BDO, the auditor for Indian edtech startup Byju's, has resigned with immediate effect, marking the embattled startup's second auditor departure in about a year and further raising concerns about the company's financial health and governance.
In its scathing resignation letter, BDO subsidiary MSKA highlighted several problems at Bijoux, including significant delays in financial reporting, inadequate management support and concerns about whether it would be able to recover large amounts owed to it by Dubai-based companies.
The auditor's departure comes as Bijoux, once India's most valuable startup valued at $22 billion, faces a series of crises, including the Supreme Court's recent decision to reopen insolvency proceedings against the company.
Bijou's former auditor, Deloitte, and the start-up's key directors resigned last year, citing governance issues at the company.
“We did not receive sufficient support from the company's management in providing the books of accounts, information, explanations and appropriate audit evidence required by the company to complete the audit for financial year 2022-23,” MSKA, who was appointed in August 2023 for a five-year term, said in his resignation letter.
In a statement, a Bijoux spokesman said BDO's demands against the firm “crossed ethical and legal boundaries.”
“The real reason for BDO's resignation is BYJU'S refusal to backdate the reports. BDO went so far as to recommend companies that could facilitate such illegal activities. Multiple call recordings exist and BDO representatives have explicitly suggested backdating these documents, which BYJU'S refused to do. BYJU'S strongly believes that this is the primary reason for the resignation,” the Byju's spokesperson added.
MSKA said it had filed a Form ADT 4 alluding to possible fraud and illegal activity within the company.
The resignation letter also highlighted concerns over the initiation of liquidation proceedings by lenders and various ongoing legal cases against Bijoux and its board, including allegations of oppression and mismanagement by minority shareholders.
MSKA cited instances where Bijoux failed to share important information with the audit team, such as notices of extraordinary shareholders' meetings and bankruptcy proceedings.
The auditor's resignation adds to the challenges facing Bijoux, whose valuation has plummeted due to missed financial deadlines, revenue shortfalls and disputes with investors. Major investors including Prosus and Peak XV had earlier alleged governance issues and sought legal action to remove founder Bijoux Raveendran.
The education technology company's troubles have worsened in recent months, with India's Supreme Court recently putting on hold a court ruling that had stayed bankruptcy proceedings against it. U.S. creditors are seeking to recover $1 billion from Bijoux, increasing pressure on the once-successful startup.