Whinge and Grovel is a small firm of Chartered Accountants, which employs approximately fifty professional staff and provides a range of management consultancy services as well as traditional audit and accounting work. The firm has recently been appointed as the auditors of Bigg Bisness PLC, a major quoted company. This has been hailed as something of a coup for such a small firm and the partner in charge of the firm has issued a press release claiming that this prestigious new appointment is likely to be followed by others.

The audit was obtained by a tendering process. The firm has committed itself to conducting the audit for a fee which is 20 per cent lower than that paid to the outgoing firm for the previous year’s audit. The engagement letter restricts fee increases to a maximum of 5 per cent for each of the next two years.

Bigg Bisness has appointed the firm to provide tax advice and to negotiate the final amount of corporation tax payable. The tax partner has given the board of Bigg Bisness an informal undertaking that the tax liability will be at least 30 per cent lower than that of the previous year.

Whinge and Grovel also gave a great deal of assistance during the replacement of the company’s computer system, which took place during the first two months of the financial year. The firm provided a systems analyst who designed the detailed systems specifications for the software house which wrote the programs for the accounting function. One of the firm’s managers has also been seconded to supervise the operation of the new system until a permanent manager with the appropriate qualifications and experience can be found. Discuss the ways in which Whinge and Grovel has compromised its independence.