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

Section 144 prohibits listed services whether rendered directly or indirectly. For an auditor who is a firm, 'directly or indirectly' includes services rendered through:

For an audit firm, services rendered through any of its partners, or through its parent, subsidiary or associate entity, are treated as indirect rendering. The Explanation to Section 144 also covers entities under the firm's or a partner's significant influence or control, or using their name or brand.

  1. AOnly the firm itself and not its partners
  2. BAny of its partners, or its parent, subsidiary or associate entityCorrect
  3. COnly entities in which the firm holds shares of more than 50 percent
  4. DOnly the firm's employees who are not partners

Explanation

The Explanation to Section 144 says that for a firm, services rendered by itself, through any of its partners, or through its parent, subsidiary or associate entity count. It also covers other entities in which the firm or a partner has significant influence or control or whose name, trade mark or brand is used. Limiting it to the firm alone or to majority holdings is narrower than the text.

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