Byju's newly appointed auditor, MSKA & Associates, the audit arm of accounting major BDO Global, has taken up an assignment that has baffled many.Deloitte, Byju's previous statutory auditor, resigned on June 22, citing its inability to conduct the audit due to a lack of communication over modifications and financials. MSKA's appointment was announced the same day.Byju's has had a turbulent past year, with valuation cuts by prominent investors, searches by the Enforcement Directorate, and a legal battle with lenders over repayment terms. Parent Think & Learn Pvt. has not released its financials for FY22, missing the September 2022 deadline.The matter is "very serious" because one isn't privy to what kind of information was not provided to Deloitte and what qualifications were not acted upon, Amarjit Chopra, former chairman at the Institute of Chartered Accountants of India, told BQ Prime.There could have been two reasons behind Deloitte's resignation, according to Chopra. "Either some very critical information was not provided to them or the management was not agreeing to some modifications for FY22, and that forced Deloitte to resign. But I believe resignation is never a solution."It is for the Ministry of Corporate Affairs to appoint an agency to look into the grounds on which Deloitte resigned, he said.Santhanakrishnan S., managing partner at accounting firm PKF Sridhar & Santhanam, agreed: "A resignation is risky. It puts investors into total confusion."To assuage investors, Byju's has said that it will file its fiscal 2022 earnings by September and its FY23 earnings by December.Chopra said that when Deloitte resigned, saying nothing had happened in this particular year, the new auditor would have to issue a disclaimer.A disclaimer is a statement indicating that the auditor was unable to obtain sufficient evidence to form an opinion on the financial statements."There's nothing else that can be done. The same thing could have been done by Deloitte," Chopra said. "It is a very difficult question to answer, how will BDO obtain the information that Deloitte couldn't?"BDO India declined to comment on BQ Prime's emailed queries.Santhanakrishnan said it's important for MSKA to start the audit all over again. "They're supposed to communicate with the previous auditor. But now, there should be an audit of the reason for the resignation first. They have some responsibility to the public to tell why you resigned."Both Chopra and Santhanakrishnan said the National Financial Reporting Authority will also have a role to play here."It's a sample case for them," Santhanakrishnan said. "It has both roads, to look at the accountants as well as the auditors, in this case. It need not even wait for MCA's notice; it can do it on its own."Byju's Troubles Mount As Auditor Deloitte Quits Citing 'Long-Delayed' ResultsAccording to Jitin Aggarwal, director of audit and assurance at SW India, given the short period that BDO has to audit these earnings, the firm needs to obtain an understanding of the modifications made by Deloitte in their report for FY21."Considering this is the first-year audit of Byju's by BDO, they may have limited knowledge about the client's business operation practices, accounting policies, internal controls, and financial reporting practices," he said.Aggarwal said delayed financial reporting can be a significant concern for auditors. "If a company consistently delays its financial reporting, it may indicate underlying issues, such as ineffective internal controls, financial mismanagement, or potential irregularities."In FY21, Byju's losses widened to Rs 4,588 crore from Rs 231.7 crore in the previous year. Revenue fell 3.2% to Rs 2,430 crore.In its notes to the accounts, the company had changed the revenue recognition retrospectively. The slight fall is also attributed to the auditor disallowing revenue recognition on an upfront basis. This is one example of what BDO will have to reconcile.BDO's first job will be to communicate with Deloitte, said Narayanaswamy R., a retired professor of finance and accounting at IIM-Bangalore."It's not going to be easy for BDO. It doesn't have the kind of stature that the Big 4 have," he said, referring to Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young, and KPMG.BDO's appointment seems like "simply capturing market share at the risk of reputation", he said. "BDO doesn't have any moral or legal obligations. Why would they step into a troubled firm?"