Auditors from Deloitte Haskins & Sells have flagged several material weaknesses in VerSe Innovation’s internal financial controls for FY24, according to financial data accessed via business intelligence platform Tofler. The findings emerge just weeks after group chief financial officer Sandip Basu resigned, citing health reasons. VerSe Innovation, the parent of Dailyhunt and Josh, is currently seeking his replacement.
The auditors observed that VerSe lacked robust internal controls across key financial processes, including supplier evaluation, purchase order approvals, invoice processing, and verification of service receipts. Deloitte warned that these gaps could lead to material misstatements in trade payables and expenses, as well as increase risks related to preferential payments and asset misappropriation.
Further concerns were raised around VerSe’s process for reviewing expense provisions, which could result in inaccuracies in operating expenses and trade payables. Additionally, Deloitte noted weak controls over the purchase, sale, and inventory management of virtual assets. Problems such as ineffective customer acceptance processes, poor pricing controls, lack of segregation of duties, and weak access management could expose the company to potential revenue misstatements and misappropriation of assets.
The auditors also flagged ineffective revenue recognition controls, especially concerning the confirmation of advertisement campaigns with customers. This could potentially result in inaccuracies in reported ad revenues and trade receivables. Moreover, general IT controls were found wanting, with issues related to user access, program development, change management, and inadequate audit logs and segregation of duties.
Financially, VerSe reported a decline in operating revenue to Rs 1,029 crore in FY24 from Rs 1,104 crore the previous year. However, its net loss narrowed to Rs 889 crore from Rs 1,909.7 crore, driven largely by a reduction in expenses.