A company auditor who is appointed under section 139 of companies act 2013 shall provide only those services that are not disallowed under section 144 of companies act 2013.
Companies act 2013 has introduced a new concept by including certain non-audit services to the list which a company auditor can not render to the company in which he or the CA firm is appointed as auditor.
As per section 144 of companies act 2013, a company auditor shall provide those services that are approved by the board of directors or the audit committee of the company. However, this section 144 also prohibits certain non-audit services which a company auditor can not perform after being appointed as company auditor.
Here are the non-audit services which a company auditor can not perform;
- accounting and book keeping services
- internal audit
- design and implementation of any financial information system
- actuarial services
- investment advisory services
- investment banking services
- rendering of outsourced financial services
- management services and
- any other kind of services as may be prescribed
Section 144 also prohibits a company auditor from offering above non-audit services whether directly or indirectly to the company or its holding company or subsidiary company.
As per the explanation to section 144 of companies act 2013, the term directly or indirectly shall include rendering of services by the auditor;
- in case of auditor being an individual, either himself or through his relative or any other person connected or associated with such individual or through any other entity, whatsoever, in which such individual has significant influence or control, or whose name or trade mark or brand is used by such individual;
- in case of auditor being a firm, either himself or through any of its partners or through its parent, subsidiary or associate entity or through any other entity, whatsoever, in which the firm or any partner of the firm has significant influence or control, or whose name or trade mark or brand is used by the firm or any of its partners
In the last No.9 “any other kind of services as may be prescribed” category, government has also kept the option open to add additional services in future to check any conflict of interest which leads to a potential fraud. If any other services are prescribed then that will also be included in this section and company auditor can not render such services.
If any auditor or audit firm who or which has been performing any of the above non audit services as mentioned above on or before commencement of this act then provisions of this section shall be complied before closure of the first financial year after the date of such commencement.