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CMA Intermediate · Business Laws and Ethics · Operational and Financial Control

Section 144 of the Companies Act, 2013 prohibits certain services by the auditor 'whether rendered directly or indirectly' to the company. The prohibition also covers services to which other entities of the company?

The prohibition on listed non-audit services extends beyond the company itself to its holding company and its subsidiary company. Services rendered directly or indirectly to any of them are barred, so the auditor cannot sidestep the rule by serving the group entities.

  1. AIts holding company or subsidiary companyCorrect
  2. BOnly its associate companies
  3. COnly its competitors in the same industry
  4. DOnly companies in which the auditor holds shares

Explanation

The text bars the listed services whether rendered directly or indirectly to the company, or its holding company or subsidiary company. Associate companies are not named in this provision, so the second option is wrong. Competitors and share-holding links are not part of the rule.

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