Critics of the auditing profession have argued vehemently for a number of years that advisory services (one example of a non-assurance service) such as those discussed in this question taint the appearance (and possibly the reality) of independence (see APES 110.290.6 - 290.12 (pre 2018) or APES 110.400 (post 2018)). These services may appear to the public to give the audit firm a financial interest in the success of the company. This argument holds that the firm will now want the client to succeed as proof of the quality of the advice that was given. In addition, the audit team may be less judicious in investigating these systems since they are aware that members of their own firm designed and installed them. The reading by Wyatt (2004) is commended on this point – it offers an excellent first hand insider perspective from collapsed international public accounting firm Arthur Andersen.
Audit firms counter by stating that adequate safeguards have been put into place to ensure continued independence. For example, advisory services are frequently rendered by a separate division of the firm so that no proximity exists between this function and the audit staff. In addition, firms are not allowed to give many types of advice that might jeopardize their independence. Finally, audit firms must make certain that their services are limited to making recommendations, not carrying out management decisions. The firm cannot make decisions for the client. The list of Contents immediately preceding APES 110, section 290.1 (pre 2018) or section 400 (post 2018) and your text (all of Section 2.2) provide a very good overview of the range of matters to be considered.
The US Sarbanes-Oxley Act specifically prescribes various activities that have traditionally been part of the CA/CPA’s repertoire. Design of accounting systems is prohibited, although helping a client with selection and implementation of off-the-shelf packages would be acceptable. So, in this case, it depends on what the client means by “developing.” In the event that Lakeside goes forward with its public offering (*) Abernethy and Chapman will need to decide whether to remain independent so they can continue as Lakeside’s auditor, or sacrifice independence to do systems consulting. In the US at least, Sarbanes-Oxley prevents trying to do both.
(*) Be aware that these constraints are specifically for companies that are listed in the US (or related thereto). However, some of the restrictions you will also find in our Code of Ethics for Professional Accountants and even Corporations Act independence provisions if you go looking. If in doubt – don’t do it! Even Arthur Andersen recognised this, but ultimately chose to ignore their own advice L – see the reading by Thomas (1993).