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ICAI found gross negligence by Byju's auditors, recommended punitive actions against it

Posted Date : 15-Mar-2024 , 08:30:40 am | Posted By CASANSAAR print Print
The Institute of Chartered Accountants of India (ICAI) has found gross negligence by edtech firm Byju's auditors, ICAI president Ranjeet Kumar Agarwal said on Wednesday.  

"Our inspection has found gross negligence on accounting practices by individual auditors of Byju's and accordingly we have recommended to the Financial Reporting Review Board (FRRB) to take punitive actions on auditors concerned," Agarwal told news agency PTI.

Agarwal said, "The FRRB will review our report on the conduct of the auditors of Byju's both individually as well as at the group levels, apart from the role of the board of the company. After this three-stage review will form an opinion on the role of the individual auditors and take appropriate action. After that, the report will be made public"

He added that not only Byju's, the accounting body is also planning to inspect the books of payments major Paytm.

"As we have taken a suo moto decision to look into the role of the auditors of Byju's, we are now thinking about looking to the role of the auditors of the payments major Paytm now," he said.

Recently, the Corporate Affairs ministry asked its field officers to expedite the inspection of the books of Byju's and submit the report. The ministry, which is implementing the company's law, will decide on a further course of action after receiving the report from its regional office.

In July 2023, a month after Deloitte resigned as the statutory auditor of Byju's, the ministry had asked the office of the regional director in Hyderabad to conduct an inspection of the holding company Think & Learn, which is registered in Bengaluru.

Last year, the ministry ordered the inspection in the wake of various developments at that time at the edtech company, including its inability to finalise the statements and the resignation of the auditor.

On February 23, shareholders of Byju's voted unanimously to remove founder-CEO Byju Raveendran and his family members from the board over alleged "mismanagement and failures" at what was once India's hottest tech startup. However, the company had called the voting done in the absence of founders as invalid and ineffective.

Raveendran, his wife and brother -- the only three members on the company board as of now -- stayed away from the extraordinary general meeting called by a group of six investors, who collectively hold more than 32 per cent of Think & Learn.

In the end, more than 60 per cent of the shareholders voted in favour of all the seven resolutions, which included removing the current management, reconfiguration of the board and a third-party forensic investigation into acquisitions done by the company, sources close to the investors had said.

The Karnataka High Court on March 13 extended its interim order till March 28 asking Byju’s shareholders not to bring in effect any resolutions expected to be passed during the February 23 extraordinary general meeting (EGM).

Last month, the EGM was called by majority shareholders seeking the removal of Raveendran. Investors Prosus, General Atlantic and Peak XV on February 23 voted to sack CEO Byju Raveendran and his family from Byju’s.

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