When Finance Takes a Back Seat - The BJYU's episode

I have seen businesses wanting to grow at any cost ignoring any subsequent fallouts. Small businesses have collapsed because of simple issues like inventory control and theft. Larger businesses have been lost in thin air due to financial impropriety and at times regulatory issues. The attitude of “What business does is none of the business of Finance” is one of the main reasons for this.

 

The role of a CFO / Financial Controller is critical to the financial management and control of an organization. They are responsible for overseeing the accounting and financial reporting functions within a company. Ideally, they must and should question the operating practices which can have a negative impact on the business in the long run.

 

However, in most cases the financial controllers are nothing more than puppets who nod to every decision a business takes. After all, if there is no business, there is no money and hence there would be no role left for a finance controller. In many cases business decisions are taken first and then, the finance team is left to do the firefighting.

 

Auditors (both internal and statutory) tend to ignore critical issues or are forced to ignore them by the management. There is an inherent conflict of interest since management would pay the auditors and if you question the management, you are bound to be fired. So, it is always a quid pro quo relationship.

 

Of late, BYJU’s has been in the news for multiple wrong reasons. Imagine a company which is currently worth about Rs. 70,000 crores but has not yet finalized the financials of FY 2021-22 – Yes you read it right. We are not even talking about the financials of 2022-23 which most of the listed entities have already filed with the exchanges. Earlier they had issues with consolidation, then revenue recognition.

 

The chronology of events does not look good for BYJU’s. A loan default followed by blacklisting of lender (not by lender  ), then the news of key directors resigning and then the auditor’s resignation. On top of it, the valuations have been marked down by more than 50%. We must wait and watch the fate of the darling startup of Indian ecosystem.