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Byju's
The Ministry of Corporate Affairs is reportedly exploring the possibility of involving the Serious Fraud Investigation Office (SFIO) to investigate the recent auditor resignation and delayed financial reporting by Think and Learn Pvt. Ltd, the company behind the popular online tutoring platform Byju's.
According to a Mint report, The ministry has already examined the legalities and procedures required to refer the case to the SFIO over the past few days. While the Registrar of Companies (RoC) has the authority to inspect books of accounts, SFIO is being considered for this investigation due to its multidisciplinary nature, with experts in various fields such as accountancy, forensic auditing, information technology, banking, law, capital markets, and taxation.
The need for this probe arises from the recent resignation of Deloitte Haskins & Sells LLP, the former auditor of Think and Learn Pvt. Ltd. Deloitte cited delays in accessing financial statements and underlying books of account as reasons for its inability to commence an audit for the financial year 2022. According to regulations, financial statements for the fiscal year 2022 should have been presented to shareholders at an annual general meeting by September 2022.
Notably, Deloitte's resignation letter to the company's board last month did not mention any non-cooperation by the management, financial irregularities, or fraud. This factor is likely to influence the government's regulatory response to the alleged compliance defaults by the edtech company. Statutory auditors who resign are also required to inform the authorities about the circumstances leading to their decision. Deloitte expressed gratitude to the company's management for the cooperation extended to them during their tenure as auditors.
Under a provision in the Companies Act, the Central government has the authority to order an SFIO investigation either in the public interest or upon receiving a report or request from relevant agencies. This provision may be invoked to initiate an investigation into the alleged compliance issues in the edtech company.
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