Section 144 of CA 2013 : Section 144: Auditor Not To Render Certain Services

Explanation using Example

Consider a hypothetical scenario where XYZ Limited, a publicly traded company, has appointed ABC & Co. as their statutory auditors. As per Section 144 of The Companies Act, 2013, ABC & Co. is restricted from providing certain non-audit services to XYZ Limited.

For instance, XYZ Limited is planning to update its financial information system and is considering various service providers. ABC & Co. offers services for designing and implementing financial information systems. However, due to the restrictions imposed by Section 144, XYZ Limited cannot engage ABC & Co. for this particular service, as it falls under the prohibited category of 'design and implementation of any financial information system'.

Furthermore, if the partner of ABC & Co. owns another company that specializes in investment advisory services, XYZ Limited would also be prohibited from availing those services from the partner's company, as the law extends to any entity in which the firm or its partners have significant influence or control.

This ensures that the auditor's independence is not compromised by providing non-audit services that could potentially lead to a conflict of interest.