Audit firm Deloitte has flagged several critical lapses in the internal financial controls of VerSe Innovation, the parent company of content platform Dailyhunt and short-video app Josh, according to recent filings with the Ministry of Corporate Affairs. The audit report comes just days after VerSe’s Chief Financial Officer, Sandip Basu, reportedly resigned.
In its report, Deloitte highlighted shortcomings across multiple areas, including the selection and evaluation of suppliers, approval of purchase orders and invoices, and payment processes. The auditor warned that these deficiencies could lead to “material misstatements” in trade payables, expense accounts, and even potential cases of preferential payments or misappropriation.
Deloitte also raised concerns over VerSe’s management of virtual assets, citing inadequate oversight in customer acceptance, pricing, segregation of duties, and user access to digital asset transfers. These gaps, the report noted, could result in misstatements in the company’s revenue and costs associated with virtual assets.
Despite these issues, Deloitte maintained a “true and fair” opinion on VerSe’s standalone financial statements for FY24, stating that the control lapses did not affect the overall audit outcome.
Further, the audit identified weaknesses in VerSe’s advertisement revenue recognition practices, pointing out that internal controls to ensure customer-approved release orders were not functioning effectively. This, Deloitte said, posed a risk of misstated revenues and inflated trade receivables.
Deloitte also flagged deficiencies in VerSe’s IT general controls, particularly concerning user access, program development, change management, and the lack of audit logs. Significantly, the auditor pointed to an unsubstantiated claim of ₹35 crore arising from “unexplained invoices” submitted by a supplier, which the company has not yet acknowledged as trade payables.
Responding to Deloitte’s findings, a VerSe Innovation spokesperson said, “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. 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 spokesperson added that VerSe is committed to strengthening its internal processes, introducing frameworks for supplier management, tightening virtual asset controls through dashboards and access segregation, and improving revenue recognition mechanisms.
According to VerSe’s updated financial disclosures, the company’s revenue from operations fell to ₹1,029 crore in FY24 from ₹1,104 crore the previous year. Its net loss narrowed to ₹889 crore in FY24 compared to ₹1,909.7 crore in FY23. However, VerSe had previously reported a higher operating revenue of ₹1,261 crore for FY24 and an EBITDA loss of ₹710 crore.
Founded with ambitions to lead India’s digital content space, VerSe has raised over $2 billion to date. It secured $805 million in April 2022 from investors including the Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan Board, valuing the company at around $5 billion. VerSe had been eyeing an IPO this year.