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

Which of the following statements about non-audit services by a statutory auditor under Section 144 of the Companies Act, 2013 is correct?

Other services may be provided only if approved by the Board of Directors or audit committee, as the case may be, and only if they are not on the prohibited list. The bar covers direct and indirect services to the company, its holding company or subsidiary, so the other statements are wrong.

  1. AAny service is allowed once the auditor's firm has done it before the commencement of the Act
  2. BServices other than the prohibited ones may be provided only if approved by the Board of Directors or the audit committee, as the case may beCorrect
  3. CManagement services are allowed if rendered to the holding company only
  4. DThe prohibition applies only to services rendered directly to the company

Explanation

Section 144 permits only such other services as are approved by the Board or audit committee, excluding the listed ones. Management services are listed and the bar covers indirect rendering and holding or subsidiary companies. The proviso only gave time to comply with the section.

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