## Services Not to Be Rendered by Auditor [Section 144]

An auditor (or audit firm) cannot provide the following services to the company being audited, or to its holding company or subsidiary company — whether directly or indirectly:

Category	Examples / Description
Accounting and book-keeping services	Maintaining books of account
Internal audit	Performing the internal audit function
Design and implementation of financial information systems	Setting up accounting/ERP systems
Actuarial services	Actuarial valuations
Investment advisory services	Advising on investments
Investment banking services	M&A advisory, fund-raising
Rendering of outsourced financial services	Outsourced finance function
Management services	General management consulting
Any other kind of services as may be prescribed	As notified by the Government

### Why This Matters

If an auditor renders any of these services, it constitutes disqualification under Section 141(3)(i), requiring immediate vacation of the office of auditor.

### Key Principle

The prohibition is designed to preserve auditor independence — an auditor cannot audit records they themselves prepared or systems they themselves designed.

Worked example

### Example 1

Example: ABC & Co. is the statutory auditor of XYZ Ltd. ABC & Co. is also engaged to design and implement XYZ Ltd.'s new ERP financial module. Is this permissible?

Analysis: Design and implementation of financial information systems is explicitly prohibited under Section 144. ABC & Co. must refuse this engagement or resign as statutory auditor. Continuing both roles triggers disqualification under Section 141(3)(i).

### Example 2

Example: The statutory auditor is asked to provide investment advisory services to the holding company of the audit client. Permissible?

Analysis: Section 144 extends to the holding company and subsidiary company as well. This is prohibited.

⚠️ Common exam mistakes

Students often think Section 144 applies only to the audited company itself — it extends to holding and subsidiary companies too.
Treating Section 144 violations as merely a professional ethics issue; they also create statutory disqualification under Section 141(3)(i).
Forgetting that 'indirect' rendering of services is also prohibited — the auditor cannot route these services through a related entity.

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

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): (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; and (ix) any other kind of services as may be prescribed.

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