ICAI to Review of BYJU’s FY21 Financial Statement: Karti P Chidambaram

A letter has been issued to ICAI President CA Debashis Mitra by Karti P Chidambaram, Member of Parliament to Review Financial Statement of BYJU’s for the FY21.

BYJU’s an Indian educational technology company, has released its FY21 results after an 18-month delay, nearly missing four deadlines. The Financial Reporting Review Board (FRRB) under the ICAI has the power to review general purpose financial statements of enterprises and auditor’s report thereon relating to which serious accounting irregularities have been highlighted by media reports. You have been quoted in the media saying 1ha1 “ICAI is not looking into BYJU’s accounts but future review can’t be ruled out.” I would like 10 bring to your attention a number of red flags in BYJU’s financials for FY 2021 :

1. Analysing how BYJU’s earns its money and where it spends it is puzzling. Nearly 81 percent of its operating revenue for FY 2021 constitutes of ‘sale of edutech products’. This includes sale of tablets, SD cards, and laptops. For an EdTech company, is it not blatant misrepresentation of facts to classify hardware as edutech?

2. On the expenses front, 60 per cent of the costs related to employees have been recognised as capital expenses rather than operational costs. ff these costs were counted as a direct expense instead of a capital expense, BYJU’s total loss for FY 2021 would have gone over Rs 5.000 crore. Such irregular accounting practices fail to give a clear picture of BYJU’s income, expenses, and losses.

3. Previously, BYJU’s was recognising revenues from ‘streaming services’ upfront and in full on the commencement of a contract. It is a standard accounting practice that subscription revenue can’t be recognised upfront and has to be recognised over the period of delivery of the service. It warrants opening up of BYJU’s previous financial statements as well.

BYJUs has laid off nearly 2,500 or its employees, according to media reports. In light of the aforementioned issues, it is clear that this company is not in a sound State of financial health. In the interest of the consumers and the company’s employees, I urge ICAI to review BYJU’s financial statements.