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

Under the Companies Act, 2013, an auditor appointed under the Act may provide other services to the company only if they are approved by the Board of Directors or the audit committee, as the case may be, and are NOT among the prohibited services. Which of the following is a prohibited service for such an auditor?

Internal audit is expressly prohibited for the statutory auditor under Section 144, along with accounting and book keeping, actuarial, investment advisory and similar services. Other services can be rendered only if approved by the Board or audit committee and not listed as prohibited.

  1. AInternal audit of the companyCorrect
  2. BCertification of a statement of dues for a lender, approved by the Board
  3. CRepresentation before a tax authority, approved by the audit committee
  4. DIssue of a comfort letter, approved by the Board

Explanation

Section 144 lists internal audit among the services that an auditor cannot render. The other options are not listed among the prohibited services in the text, and approval by the Board or audit committee is the requirement for permitted services.

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