Auditor not to Render Certain Services

Article on provisions restricted Auditors of the Company to render Certain Services


Section 144 of the Companies Act, 2013 - Auditor not to Render Certain Services

Service of Auditors shall not include:-

(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: (No such services are prescribed yet)


Explanation.—For the purposes of this sub-section, 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 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

Services to be considered as Management Services

The non-audit services are those services which are primarily the responsibility of the management itself and has no threaded connection with audit and assurance services.


Management Consultancy Services:

In the opinion of the Council of ICAI, the “other services” that may be rendered by a chartered accountant as described in Section 2(2)(iv) will include the entire range of management consultancy services, as described below:

(i) financial management planning and financial policy determination;

(ii) capital structure planning;

(iii) working capital management;

(iv) preparation of project reports and feasibility studies;

(v) preparing cash budgets and other budgets, cash flow statements, profitability statements etc.;

(vi) inventory management, price fixation and other management decision making;

(vii) personnel recruitment and selection;

(viii) management and operational audit;

(ix) advise regarding mergers and amalgamations;

(x) systems analysis and computer related services;

(xi) acting as advisor or consultant to an issue, including matters such as:

  • drafting of prospectus and memorandum containing salient features of prospectus
  • drafting and filing of listing agreement and completing formalities with Stock Exchanges, ROC and SEBI;
  • preparation of publicity budget;
  • advice regarding selection of various agencies connected with issue such as Registrars to Issue, printers and advertising agencies;
  • advice on post issue activities;

(xii) investment counselling in respect of securities as defined in SCRA, 1956 and other financial instruments;

(xiii) acting as Registrar to an Issue and for transfer of shares/other securities;

(xiv) quality audit, environment audit, energy audit;

(xv) acting as Recovery Consultant in the Banking sector;

(xvi) insurance financial advisory services under IRDA, 1999, including insurance brokerage.

It is to be noted that the activities of brokering, underwriting and portfolio management are not permitted.



  1. Permitted Services or services not covered under 144(h) of the Companies Act, 2013

  • Filing VAT/ Service Tax Returns,
  • Filing IT/ TDS Returns,
  • Filing ROC forms which are not to be certified by any professional,
  • Issuing opinions on Tax, FEMA or other issues etc.

are not fall under the definition of Section 144(h) of the Act.


  1. Can a chartered accountant be a Director of a Company

Yes, a chartered accountant can be a director of a company (Not being managing director or a whole time director), unless he or any of his partners is interested in such company as an auditor.


  1. Penalty for contravention of Section 144 of Companies Act, 2013

Fine on Auditor – Rs. 25,000/-  to Rs. 5, 00, 000/- or 4 times of remuneration whichever is less.


If an auditor has contravened such provisions knowingly or wilfully with the intention to deceive the company or its shareholders or creditors or tax authorities – Imprisonment which may extend to 1 year and Fine of Rs. 25,000/- to Rs. 25,00,000/- or eight times of remuneration whichever is less.

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