In the modern commercial world, auditors provide numerous other services to complement their audit work. These services include the following:

(a) Accountancy and book-keeping assistance, e.g. in the maintenance of ledgers and in the preparation of monthly and annual accounts.

(b) Consultancy services, e.g. advice on the design of information systems and organisational struc-tures, advice on the choice of computer equipment and software packages, and advice on the recruitment of new executives.

(c) Investigation work, e.g. appraisals of companies that might be taken over.

(d) Taxation work, e.g. tax planning advice and preparation of tax returns to HM Revenue and Customs for both the company and the company’s senior management.

Discuss:

(i) Whether any of these activities is unacceptable as a separate activity because it might weaken an auditor’s independence.

(ii) The advantages and disadvantages to the shareholders of the audit firm providing this range of service.