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Edtech major BYJU’S alleged irregularities around accounting practices and financial statements is all set for a regulatory review. This as the CA Institute President, Debashish Mitra, referring the matter to the Financial Reporting Review Board (FRRB), a non-standing committee of the CA Institute’s Council.
“I believe the FRRB is going to meet post the World Congress of Accountants (WCOA) and take a call on the matter,” Mitra told businessline on the sidelines of WCOA 2022 in Mumbai.
The development comes in the backdrop of several complaints received by the Ministry of Corporate Affairs (MCA), Serious Frauds Investigation Office (SFIO) and the CA Institute in the recent months, over the alleged irregular accounting practices at BYJU’S. The start-up had also delayed filing of its FY21 results (filed in October this year), prompting the MCA to demand an explanation on the same. The Ministry, reportedly sent its letter on this issue in August.
The current legal framework says private companies need to file their financial statements with MCA within 30 days of holding the annual general meeting (AGM). The AGM has to be held within six months of the end of the financial year.
In mid-October, BYJU’S had raised $250 million in a new funding round from existing investors, including the Qatar Investment Authority at $22-billion valuation. This fundraise came a week after the start-up announced the lay off of more than 2,500 employees.
NFRA inspection
When asked about the National Financial Reporting Authority (NFRA) publishing guidelines for its inspection of audit firms, Mitra said the Institute of Chartered Accountants of India (ICAI) is yet to take a stance on this development.
“Before responding to this, we are looking at international practices. We are seeing whether FRC in UK or the PCAOB in the US have similar practice. We are studying as to what extent this NFRA move infringes our activities. If we find there are no similar international practice, then we will certainly talk to NFRA,” Mitra said.
He also asserted that ICAI’s relationship with NFRA is now cordial and that he can always walk into NFRA Chairman Ajay Bhushan Pandey’s office to convey the CA Institute’s concerns, if any, on any audit issue.
The ICAI President also said he has so far not discussed the matter with the members of ICAI. Mitra noted that NFRA was the audit regulator for public interest entities (listed companies and large private companies) while ICAI was looking at auditor performance on a much larger universe of unlisted companies.
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