VerSe Innovation gets clean audit from Deloitte for FY24; check details

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VerSe Innovation Pvt Ltd, the parent company of popular content platform Dailyhunt and short-video app Josh, has received a clean audit opinion from long-time auditor Deloitte for the financial year 2023-24 (FY24), despite the identification of significant internal control deficiencies.

VerSe Innovation on Tuesday announced that Deloitte had provided a "true and fair" view of the company's consolidated financial statements for FY24. The audit firm affirmed that the company's financials are presented accurately and without material misstatements.

"Deloitte, VerSe Innovation's long-term auditor, has issued a true and fair view of our FY24 consolidated financial statements, providing a clean audit opinion on our financials," a VerSe spokesperson said.

However, filings with the Ministry of Corporate Affairs revealed that Deloitte flagged numerous shortcomings in the company's internal financial controls. These included lapses in supplier evaluation, approval of purchase orders and invoices, as well as the company's payment processes. According to Deloitte, these issues could potentially result in misstatements in trade payables and expense accounts, and in extreme cases, could enable preferential payments or misappropriation of funds.

Deloitte had also raised red flags regarding VerSe Innovation's management of virtual assets. The auditor cited a lack of adequate oversight in areas such as customer verification, pricing models, segregation of duties, and user access to digital asset transfers. These deficiencies, the report warned, may lead to errors or misstatements in the company's revenue and cost calculations associated with digital assets.

The audit further highlighted gaps in VerSe's advertising revenue recognition processes, particularly around customer-approved release orders, which were found to be ineffective. This, according to Deloitte, creates a risk of misstated revenue figures and inflated trade receivables.

Additionally, deficiencies were found in VerSe's IT general controls, including weaknesses in user access management, program development, change tracking, and a lack of audit logging. These IT lapses add to the risk of unauthorized transactions or undetected system changes.

One particularly serious concern flagged in the audit was an unverified claim of Rs 35 crore from a supplier related to "unexplained invoices." Deloitte noted that VerSe had not acknowledged this as part of its trade payables, raising further questions about financial oversight.

Despite the litany of issues raised, VerSe maintained that the auditor's core opinion remains positive. "While Deloitte identified certain internal control weaknesses, their report has clearly confirmed that these do not impact their opinion on the Consolidated Financial Statements," the company said.