Mint Explainer: What is behind ICAI's review of Byju's financial statements?

livemint.com:

edtech business Byju's. Mint takes a look at what this entails and what it means for the company and the auditor. ICAI takes up financial statements of companies including the auditor’s report for a review either on its own accord or on a reference from a sectoral regulator.

The review involves multiple stages. The financial statements are first examined by an independent reviewer and then by a panel of experts before ICAI’s Financial Reporting Review Board (FRRB) takes a look at the documents. Where material violations by the auditor are detected, the matter is referred to ICAI’s disciplinary committee for initiating investigation and action against the auditor.

If the auditor has flagged any irregularity in the company, that forms the basis for other regulators to take action under their respective laws. If the non-compliance of the auditor is not material and does not affect the true and fair view of the financial statements, then the auditor is issued an advisory. All commercial, industrial and business reporting entities, the net worth of which exceed ₹250 crore in the immediately preceding accounting year are within the purview of FRRB.

Byju's had reported a net worth of ₹8,255 crore in the regulatory filings for FY21. While regulators like ICAI and National Financial Reporting Authority (NFRA) follow the set parameters for selection of cases for review, any other cases based on references from government agencies in public interest may also get covered. Also, entities with equity or debt securities listed or about to get listed on any stock exchange in India or abroad, banks, co-operative banks, financial institutions and entities carrying on insurance business are within the purview of FRRB.