Auditors from Deloitte Haskins & Sells have raised significant concerns regarding VerSe Innovation’s internal financial controls for the fiscal year 2024. The alarming revelations surface shortly after Sandip Basu, the group’s chief financial officer, stepped down due to health issues. Currently, VerSe Innovation—known for its flagship platforms Dailyhunt and Josh—is on the lookout for a new CFO.
Key Findings on Internal Financial Controls
Deloitte’s audit highlighted several material weaknesses within VerSe’s financial processes. The firm pointed out that there were inadequate internal controls in critical areas such as:
- Supplier evaluations
- Purchase order approvals
- Invoice processing
- Verification of service receipts
These deficiencies pose a risk of significant misstatements in trade payables and expenses, raising alarms about potential preferential payments and asset misappropriation.
Concerns Over Expense and Revenue Management
Further scrutiny revealed issues with VerSe’s approach to reviewing expense provisions, which could lead to inaccuracies in both operating expenses and trade payables. Additionally, the auditors noted vulnerabilities in managing virtual assets, including:
- Ineffective customer acceptance processes
- Poor pricing controls
- Lack of duty segregation
- Insufficient access management
These weaknesses could increase the likelihood of revenue misstatements and asset misappropriation.
Deloitte also expressed concerns regarding revenue recognition controls, particularly in validating advertisement campaigns with clients. This could result in errors in reported advertising revenues and trade receivables. Moreover, the audit uncovered deficiencies in general IT controls, including:
- User access issues
- Program development challenges
- Change management flaws
- Inadequate audit logs and segregation of duties
Financial Performance Snapshot
On the financial front, VerSe reported a decrease in operating revenue, dropping to ₹1,029 crore in FY24 from ₹1,104 crore in the previous year. However, there is a silver lining as the net loss reduced significantly to ₹889 crore, down from ₹1,909.7 crore, thanks to a concerted effort to cut expenses.
Conclusion
As VerSe Innovation navigates these challenges, the company’s management is tasked with addressing the flagged weaknesses to restore confidence among stakeholders and ensure robust financial governance. The search for a new CFO comes at a critical time, highlighting the need for strong leadership to guide the company through these turbulent waters.
By addressing these internal control issues, VerSe can aim for a more stable financial future, ultimately benefiting both its operations and stakeholders alike.
