# Auditor Not to Render Certain Services [Section 144]

An auditor appointed under the Companies Act, 2013 shall provide only such services to the company as are approved by the BOD or the Audit Committee, BUT shall NOT render the following services (whether directly or indirectly) to:

The company,
Its holding company, or
Its subsidiary company.

## List of Prohibited Services

S. No.	Prohibited Service
(i)	Accounting and book-keeping services
(ii)	Internal audit
(iii)	Design and implementation of any financial information system
(iv)	Actuarial services
(v)	Investment advisory services
(vi)	Investment banking services
(vii)	Rendering of outsourced financial services
(viii)	Management services
(ix)	Any other services as may be prescribed

## Key Concepts

### 'Directly or Indirectly'

Includes services rendered:

By the auditor himself,
Through a partner / parent / subsidiary / associate, or
Through any entity in which the auditor has significant influence.

### Scope of Restriction

The restriction extends to services for the auditee company AND its holding & subsidiary companies — not just the auditee.

## Memory Aid

'AAA + IIIIM' — Actuarial, Accounting/book-keeping, (Outsourced financial services), Internal audit, Investment advisory, Investment banking, (Design of) Information system, Management services.

Worked example

### Example 1

Example: Indirect rendering via partner's firm

Mr. P is appointed as statutory auditor of XYZ Ltd. through his proprietary firm. His brother runs a separate consultancy firm that XYZ Ltd. hires for internal audit services.

Analysis: If Mr. P has any direct/indirect interest or significant influence in his brother's firm such that the services are indirectly rendered by Mr. P, the appointment would be hit by Section 144.

Even a service rendered to XYZ Ltd.'s holding or subsidiary company by Mr. P (directly or indirectly) is prohibited.

Conclusion: If 'indirect' nexus is established, Mr. P would be disqualified — and a disqualification under Section 144 leads to disqualification under Section 141(3)(i).

⚠️ Common exam mistakes

Thinking the prohibition applies only to the auditee — it also covers holding and subsidiary companies.
Forgetting that 'indirectly' covers services through relatives, partners, and entities with significant influence.
Believing tax services or representation services are barred — they are not in the prohibited list (subject to ICAI code).
Assuming BOD/Audit Committee approval can override the prohibition — it cannot; the prohibited list is absolute.
Confusing internal audit (prohibited under S. 144 for statutory auditor) with the appointment requirements under S. 138.

Bare-Act text Section 144 · Companies Act, 2013 · click to expand

Section 144 — An auditor appointed under this Act shall provide to the company only such other services as are approved by the Board of Directors or the audit committee, as the case may be, but which shall not include any of the following services (whether such services are rendered directly or indirectly to the company or its holding company or subsidiary company), namely: (a) accounting and book keeping services; (b) internal audit; (c) design and implementation of any financial information system; (d) actuarial services; (e) investment advisory services; (f) investment banking services; (g) rendering of outsourced financial services; (h) management services; and (i) any other kind of services as may be prescribed.

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Services Auditor Cannot Render – Section 144

Worked example

⚠️ Common exam mistakes