Sparkies has undergone a period of substantial growth following its establishment five years ago by two electricians who pooled their redundancy pay. Because of a lack of accounting expertise within the company it has traditionally looked to its auditors, Sudden Haddock & Co, for accounting services in the preparation of annual financial statements as well as for the statutory audit function.

Sudden Haddock & Co have also provided advice in connection with the company’s accounting and internal control systems. Sudden Haddock & Co is a two partner firm of certified accountants and registered auditors whose clients are mainly sole traders, partnerships and small limited companies. Although Sparkies was originally atypical small company client, its growth over the last five years has meant that it now accounts for approximately 20% of Sudden Haddock & Co’s gross fee income and the company has indicated that it may wish to issue shares on the stock market in the near future.

Required:
Discuss the extent to which it is acceptable and desirable that Sudden Haddock & Co have in the past provided the three services of statutory audit, advice in connection with systems, and accountancy services in the preparation of annual financial statements to Sparkies.