BYJU'S reacts to auditor's resignation amid insolvency, calls it 'escapist'
BDO (MSKA & Associates), the auditing firm for Indian edtech giant BYJU'S, has resigned amid allegations of a lack of transparency and cooperation from the company's management. The founders of BYJU'S, BYJU Raveendran and Divya Gokulnath, have responded to BDO's resignation by labeling it as an "escapist" move and a procedural failure. They also questioned the legality of BDO's resignation in light of the company's ongoing insolvency proceedings and board suspension at the time.
Timing of BDO's resignation questioned
The founders of BYJU'S, along with the suspended board, highlighted that BDO's initial notice seeking clarifications on certain Middle Eastern transactions was issued on July 17. This date coincides with a day after the company entered insolvency proceedings. They argued that due to the suspension of the board at this time, it was neither able to accept nor act upon BDO's resignation.
Founders refute BDO's criticism of suspended board
The founders of BYJU'S refuted BDO's criticism that the suspended board failed to provide adequate responses within 45 days, leading to their resignation. They described this accusation as "baseless, escapist, and legally untenable." This statement was made in response to BDO's resignation on September 6, citing the board's failure to respond to their request for clarifications regarding historical transactions in BYJU'S Middle East business.
Auditor alleged of misleading information
The founders of BYJU'S have accused BDO of providing misleading information. They argue that an Insolvency Resolution Professional (IRP) was overseeing the company's operations for most of the 45-day period during which BDO expected a response. Raveendran, in an email to a top executive at BDO, stated that "BYJU'S has complied with every request made by BDO, except those that would require us to cross the lines of ethics and legality."
Founders question BDO's lack of communication with IRP
The BYJU'S founders also raised concerns about BDO's decision to bypass the IRP during this period, especially since the IRP was in control of the company. They pointed out that during the first Committee of Creditors (CoC) meeting on September 3, 2024, the IRP confirmed that attempts to contact BDO were met with no response.
