EGM notice, the report added.

This further gets compounded by the fact that it has been in multiple litigations ranging from its admission for insolvency by the NCLT to disputes with different creditors. The resignation of BDO MSKA & Associates is the latest in the series of setbacks that began with a similar resignation by Deloitte last year on grounds of a lack of cooperation from Byju's management.

Operational and financial creditors, including the firm's fully-owned subsidiary, Aakash Educational Services, have to receive more than Rs 15,000 crore from Byju's. As per the report, the firm owes $101 million-Rs 848 crore-to the Indian government and the Karnataka government too, raising the debt crisis.