ICAI discovers gross negligence in Byjus Auditing Process: Paytm Next in Line

The Institute of Chartered Accountants of India (ICAI) has identified gross negligence by the auditors of controversial edtech company BYJU, according to its president, Ranjeet Kumar Agarwal.

“Our investigation has found gross negligence on accounting practices by individual auditors of BYJUs and accordingly we have recommended to the financial reporting review board (FRRB) to take punitive actions on auditors concerned,” Agarwal said in a statement.

This comes only days after the chartered accountants‘ apex body’s branch, FRRB, announced that it will shortly submit a full report on BYJU’s financial concerns.

To be sure, the FRRB evaluates company financials and auditor reports in an effort to improve financial reporting efficiencies.

In 2022, the board began reviewing BYJUs for financial years 2020 and 2021. It is worth noting here that after its auditor resigned in June of last year, the startup hired BDO (MSKA & Associates) as its new statutory auditor.

While the FRRB has yet to disclose its report on BYJU’s audits, the ICAI is also planning a financial inspection of another troubled company, Paytm.

Confirming this, Agarwal stated that the CA regulatory body is currently looking into “the role of the auditors of the payments major Paytm now.”

This comes as Paytm’s payments bank is under investigation by the Reserve Bank of India (RBI) for breaches in due diligence.

Paytm Payments Bank (PPBL) will no longer accept deposits, credit transactions, or top-ups in client accounts after tomorrow due to chronic noncompliances and ongoing supervisory concerns. Furthermore, PPBL is prohibited from providing financial services, including UPI and fund transfers, after this date.

The measure was taken at the request of the central bank, which received 501.86 complaints per branch against the bank between April 1, 2022, and March 31, 2023, totalling 3,513, according to its most recent annual report.