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

Which of the following is correct about services that an auditor may provide to the company apart from the audit, as per Section 144?

An auditor may provide other services only if the Board of Directors or the audit committee, as the case may be, approves them and they are not among the prohibited services listed in Section 144, such as internal audit or management services.

  1. AAny non-audit service may be provided freely, as only listed services are restricted
  2. BOnly services approved by the Board of Directors or the audit committee, as the case may be, and not falling in the prohibited listCorrect
  3. COnly services approved by the members in general meeting
  4. DOnly services approved by the Central Government

Explanation

Section 144 permits other services only if approved by the Board or audit committee, as the case may be, and they must not include the listed prohibited services. Approval by members or the Central Government is not required by the text. Option 1 ignores the approval requirement.

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