Byju’s accounting practice Likely to be Reviewed by ICAI’s Financial Reporting Review Board

BYJU, a prominent player in the edtech industry, is expected to have its financial statements and reportedly questionable accounting procedures reviewed by the Financial Reporting Review Board (FRRB), a non-standing committee of the CA Institute’s Council.

The President of the CA Institute is in favour of the action, according to sources, who also stated that the FRRB will meet in the next two days to discuss the matter.

This is in light of many complaints regarding allegedly irregular accounting practices at BYJU’s that have recently been made to the Ministry of Corporate Affairs (MCA), Serious Frauds Investigation Office (SFIO), and the CA Institute.

MCA demanded an explanation from the start-up when it delayed filing its FY21 results, which were finally submitted in October of this year. According to reports, the Ministry’s letter on this subject was sent in August.

According to the existing regulatory framework, private firms must submit their financial accounts to MCA within 30 days of the annual general meeting (AGM). The AGM must be convened no later than six months after the conclusion of the financial year.

It was decided to proceed with this case given all the signs that were sent to the CA Institute regarding it. No member of the legislature has anything to do with this. According to reports, the problem must be viewed as a whole.

Currently, any regulatory authority, including the RBI, SEBI, Insurance Regulatory and Development Authority, MCA, etc., may refer it or act on its own initiative for the FRRB to review general-purpose financial statements. The general-purpose financial statements of businesses with which substantial accounting problems have been linked by media reports are also examined by the FRRB.

The technique of “revenue recognition” was one of the BYJU’S accounting procedures that drew criticism. It was claimed that the company’s strategy of upfront and complete revenue recognition from “streaming services” was in conflict with generally accepted accounting norms. Critics have emphasised that recognising money over the course of service delivery is the more prudent and ethical course of action.

In a recent investment round, BYJU’s raised $250 million from current investors, including the Qatar Investment Authority, valued at $22 billion. A week has passed since the startup had announced the termination of more than 2,500 employees.