Congress MP Karti Chidambaram Seeks ICAI Review Of BYJU’S Financial Statements

Congress MP Karti Chidambaram has written to The Institute of Chartered Accountants of India (ICAI) for a review of edtech giant BYJU’S financial statements. 

After nearly 18 months of delay, the edtech company released its financial statements for FY21 last month. It reported a consolidated loss of INR 4,588.7 Cr during the year, as compared to INR 231.6 Cr in FY20. 

The Financial Reporting Review Board (FRRB), under the umbrella of ICAI, has the power to review general purpose of financial statements and auditor’s reports, Chidambaram said in his letter.

BYJU’S revenue from operations stood at INR 2,280 Cr during the year, a slight increase from INR 2,188.9 Cr in FY20. Chidambaram mentioned in his letter that nearly 81% of BYJU’S operating revenue was from ‘sale of edutech products’.

While the products include sale of SD cards, tablet and laptops, the Congress MP has questioned if it’s a misrepresentation of facts to classify hardware as edtech products. 

Among other issues, Chidambaram pointed out that 60% of BYJU’S employee related costs have been mentioned as capital expenses rather than operational costs. According to him, if these costs were counted as a direct expense, the edtech giant’s total loss would have surpassed INR 5,000 Cr.

“Such irregular accounting practices fail to give a clear picture of BYJU’S income, expenses and losses,” the letter read.

Chidambaram also added that previously BYJU’S was recognising revenues from ‘streaming services upfront and in full’, on the commencement of a contract. It is a standard practice that subscription revenues’ can’t be recognised upfront, and has to be recognised over the period of the delivery of the service, he noted.

“It warrants opening up Byju’s previous financial statements as well,” Chidambaram added.

It is pertinent to note that BYJU’S said earlier this week that it would be laying off around 2,500 employees, constituting 5% of its workforce across product, content, media, and technology teams. 

It said that it took this drastic measure to reach profitability by the end of FY23, the current financial year.

Citing this Chidambaram said that the edtech giant is not in a sound state of financial health. “In the interest of the consumer and the company’s employees, I urge ICAI to review BYJU’S financial statements,” he added.