Builder.ai, one of the UK’s most funded high-tech startups, relied on auditors with long-standing links to its founders to sign off their accounts.
A partner at accounting firm PKF Little John has registered a UK account for an artificial intelligence startup despite previously serving as director of another company founded by Sachin Dev Duggal, the founder of Builder.ai, according to reviews of hundreds of filings analyzed by Financial Times.
Duggal resigned last month as CEO of Builder.ai and last week as director of a UK entity, but he remains on the group’s board of directors and holds the title of “Chief Wizard.” Builder.ai continues to look for a Chief Financial Officer after his previous financial officer, who resigned in July 2023.
The London-based group said it used artificial intelligence to develop the app and received around $450 million from top investors such as Microsoft, SoftBank, Catar Investment Authority and Insight Partners.
FT’s analysis shows that two overseas subsidiaries of Builder employ two overseas subsidiaries.
Corporate governance experts said the findings raise questions such as whether the person signing the company’s UK account could have had a conflict of interest and why multiple auditors of overseas entities quickly resigned.
Other companies face scrutiny for using lesser known companies to audit books from major subsidiaries. The Adani Group is one of those targeted by short sellers over the use of small audit companies in India.
Builder.ai said, “The choice of auditors for Builder.ai’s subsidiary has evolved in line with segmentation of our operational scale and revenues and local regulations.”
The company added, “currently engages with Big 4 internal auditors and Big 4 statutory group auditors for consolidated monitoring.”
He searched “seriously” for new CFOs, adding that the new finance chief joined the company in September, bringing “strategic change” to the CEO after long-term discussions to meet the company’s “evolution and growth.”
According to the application, Paul Goldwin, a partner at accounting firm Linn Maggs Goldwin in 2010, became director of SMX Corporation, a British company founded by Duggal 10 years ago.
Goldwin was responsible for signing SMX’s unaudited financial statements for several years. This claims recently it operates on different business lines such as computer hardware, investment consultants and construction resale.
In January 2017, Goldwyn had moved to medium-term accounting company PKF Little John and resigned as director of SMX. Later that year, the London Entity of Duggal Incorporated Builder.ai records its registered office address as headquarters for PKF Little John at Canary Wharf.
One of the Indian subsidiary of Builder.ai, previously had a letter of SMX in the name of SMX, was founded in 2003 (13 years before Builder.ai itself) as SMX Iexplore Software Services India.
Despite the obvious link between SMX and Builder.ai, Goldwin has signed off the Builder.AI UK business account every year since 2021, including an account filed last August.
Goldwyn declined to comment.
Recommended
PKF Little John said “we cannot comment on the work of a particular client,” but maintained “independence and integrity in full compliance with relevant rules and regulations.”
John Webb, a corporate governance consultant who previously headed internal audits at JPMorgan Cazenove, asked whether either the auditing company or the partners working in any way in the Builder.ai audit would have any conflict of interest through past or present connections with Builder.ai.
“We can’t make conclusions or opinions until a person has an answer,” he added.
PKF Little John said that SMX and Builder.ai are “two separate companies and there is no business relationship between them,” adding that before starting as an auditor for Builder.ai, the company “examined the situation and concluded that their previous role in another company has no reason to compromise our independence.”
Builder.ai said it had “no relation” with SMX Corporation.
Builder.ai’s major Indian subsidiary has experienced a series of legal auditor resignations. In 2017, Delhi-based GMB & Associates resigned. That alternative, which looks like the only trader, lasted for a year.
The next auditor, VSC & Company, was replaced by Navratn & Co in 2020.
Similarly, the first auditor of the obvious only trader, a Singapore subsidiary of Builder.ai, was replaced 11 months later by Oakfield & Associates. Oakfield also conducted an unqualified audit of three Arrows Capitals in 2021, before crypto investment companies collapsed in a high-profile scandal.
Paul Burns, a finance professor at Nottingham Business School, said the resignation raised “concerns” and “usually large companies hire large companies of auditors, especially internationally.”
Builder.ai said its board agreed to the appointment of an auditor when “their services were consistent with the relative size of these subsidiaries.” It added that some small sizes of Builder.AI mean “may not be eligible for a Big 4 audit.”
VSC & Company could not be reached for comment. Other Indian or Singapore accounting firms or traders did not respond or declined to comment.
