Manshi Baid
SEC 144 OF THE COMPANIES ACT 2013
AUDITOR NOT TO RENDER CERTAIN SERVICES
A person who is appointed as an auditor of a company can render only such services which have been approved by the board of director or the audit committee. But these services should not include the following services:-
1. Accounting and book keeping services
2. Internal audit
3. Actuarial services
4. Investment advisory services
5. Investment banking services
6. Rendering of outsourced financial services
7. Management services
8. Design and implementation of any financial information system etc.
The auditor can no provide these services in the company in which he is appointed an as auditor as well as in its holding or subsidiary company also.
If an auditor or audit firm is doing any non-audit functions in a company then the auditor should comply with this section before the closure of first financial year.
This section provides that in addition to the auditor himself the following persons also cannot provide the non-audit functions in a company or its subsidiary or holding company in which that person is an auditor :-
1. In case of individual his relative or any other person connected with such individual as well any entity in which such individual have significant influence or control or whose trade name or brand name is used by such individual
2. In case the auditor is an audit firm , its partners ,its parent or subsidiary or associate entity , any other entity in which such firm or partners of such firm have significant influence or control or whose trade name or brand name is used by the partner or its firm.
SECTION 145 OF COMPANIES ACT 2013
AUDITOR TO SIGN AUDIT REPORTS
This section provides that person appointed as an auditor of the company is required to sign the audit report and certify the documents of the company in accordance with the provisions of section 141(2).The observations , qualifications and any adverse opinion on the financial statement or matters of the company which have any adverse effect on the functioning of the company shall be read at the AGM and should be open for inspection by any member of the company.
SECTION 146 OF THE COMPANIES ACT 2013
AUDITORS TO ATTEND GENERAL MEETING
This section provides that all the notices and other communications relating to the AGM shall be forwarded to the auditor also and the auditor shall either himself or through his representative, who is also qualified to be appointed as an auditor, attends the meeting. The auditor shall have the right to be heard at the meeting.
Very good article.
MCA may issue a clarification in the lines of phrase “Non Audit Services” used in proviso to Section 144 of the Companies Act 2013. It is indicating “Auditor” is prohibited from providing any non attest services to the “Auditee”.
Probably logic might be,
We are undertaking Audit by virtue of provisions of legislation passed by Government which makes us representative of Government and at the same time we are representing the same report to the Government on behalf of “Assessee”.
Clarification on this issue is very essential and at the earliest.