ICAI will review BYJU’s financial statements for FY21: Karti P Chidambaram

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ICAI will review BYJU’s financial statements for FY21: Karti P Chidambaram

A letter was sent to ICAI President, CA Debashis Mitra, by Karti P Chidambaram, Member of Parliament, to review BYJU’s financial statements for FY21.

BYJU, an Indian educational technology company, released its FY21 results after an 18-month delay, missing almost four deadlines. The Financial Reporting Review Board (FRRB) under the ICAI has the authority to review the general purpose financial statements of companies and the auditor’s report thereon for serious accounting irregularities that have been brought to light by the media. You were quoted in the media saying 1ha1 “ICAI does not review BYJU’s accounts, but future review cannot be ruled out.” I would like to 10 draw your attention to a number of red flags in BYJU’s financial statements for fiscal year 2021:

1. Analyzing how BYJU makes its money and where it spends it is confusing. Almost 81% of its operating revenue for the 2021 financial year constitutes ‘sale of edutech products’. This includes the sale of tablets, SD cards and laptops. For an EdTech company, isn’t it a gross misrepresentation of facts to classify the material as edutech?

2. On the expenditure side, 60% of employee-related costs were accounted for in capital expenditure rather than operating costs. If these costs were accounted for as a direct expense instead of a capital expense, BYJU’s total loss for the financial year 2021 would have exceeded Rs 5,000 crore. These irregular accounting practices do not provide a clear picture of BYJU’s revenues, expenses and losses.

3. Previously, BYJU Recognized ‘Streaming Services’ Revenues Upfront and in Full at the start of a contract. It is standard accounting practice that subscription revenue cannot be accrued in advance and must be accrued over the period the service is provided. This also justifies the opening of BYJU’s previous financial statements.

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

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