Chapter X - Audit and Auditors
Section 144
Section 144: auditor not to render certain services
A statutory auditor may provide only other services approved by the Board or audit committee, and never the services listed in section 144, directly or indirectly, to the company or its holding or subsidiary company.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
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: Provided that an auditor or audit firm who or which has been performing any non-audit services on or before the commencement of this Act shall comply with the provisions of this section before the closure of the first financial year after the date of such commencement. Explanation.—For the purposes of this sub-section, the term “directly or indirectly” shall include rendering of services by the auditor,— (i) 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; (ii) in case of auditor being a firm, either itself 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.
Introduction
Section 144 protects auditor independence by prohibiting specified non-audit services. The prohibition covers services given through relatives, connected persons, associated entities and brand-sharing entities, as set out in the Explanation.
Key takeaways
Approval for any other service
Any other service needs approval from the Board of Directors or the audit committee, as applicable.
Prohibited list
Accounting and book keeping, internal audit, design and implementation of financial information systems, actuarial, investment advisory, investment banking, outsourced financial services, management services, and any other prescribed services.
Indirect services
Services through relatives, associates, network entities or entities using the auditor’s name, trade mark or brand count as indirect services.
The prohibited services
The auditor may not provide, directly or indirectly, to the company or its holding company or subsidiary company: (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) outsourced financial services; (h) management services; or (i) any other services prescribed by rules.
Directly or indirectly
For an individual auditor, indirect services include services given through a relative, any connected or associated person, or any entity in which the individual has significant influence or control, or whose name, trade mark or brand the individual uses. For an audit firm, they include services given through partners, a parent, subsidiary or associate entity, or any entity in which the firm or a partner has significant influence or control, or whose name, trade mark or brand the firm or a partner uses.
Approval and transition
Any permitted other service needs approval from the Board of Directors or the audit committee, as the case may be. The proviso gave auditors who were providing non-audit services when the Act commenced until the close of the first financial year after commencement to comply. Penalties for contravention are in section 147.
Practical preparation
Map the auditor’s network entities and related persons. Screen every proposed engagement for the company, its holding company and its subsidiaries against clauses (a) to (i). Check the current rules for any additional prescribed services. Get Board or audit committee approval for permitted services and record it.
Practical checklist
Do
- Keep a group-wide register of services provided by the auditor and its network.
- Have permitted services approved before work begins.
Avoid
- Do not engage an entity using the auditor’s brand for a prohibited service.
- Do not forget holding and subsidiary companies when screening.
Illustrative example
Hypothetical: bookkeeping by an affiliated entity
A company proposes to engage a firm that shares the auditor’s brand for monthly bookkeeping.
Screen
Bookkeeping is prohibited under clause (a).
Indirect test
The brand link means the service would be provided indirectly under the Explanation.
Decide
Engage an independent provider instead.
Outcome
- The company avoids a section 144 contravention and the penalties in section 147.
Glossary
- Non-audit service
- Any service other than the statutory audit. Section 144 prohibits some outright and requires approval for the rest.
- Significant influence or control
- The link that brings another entity’s services within “indirectly” under the Explanation.
Frequently asked questions
Can the statutory auditor do tax work?
Section 144 does not list tax services. Any service not prohibited still needs Board or audit committee approval, and must not fall under clause (i) prescribed services or any other listed category.
Does the ban extend to a subsidiary?
Yes. The prohibited services cannot be provided directly or indirectly to the company, its holding company or its subsidiary company.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026