MANAGEMENT
CONSULTANCY
Source: corporatefinanceinstitute.com
Source: corporatefinanceinstitute.com
WHO IS A CONSULTANT?
• Has a specialized field of interest and expertise
• Has specific knowledge derived from advanced training and/or experience
• Provide assistance to external agencies to solve problems and achieve goals
KINDS OF CONSULTANCY WORK
• Project-based: short-term to long-term projects
• In-house consultant: hired dedicated to do the consultancy work on a longer
period of time
• Technical panel consultant: invited to participate in meetings and provide inputs
STRUCTURE
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Independent contractors
Freelancers
Self-employed professionals
Work for a consulting firm
GETTING THE JOB
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You can be searched on the web (e.g. LinkedIn, Google sites, your own website)
Vast network – knowing the right people
Big affiliations
Bidding
Freelancing websites (e.g. Upwork, Freelancer)
SKILLS NEEDED
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Logical reasoning
Leadership
Communication
Ingenuity
Ability to work well with others
HOW TO SUCCEED IN CONSULTING WORK
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Getting in! (work towards a long-term project)
Testing the grounds (provide initial free consulting and later get the contract)
Making an impression and helping the client clarify what they need
Your previous experience matters!
Make sure to deliver the output
WHAT FACTORS CONTRIBUTE TO THE GROWING DEMAND FOR MANAGEMENT
CONSULTANTS?
• Increase in demand from industries to bring in specialists to manage non-core
activities when they are needed
• Continued demand for IT spending
• Increasing demand from governmental and associated organizations
COMMON ROLES (in ascending order of seniority) IN CONSULTING FIRMS
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Analysts
Consultants
Senior consultants or managers
Business development managers
Directors or Partners
DISTINGUISH BETWEEN CONSULTATION AND ENGAGEMENT
A consultation normally consists of providing advice and information during a short
time frame. This advice and/or information is provided verbally during one or more
discussions with the client. Sometimes, the advice and/or information will be
definitive when the consultant is fully aware of the situation and possesses sufficient
expertise to require more intensive study or investigation. Often, however, such
advice and/or information will be qualified by stated limitations due to lack of firsthand observation of the problem/situation or lack of familiarity with underlying
technical aspects, and so on.
An engagement consists of that form of management advisory or consulting service in
which an analytical approach and process is applied in a study or project. This
approach typically involves:
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Ascertaining the pertinent facts and circumstances
Seeking and identifying objectives
Defining the problem or opportunity for improvement
Evaluating and determining possible solutions
Presenting findings and recommendations
Implementing the solution, if appropriate
REASONS WHY MANAGEMENT CONSULTANTS ARE ENGAGED
1.
2.
3.
4.
A consultant is considered independent, objective and detached to the problems
faced by the client organization. Also because the consultant is not involved in the
internal policies of the organization, his/her suggestions tend to be accepted as
unbiased.
An experienced consultant possesses special knowledge, skills and a variety of
personal attributes that make him the most desirable party to undertake an
engagement involving his area of expertise.
The use of consultants will be probably less expensive to the company than hiring
new full-time managers or employees to provide professional advisory services.
A management consultant serves as a catalyst for change.
WHAT COULD BE THE CPA/CMA’s OBJECTIVE IN ENGAGING IN MAS?
An independent professional’s purpose in engaging in MAS is:
“to utilize the essential qualifications it has available to provide advice and technical
assistance which will enable client management to conduct its affairs more effectively.”
WHAT ARE SOME OF THE ATTRIBUTES OF A CPA/CMA THAT MAKE HIM QUALIFIED TO
RENDER MAS?
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Technical competence
Familiarity with the client’s finance and control systems and his business problems
Analytical ability and experience in problem solution
Professional independence, objectivity and integrity
MANAGEMENT REPORTING
ALEXANDRA R. SANSAN, CPA,CMA,CTT
LEARNING OBJECTIVES
• Understand a report
• Define Management Report
• Differentiate Management Report and Financial Report
• Understand the methods of Management Reporting
• Understand the types of management reporting
•
Understand the process of management reporting
• Understand the importance of management reporting
• Understand the qualities of a good management report
A report is a specific form of writing that is organized around
concisely identifying and examining issues, events, or findings that
WHAT IS A REPORT
have happened in a physical sense, such as events that have
occurred within an organization, or findings from a research
investigation.
Purpose: The purpose of a report is to provide information to people
on a specific topic.
Management reporting is a key factor in growing a
successful business, as it informs the goals,
MANAGEMENT
REPORT
decisions and strategies managers implement.
Management reporting is the collection of data
that informs managers on how to efficiently run
their department.
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Wide variety of data
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Easily understandable
LIST OF MANAGERIAL
REPORTS
• Budget Report
• AR Aging Report
• Cost Report
• Performance Report
• Variance Analysis Report
• Projected Financial Statements
• Strategic Plan
• Tactical Plan
• Business Continuity Plan
PURPOSE OF
MANAGEMENT
REPORTING
Managerial reports reflect the status and health of a business
and remove the guesswork from implementing strategies.
Management report is important in:
•Monitoring and tracking KPIs and other performance metrics
•Setting goals and milestones
•Determining the profitability of a product, service or client
•Deciding where money is best spent
•Pricing products or services accurately
•Hiring the correct type and amount of employees
•Creating cohesive communication regarding the data
collected
MANAGEMENT REPORT
VS.
FINANCIAL REPORT
•Financial reports are used for external purposes and look backward
•Managerial reports are used internally and look forward.
•Managerial reports look at both financial and operational data while
financial reports focus solely on financial data
•Financial reports provide information on the entire company while
managerial reports Focus specifically on management’s needs.
•Managerial reports are not required and managers can choose the
information they need.
•Financial reports are mandatory for publicly held companies and the
information that must be provided is based on outside regulators.
USERS OF
MANAGEMENT
REPORT
• Owners / Proprietors / Partners
• Creditors, Bankers, other lending institutions
• Potential Investors
• Management
• Government
• Regulatory agencies
• Employees
• Researchers
THE
MANAGEMENT
FUNCTIONS
THE
MANAGEMENT
REPORTING
PROCESS
IMPORTANCE OF
MANAGEMENT
REPORT
• Public relations
• Forecasting
• Control and Evaluation
• Internal and External Use
• Comparison
• Benchmark
• Better Management
• Accuracy
QUALITIES OF
GOOD REPORT
• Suitable Title
• Precise and Simple
• Consistency
• Reporting Relationship
• Timeliness
• Cost Effective
• Selective
• Comprehension
• Unbiased
CONCLUSION
A management report is an important tool to convey essential
information to different levels of management. It facilitates the
control function of management. These reports also highlight the
area of concern and take remedial actions accordingly. It results in
increased efficiency and effective decision making.
INTRO TO MANAGEMENT CONSULTING
ALEXANDRA R. SANSAN, CPA,CMA,CTT
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EVOLUTION OF
MAS
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1886 – Arthur R. Little Inc., first management consulting firm
(focused on technical research)
1893 – Frederick Winslow Taylor, first management consultancy.
He invented Scientific Management (a.k.a. Taylor’s
Method)
1905 – Morris Llewellyn Cooke, collaborator of Taylor also made
his own management consultancy
1930s – Initial period of GROWTH, triggered by Glass-Steagall
Banking Act.
1950s – expansion of management consulting, USA, Europe, Asia,
and South America.
1980s - management consulting firms Stern Stewart, Marakon
Associates, and Alcar pioneered value based management(VBM).
5 consulting firms with more than 1,000 consultants worldwide.
Big accounting entities came into picture.
1990s - SIGNIFICANT GROWTH. 30 consulting firms with same
size. The Big Four divided their services (e.g. IT, tax, audit, mgmt
consultancy)
2001 – Arthur Andersen announced new name: ACCENTURE.
Currently the largest consulting firm in the world in employee
headcount.
Financial Services and Government are the two largest spenders
on consulting services.
MANAGEMENT ADVISORY SERVICES
A function of providing professional advisory (consulting) services,
the primary purpose of which is to improve the client’s use of its
capabilities and resources to achieve the objectives of the
organization.
MANAGEMENT CONSULTING
Independent and objective advisory service provided by qualified
persons to clients in order to help them identify and analyze
management problems or opportunities.
MANAGEMENT
CONSULTANT
A person who is qualified by education, experience, technical
ability, and temperament to advise or assist businessmen on a
professional basis in identifying, defining, and solving specific
management problems involving the organization, planning,
direction, control, and operation of the firm.
CONSULTANT
Consultations – providing advice during short
period of time frame.
Engagements – an advisory/consultancy which is
analytical in approach and process is applied.
REASON FOR HIRING A CONSULTANT
❑Independent point of view
❑Professional advisor or counselor
❑Temporary professional service
❑Agent of change
PROFESSIONAL ATTRIBUTES OF
MANAGEMENT CONSULTANTS
❑Technical Skills
❑Interpersonal Skills
❑Consulting Process Skills
END
INTRODUCTION TO MANAGEMENT REPORTING
Management reporting is a key factor in growing a successful business, as it informs the goals,
decisions and strategies managers implement. Therefore, it's important to understand the
purpose of these reports and the context they provide. Managerial reports should take a wide
variety of data and come in an easily understandable format.
Management reporting is the collection of data that informs managers on how to efficiently run
their department. A successful business implements managerial reports not only to track a
department's key performance indicators (KPIs) but also to help guide its managers toward
making accurate, data-driven decisions. These decisions can range from cutting costs to
determining how many employees should be on staff.
Purpose of Management Reporting
Managerial reports reflect the status and health of a business and remove the guesswork from
implementing strategies. With hard data compiled specifically for certain departments,
department managers can evaluate what strategies have worked and which need improvement.
Managerial reporting is important in:
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Monitoring and tracking KPIs and other performance metrics
Setting goals and milestones
Determining the profitability of a product, service or client
Deciding where money is best spent
Pricing products or services accurately
Hiring the correct type and amount of employees
Creating cohesive communication regarding the data collected
Financial Reporting vs. Management Reporting
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Financial reports are used for external purposes and look backward
Managerial reports are used internally and look forward.
Managerial reports look at both financial and operational data while financial reports
focus solely on financial data
Financial reports provide information on the entire company while managerial reports
Focus specifically on management’s needs.
Managerial reports are not required and managers can choose the information they
need.
Financial reports are mandatory for publicly held companies and the information that
must be provided is based on outside regulators.
Users of Management Report
1. Owners/Proprietors and Partners:
They are interested to know the rates of return on Capital employed, the long-term solvency of
the firm and the rates of dividends among others.
2. Creditors, Bankers and Other Lending Institutions:
Their interest lies in the ultimate solvency and liquidity position of a firm and in the interest
cover. These they can read from the analysis of financial statements.
3. Potential Investors:
Investors use accounting information while determining the relative merits of various investment
opportunities. They are interested to know the profitability and safety of their investment which
are presented by a financial statement.
4. Management:
Management is interested about profitability and efficiency in financial management which are
supplied by the accounting information in a number of ways.
5. Government:
Government is interested in profit earning capacity and in the effective utilisation of the firm’s
capacity which are also supplied by the accounting statements.
6. Regulatory Agencies:
Various government departments and agencies (i.e., Company Law Board, Registrar of
Companies, including tax authorities) use accounting reports for the purpose of tax assessment
and to evaluate the business operation under the regulatory legislations.
7. Employees:
They are interested in the earning capacity of the firm since their remuneration depends on it. At
present, trade unions are using accounting reports and statements to support their demand for
increasing the rate of wages.
8. Researchers:
Research scholars use the accounting data in their research works.
Importance of Management Report
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It is a good means of maintaining public relations.
Reports enable us to identify trends which helps in forecasting.
Helps to achieve the overall objective by timely and continuous evaluation.
A management report is a tool for the controlling function of the management.
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These reports satisfy the internal and external parties related to business.
The comparison of actual and planned targets are made, and suitable actions are
taken.
Management reports lead to effective and efficient management.
Qualities of a Good Report
1. Accuracy: Management reports contains facts and figures which may be
misunderstood if not recorded accurately.
2. Suitable Title: The title of the report should be self-explanatory. It should specify
what that report consists of?
3. Precise and Simple: Only the necessary information should be reported in
simplified form. Unnecessary information should be excluded.
4. Consistency: The report should be prepared in a fixed format. It helps in avoiding
confusion and maintaining the standards.
5. Reporting Relationship: There should be clarity in the source and destination of
the report, i.e. who is making the report for whom.
6. Timeliness: Management uses these reports for decision making and policy
formulation. Reports should be prepared and presented at regular intervals.
7. Cost-Effective: Preparation of the report should not add unnecessary expense.
The cost should not exceed the benefit from the report.
8. Selective: The mode of presentation should be selected in a way, which represent
information in the best possible way.
9. Comprehension: Management reports should be made in a simple and
systematic form. The end-user should understand it easily.
10. Unbiased: It should convey true facts and figures and doesn’t get affected by the
personal bias of the person.
MANAGEMENT CONSULTANCY
Consultant
A consultant is someone who has expertise in a specific area and offers unbiased opinion and
advise for a fee.
Management Advisory Services?
A function of providing professional advisory (consulting) services, the primary purpose of which
is to improve the client’s use of its capabilities and resources to achieve the objectives of the
organization.
Management consulting can also be described as an independent and objective advisory
service provided by qualified persons to clients in order to help them identify and analyze
management problems or opportunities. Management consultants recommend solutions or
suggested actions with respect to these issues help, when requested, in their implementation. In
essence, management consultants help to effect constructive change in private or public sector
organization.
Activities of management consultants can involve two types:
(a) Consultations – consists of providing advice during a short time frame. The advice is
provided orally and will be definitive when the consultant is fully aware of the situation to
require more intensive study or investigation.
(b) Engagements – consists of that form of management advisory or consultancy in which
analytical approach and process is applied in the study or investigation.
Role of Management Consultant
MANAGEMENT CONSULTANT is a person who is qualified by education, experience, technical
ability, and temperament to advise or assist businessmen on a professional basis in identifying,
defining, and solving specific management problems involving the organization, planning,
direction, control, and operation of the firm.
The client in MAS practice is the management. Managers are entrusted with the entity’s
resources to safe keep and use it to increase entity’s wealth. The role of consultants is to
provide technical advice and assistance to its clients on areas which needed development,
solution or improvements.
It involves the ability to find facts and define basic problems (not the symptoms), identify
alternative solutions and recommend solutions under the circumstances.
NOTE: Consultants are INDEPENDENT PERSON, AN OUTSOURCED PROVIDER and NOT
AN INTERNAL EMPLOYEE of the organization. Thus, the advice provided by the consultant are
mere guide only in decision making, the FINAL DECISION still rests with the MANAGEMENT.
Reasons for hiring Management Consultants
• Independent point of view
A consultant is considered to be independent and objective to the dilemma faced by the
organization. Since the consultant is not part in the establishment of internal policies of the
organization, his or her suggestion is considered to be unbiased.
• Professional advisor and counselor
An experienced management consultant possesses special knowledge, skills and a variety
of personal attributes that make him the most desirable candidate to undertake the
engagement involving his area of expertise.
NOTE: Although law DOES NOT RESTRICTS the practice of management consultancy to
CPAs, business firms generally prefer CPAs as their consultants.
• Temporary professional service
The use of consultants is less expensive to the company than hiring new managers and
employees to provide professional advisory services
• Agent of change
A management consultant is a catalyst of change specifically in providing solutions to
clients’ problems. These solutions tend to help management in the administration and
improvement of the organization.
PROFESSIONAL ATTRIBUTES OF MANAGEMENT CONSULTANTS
Management consultants must possess the following professional attributes or skills:
(1) Technical Skills
- include understanding and experience in technical discipline such as information technology,
marketing, engineering, accounting and organizational behavior.
(2) Interpersonal Skills
- include personal attributes that make an individual amiable among people and effective in
accomplishing desirable objectives through people.
(3) Consulting Process Skills
- include ability to define problems, identify alternative solutions and recommend solutions under
the circumstances.
STAGES OF MANAGEMENT CONSULTANCY
STAGE 1: NEGOTIATING THE ENGAGEMENT
This stage involves preliminary discussion with the client, client background investigation,
preparation of proposal letter and engagement contract and establishing fees and billing
arrangement.
PROPOSAL LETTER: is a written communication between the CPA and the client setting forth
the terms and conditions of a proposed consultancy work.
ENGAGEMENT CONTRACT: is the legal contract binding both parties to the engagement.
CONSULTANCY FEES:
The cost of consultancy shall consist the following and shall be presented in the agreement in
the like manner:
(1) Salaries or billing rates
(2) Reimbursable costs or out-of-pocket costs
(3) Contingency costs
METHODS OF BILLING CLIENTS:
(1) Actual time basis / per diem basis – billing is done on the basis of actual time spent
multiplied by the hourly rates agreed upon.
(2) Flat or fixed basis – client is billed flat but all inclusive pre-arranged amount for the entire
engagement.
(3) Maximum fee basis – client is charged on a per diem basis with the arrangement that the
total charges will not exceed a certain agreed amount.
(4) Retainer basis – consultant is paid a fixed predetermined fee for all services rendered during
a designated period of time, say on a monthly or semi-annual basis.
STAGE 2: PREPARING FOR AND STARTING THE ENGAGEMENT
This stage is all about engagement planning.
Engagement Planning involves preparing a work plan (A.K.A. Engagement Program), selection
of personnel, scheduling of tasks, determining project cost and professional fees.
STAGE 3: CONDUTING THE ENGAGEMENT
Under this stage, four (4) necessary activities are done:
(1) Problem Identification – It is the first phase of the problem-solving process and its position in
the process is well established.
NOTE: A problem is said to exist when the observed behavior of a system or process violates
the bounds of reasonable expectations.
(2) Data Gathering – It deals with fact sources and identifies places where the consultant can
look to find facts associated with the operation of the client. Sources of the consultant could be
internal or external.
DATA GATHERING TECHNIQUES: (a) Interviews; (b) Questionnaire; (c) Observation; (d)
Document Gathering; (e) Charting
(3) Data Analysis and Diagnosis
(a) Decision-level Analysis – has the purpose of depicting the varied interrelationships among
the decisions made throughout the segments and levels of organization.
(b) Input / Output Analysis – analysis of the problem in terms of input or output.
(c) Structured Analysis – the key assumption underlying this approach is that any organization is
comprised of a number of well-defined functions, which in turn are made up of group of
activities.
(4) Solution Development – It involves generation and evaluation of solution alternatives,
making a choice of solution alternative and detailed development of selected solution.
STAGE 4: PREPARING AND PRESENTING THE REPORT AND RECOMMENDATION
Presentation of the report and recommendation could be in the following form: (a) oral; (b)
written; (c) visual NOTE: The recommended solution should be presented in a persuasive
manner of the consultant expects to obtain client’s acceptance of the recommendation.
STAGE 5: IMPLEMENTING THE RECOMMENDATION
This stage is considered to be the important lengthy phase that follows solution development
phase. NOTE: It must be understood that the CPA or the CONSULTANT SHOULD NOT TAKE
RESPONSIBILITY for making management and policy decisions.
STAGE 6: EVALUATING THE ENGAGEMENT
Evaluation is necessary for CONSTANT IMPROVEMENT AND REFINEMENT in the QUALITY
of future advisory services of the consultant.
STAGE 7: POST-ENGAGEMENT FOLLOW-UP
OVERVIEW OF MANAGEMENT
ADVISORY SERVICES
EVOLUTION
OVERVIEW OF MAS BY CPAS
TRADITIONALAREAS OF CPA FIRM
Auditing
Accounting
system
design and
installation
Income tax
work
Management
consultancy
WHY MANAGEMENT CONSULTANCY?
CPA firms
engage in
audit
Management
consultancy
Natural area of
development of
a public
accountant
Provide
extremely useful
services to
business
managers
DEVELOPING TRENDS
DEVELOPING TRENDS
Specialization
in different
areas
Improvement
of business
education
Change in the
management
culture
Technical
Development
FUTURE PROSPECT
 Management consulting will become even
more specialized
 Insight provider, creator and sharer of
information
 Management consultancy firms will tend to
remain small or quite large
 Sophisticated marketing
 Career attraction in management consulting
THE CONSULTING INDUSTRY
 Information
Technology (IT)
 Consulting and system integration
 Corporate strategy
 Operations management
 Human resources management
 Outsourcing
OVERVIEW OF MAS BY CPAS
IT Firms
Accounting
firms
offering
consultancy
MAIN
TYPES OF
CONSULTI
NG FIRMS
Major
consulting
only firms
Independents
OVERVIEW OF MAS BY
CPAS
CAREER STRUCTURE
 Analyst
 Consultants
 Senior Consultants/Managers
 Business Development Managers
 Directors/Partners
•
Most experienced
consultant
•Responsible for the
development of the
organization
•
Leads strategic
development
•Over-all responsibility for
•Data Gathering
•
Evaluation and
recommendations of the
client business
•3-5 years of experience
•Leads a consulting team
•Dealing with the client team
•Ability to take
responsibility in running
small consultancy project
•5-10 years of experience
•Developing firms product
•Responsible for building
relationship with its client
•Involved in some large,
complex consulting
projects
OVERVIEW OF MAS BY CPAS
MANAGEMENT CONSULTING
 Independent
and objective advisory
service provided by qualified persons to
clients
 Recommend solutions or suggested
actions with respect to the issues involved
 Helps to effect constructive change in the
organization
OVERVIEW OF MAS BY CPAS
TWO TYPES OF ENCOUNTERS
1.
2.
Consultations
Engagements
• Providing advice and
information during a short
time frame
• Information provided is
orally
• Information are qualified to
limitations
• Analytical approach and
process is applied in a
study or project
OVERVIEW OF MAS BY CPAS
WHY USE MANAGEMENT
CONSULTANTS?
Professional
Advisory
Independent
• possesses
Viewpoint
special
• see the true
knowledge,
nature of the
skill and
problems
variety of
• distinguish
personal
feasible
and
attributes
infeasible
• introduce
• unbiased
new ideas
suggestion
into the
organization
Temporary
Professional
Service
• less
expensive
• temporary
professional
help
Agent of
Change
•
catalyst
change
for
CHAPTER 2
• Areas of Management Advisory Services - Part I
TYPES OF MAS ENGAGEMENTS
Nature of the Problem
b) Service Delivery Area
c) Phases of the Analytical Process
d) Techniques and Methodologies
Applied
e) Industry(or nature of
organization)
f) Geographical Area
a)
NATURE OF THE PROBLEM
a.
b.
Corrective
Progressive
• Situation in which
conditions have worsened.
• Existing situation
• that can be
improved.
c.
Opportunistic
•
Situation in which a future
opportunity exists.
SERVICE DELIVERY AREAS
o
functions or activities in which the problem
exists.
Example:
1. General Management
2.
3.
4.
Manufacturing
Personnel
Finance and Accounting
General Accounting
Cost Accounting
Capital Investment
PHASES OF
ANALYTICAL PROCEDURE
a.
b.
c.
d.
e.
Identifying objectives
Defining the problem
Finding out the facts
Developing the solution
Implementing the solution
TECHNIQUES AND
METHODOLOGIES APPLIED
Example:
Capital Investment planning can
be aided by a discounted cash
flow model.
INDUSTRY OR NATURE OF ORGANIZATION
GEOGRAPHICAL AREAS
AREAS OF MS PRACTICE
1. Management functions of analysis, planning, organizing
and controlling.
2. Introduction of new ideas, concepts and methods to
management.
3. Improvement of policies, procedures, systems, methods
and organizational relationships.
4. Application and use of managerial accounting, control
systems, data processing, and mathematical techniques
and methods.
5. The conduct of special studies, preparation of
recommendation.
TYPES OF CONSULTANCY WORK
A.
B.
C.
D.
E.
Business planning and development or Project
feasibility studies
Information systems consulting
Management / Operations audit
Business process improvement / reengineering
Others such as
1)
2)
3)
4)
5)
6)
7)
8)
Marketing Research
Marketing Strategy Development
Developing promotional campaign
Planning sales force activity
New product development
Developing proposal for financial support
Staff Recruitment
Exporting and international market
BUSINESS PLANNING AND DEVELOPMENT
(PROJECT FEASIBILITY)
o
Effective consultant can use the project
proposal to establish exactly what the
client wants and to manage his or her
expectations
about
what
can
realistically be achieved.
INFORMATION SYSTEMS CONSULTING
Information needed:
Business’s external situation and its
internal state.
MANAGEMENT / OPERATIONS AUDIT
Operational Audit are conducted to
evaluate the effectiveness and/or efficiency of
operations.
BUSINESS PROCESS IMPROVEMENT /
REENGINEERING
o
It is the complete redesign of a process with
an emphasis on finding creative new ways to
accomplish an objective.
o
It involves developing new ways to perform
existing activities and ways to stop
performing non-value adding activities.
OTHER TYPES OF CONSULTANCY WORK
MARKETING RESEARCH
o
Process through which managers
discover the nature of the competitive
environment in which they are operating.
TWO TYPES:
1. Primary Research
a. Quantitative Research
b. Qualitative Research
2. Secondary Research
OTHER TYPES OF CONSULTANCY WORK
MARKETING STRATEGY DEVELOPMENT
 Defines
the approach the business will take
in order to get the customer’s attention and
get them to spend their money on the
business’s products or services
DEVELOPING PROMOTIONAL CAMPAIGNS
 Any
program of activities dedicated to
informing customers about a product,
stimulating their interest and encouraging
purchase.
OTHER TYPES OF CONSULTANCY WORK
PLANNING SALES FORCE ACTIVITY




Overall organization of the team
Sales team training
Sales team motivation
Planning sales campaigns
OTHER TYPES OF CONSULTANCY WORK
NEW PRODUCT DEVELOPMENT
Understanding the customer’s needs through market
research
 Technical advice on product development
 Identifying and contacting suppliers of critical
components
 Development of marketing and PR campaigns to
support the launch
 Developing promotion campaigns to get distributors on
board
 Financial planning and evaluation of the return on new
product investment

OTHER TYPES OF CONSULTANCY WORK
DEVELOPING PROPOSALS OF FINANCIAL
SUPPORT
 Evaluation
of the business’s investment
needs
 Identification of funding providers and how
they might be contacted
 Developing an understanding of the criteria
employed by funding providers and how
these might be addresses
 Developing communications with funding
providers
OTHER TYPES OF CONSULTANCY WORK
STAFF RECRUITMENT

Assessing the firm’s human resource
requirement and identifying skill and knowledge
gaps

Creating advertisements to attract the right
people

Development assessment criteria, interview
procedures and psychometric testing of
candidates

Advice on the reimbursement packages new
recruits will expect
OTHER TYPES OF CONSULTANCY WORK
EXPORTING AND INTERNATIONAL
MARKETING
IN PARTICULAR THE CONSULTANT CAN
SUPPLY:

An overall insight into regional, social and
macroeconomic development

An analysis of the growth and evolution of
specific markets

An evaluation of consumer needs and
requirements and how these are being
satisfied currently
IN PARTICULAR THE CONSULTANT CAN
SUPPLY:

Information on regulatory and legal issues

Details of the existing supply structure and
competitors present

An investigation into distribution channels and
possible partners

Information on advertising and promotional
opportunities
CHAPTER 3
• Areas of Management Advisory Services- Part II
I. TRADITIONAL SERVICE
Planning
Management
Accounting
Controlling
Decision
Making
I. TRADITIONAL SERVICE
B. Design and Appraisal of Accounting System
1.
Development of an accounting system for newly-organized
firm
2.
Revision, partial or complete, of an existing accounting
system
3.
Extension of the present accounting system to cover new
business activities.
4.
Accounting service in general
5.
Accounting Machines installation
6.
Internal Control Studies and Installation
B. Financial Management- related services
C. Project Feasibility Studies
II. EMERGING CONSULTANCY SERVICES
Global Risk Management Solution
 Managing totality of risks-financial, operational
and systems, and strategic to improve financial
and business performance.
1.
2.
3.
4.
5.
Financial Risk Management
Strategic Risk Management
Operational and Systems Risk
Management
Compliance Risk Management
Internal Audit Services
II. EMERGING CONSULTANCY SERVICES
Transaction Services
 Involves services related to mergers, acquisition,
divestitures, joint ventures, spin-off and strategic
alliance
Financial Advisory Services
 CPA’s provide financial, economic and strategic
advice to companies with complex business
problems and disputes.
II. EMERGING CONSULTANCY SERVICES
Project Finance and Privatization

Involves management advisory services related to
partnership between the public and private sectors in
delivering infrastructure and services or privatization
and project finance.
Valuation Services
 Guide
clients through complex business
transaction such as acquisition or divestiture of
investment, debt structuring and finance-raising,
entry to major stock exchange, mergers.
II. EMERGING CONSULTANCY SERVICES
Business Recovery Services
 CPA’s provide services to troubled business by
emphasizing on the implementation and
rationalization and recovery programs designed
to rebuild value.
Dispute Analysis and Investigations
 Environmental analysis, real estate
damage,
investigative services, construction
disputes,
investigative services, economic and financial
analysis.
II. EMERGING CONSULTANCY SERVICES
Computer Risk Management
 Help
client understand and manage their
business risks relating to implementation and use
of technology
Application Software Selection and
Implementation
 Assist clients in prioritizing their needs, identifying
the right software and tailoring it to meet their
specific requirement.
DETERMINING SCOPE OF SERVICE
1.
2.
3.
4.
5.
6.
7.
Responsibility to establish scope of
services
Independence
Competence
Requirement for specialization
Identification and Resolution of client’s
basic problems
Referrals
Code of Professional Ethics
TYPES OF CLIENTS SERVED
Contact
Clients
Intermediate
Clients
Ultimate
Clients
Types of
Clients
Served
Indirect
Clients
Primary
Clients
Unwitting
Clients
GROUP OF CLIENTS THAT CPA’S CAN
PROVIDE MAS
1.
2.
3.
4.
5.
Privately-owned Business firms
Governmental Agencies and Organization
Not-for-Profit Nongovernment Organization
Professional Association
Others
THE DECISION TO USE AN
ACCOUNTANCT
A.
What can I offer the client business that will
enhance its performance and help achieve its
objectives?
B.
Why will my contribution be more valuable than
that which existing managers and potential
recruits can contribute?
C.
How can I communicate to the client business
than what I offer is valuable?
PROVISIONS
Provision of Information
• Information is valuable to a business
• It has a cost
• Information is a resource that must be managed
Provision of Specialist Expertise
• Require the application of technical knowledge and
an ability to use specialist analysis techniques
Provision of a New Perspective
• Managers are not decision making automata
• 'cognitive maps', 'mindsets', or 'dominant logics' are
used by managers to see their managerial world
• Consultant can offer a fresh mind to an issue
PROVISIONS
Provision of Support for Internal Arguments
• Disagreements arise over a wide range of issues
• Conflicts of opinion take a variety of form
Provision of Support in Gaining a Critical
Resource
• Organization must attract resources in order to
survive
• One of the manager's most critical function is
attracting resources on behalf of the firm
• Consultant can be of great value in structuring a
proposal and advising on how it might be delivered
PROVISIONS
Facilitating Organizational Change
•
•
•
•
Organizations change all the time
Managers change their roles and responsibilities
Change usually meets resistance
Sometimes organizations call for change as the
primary goal of the consulting exercise
FACILITATING ORGANIZATIONAL
CHANGE
Organizations
change all the
time
Managers
change their
roles and
responsibilities
Sometimes
organizations
call for change
Change
usually meets as the primary
goal of the
resistance
consulting
exercise
MANAGEMENT ADVISORY
SERVICES
-THE AREA OF ACCOUNTING WORK THAT IS
CONCERNED WITH PROVIDING ADVICE AND
TECHNICAL ASSISTANCE TO HELP CLIENTS
IMPROVE THE USE OF THEIR CAPABILITIES
AND RESOURCES TO ACHIEVE THE
OBJECTIVES OF THEIR ORGANIZATION
-ALSO CALLED CONSULTING SERVICES OR
BUSINESS ADVISORY SERVICES
..
CHARACTERISTICS OF
MAS
1. Services rendered are for management
2. It involves problem solving
3. MAS relates to the future
4. It is broad in scope.
5. It involves varied assignments.
6. Engagements are usually non recurring.
7. Engagements require highly qualified staff.
8. Human relations play a vital role in each
engagement.
MANAGEMENT CONSULTANT
- A PERSON WHO IS QUALIFIED TO ADVISE OR ASSIST
BUSINESSMEN ON A PROFESSIONAL BASIS IN EDUCATION,
EXPERIENCE, TECHNICAL ABILITY, AND TEMPERAMENT IN
DEFINING AND SOLVING SPECIFIC MANAGEMENT PROBLEMS
INVOLVING THE ORGANIZATION, PLANNING. DIRECTION,
CONTROL AND OPERATION OF THE FIRM.
- A person with a marketable skill, a perceptive mind,
a need for independence and challenge, an ability to
communicate with others and persuade them to
follow advice, a desire to help others in an effective
way and a wish to be an agent of positive change.
ADVANTAGES OF CPAS OVER
OTHER PROFESSIONALS IN
RENDERING MAS
1. The CPA is already familiar with the client and his
business .
2. The CPA enjoys his client’s confidence.
3. The CPA is a member of a profession with
recognized standing.
4. The CPA is equipped with the technical know-how
in accounting and taxation and his accounting
practice offers an advantageous position upon
which to build an MAS practice.
DETERMINATION OF THE
SCOPE OF SERVICE
The consultant should consider the following
guidelines:
1. Responsibility to establish scope of service.
2. Independence
3. Competence
4. Requirements for specialization
5. Attention to the client’s basic problems.
6. Referral arrangements
7. The Code of Professional Ethics
EMERGENCE AND GROWTH OF
MANAGEMENT CONSULTANCY
Attributed to the following factors:
1. Growth in size and complexity of
business firms
2. Complexities in managing and
conducting a business
3. Lack of competent staff
EMERGENCE AND GROWTH OF
MANAGEMENT CONSULTANCY
4. Trend towards industrialization
5. Need for adequate and timely
information for management decision
making
6. Development of techniques for the
solution of management problems, and the
businessmen’s awareness of their
usefulness
REASONS FOR HIRING
MANAGEMENT CONSULTANTS
To:
1.help define specific problems and develop
solutions
2. provide specialized skills and experience
3. provide confidential service in which the
identity of the client is concealed
4. train client personnel
REASONS FOR HIRING
MANAGEMENT CONSULTANTS
5. provide temporary personnel
6. help improve intra-company
communications
7. render an independent opinion
8. help get results
RATIONALE FOR HIRING
MANAGEMENT CONSULTANTS
Four variable reasons:
1. Independent viewpoint
2. Professional advisor and
counselor
3. Temporary professional service
4. Agent of change
DEVELOPING TRENDS IN MAS
-CHANGED DRAMATICALLY IN THE MID
90S
-MAS NOW SPECIALIZES IN INFORMATION
SYSTEM, AUTOMATED OFFICES, FINANCIAL
ANALYSIS AND MODELING BUDGETING
AND COST CONTROLS, ORGANIZATION
STRUCTURES,PERSONNEL
COMPENSATION, STRATEGIC PLANNING
AND HOST OF OTHER AREAS.
FUTURE PROSPECTS
1. Management consulting will become even more
specialized.
2. The consultant’s orientation will be towards being an
insight-provider, creator and sharer of information
3. Small consultancy firms may prosper by focusing
upon narrow areas of specialization while larger firms
will have to develop and offer a wide range of services .
4. As consultants grow in number they will develop
more sophisticated means of marketing their services.
5.Bright graduates of accounting, management and
business schools will continue to be attracted to
careers in management consulting.
CAREER STRUCTURE IN
CONSULTING FIRMS
1. Analysts
2. Consultants
3.Senior Consultants or Managers
4. Business Development
Managers
5. Directors (Partners)
TYPES OF ENCOUNTERS WITH
CLIENTS
1. Consultation- consists of providing advice
and information during a short time frame.
This advice and/or information is provided
orally during one or more discussions with
the client.
2. Engagement- consists of that form of
management advisory or consulting service
in which the analytical approach and
process is applied in a study or project.
INDEPENDENT ACCOUNTING
FIRM’S ROLE IN MAS
The role of an independent accounting firm in
performing management advisory services is
“to provide advice and technical assistance
which should provide for client participation in
the analytical approach and process.
Specifying this as the proper role recognizes
both the appropriate place of MAS and the
realities of practice. This is the only basis on
which the work should permit it to be done.”
CPA’S OBJECTIVE IN ENGAGING
IN MAS
An independent accounting firm’s
purpose in engaging in MAS is;
“to utilize the essential qualifications it
has available to provide advice and
technical assistance which will enable
client management to conduct its affairs
more effectively”
CPA’S OBJECTIVE IN ENGAGING
IN MAS
These essential qualifications are based in part
on attributes acquired in conducting other
aspects of practice and include :
1. technical competence
2. familiarity with the client’s finance and
control systems and his business problems.
3. Analytical ability and experience in problem
solution
4. professional independence, objectivity and
integrity
Classifications of MAS engagements
according to six dimensions
1. Nature of the problem
2. Service delivery area
3. Phase(s) of the analytical process
4. Techniques and methodologies applied
5. Industry to which the client belongs
6. Geographical area(s) where the engagement
takes place
1. Nature of the Problem
A. Corrective-involves a situation in which conditions
have worsened. Arises suddenly and demands urgent
action. Example is a sudden drop in productivity
within a critical department. The consultant is
expected to suggest corrective action that will bring the
situation to its previous state.
Nature of the Problem
2. Progressive-involves an existing situation that can
be improved. Example is when a firm continues to
employ old procedures in spite of significant growth in
transactions and development in technology. In this
case, the consultant may determine that computer
based transaction processing systems are likely to
provide considerable improvements.
1. Nature of the problem
3. Opportunistic- involves a situation in which future
prospect exists. Example is when a firm has surplus of
cash and cash equivalents available and the consultant
maybe hired to search out and recommend
opportunities for more effective use of the excess
funds.
2. Service Delivery Areas
- the functions or activities in which the problem
situation exists and maybe classified in a number
of groupings :
1. general management 6. procurement
2. manufacturing
7. research and development
3. Personnel
8. packaging
4. finance and accounting 9. administration
5. marketing
10. international
operations
3. Application of the Analytical Process
1. Identifying the objectives
2. Defining the problem
3. Finding out the facts
4. Developing the solution
5. Implementing the solution
4. Techniques and Methodologies Applied
 Engagements can be aided by technical models or
methodologies like the use of discounted cash flow
models in capital budgeting or a structured
methodology in information systems planning and
design.
5. Industry or Nature of Organization
-maybe a privately owned business firm, a
government agency, a not for profit organization, a
professional association or some other type of
organization.
6. Geographical Areas
- Maybe restricted to a single location, such as the
home office of the client. It may also involve multiple
locations such as the several production plants and
warehouses of a large manufacturing firms. It may also
involve location in foreign countries.
AREAS OF MAS PRACTICE
1. The management function of analysis, planning,
organizing and controlling
2. The introduction of new ideas, concept and methods to
management.
3. The improvement of policies, procedures, system,
methods and organizational relationships.
4. The application and use of managerial accounting,
control systems, data processing, and mathematical
techniques and methods, and
5. The conduct of special studies preparation of
recommendation.
Most sought after Consultancy work
1. Business planning and development
2. Information system consulting
3. Management/Operations audit
4. Business process improvement/reengineering
Most Sought after types of Consultancy Work
5. Others such as
a. marketing research
b. Marketing Strategy Development
c. Developing promotional campaign
d. Planning sales force activity
e. New product development
f. developing proposal for financial support
g. Staff recruitment
h. Exporting and International market
Traditional Services
1. Managerial Accounting
a. Financial statement analysis
b. Budget and their preparation
c. Cost analysis, planning and control
d. variance analysis
e. Cost analysis for managerial decisions
f. Development and installation of responsibility accounting
system and evaluation of responsibility centers
g. establishment of internal reporting system
h.Assistance in preparation of reports
Traditional Services
2. Design and Appraisal Of Accounting System
a. Development of an accounting system for a newly
organized firm
b. revision, partial or complete of an existing
accounting system
c. Extension of the present accounting system to
cover new business activities
d. Accounting service in general
e. Accounting machine installation
f. Internal control studies and installation
Traditional Services
3. Financial Management Related Services
a. Study of working capital requirements
b. Study of methods of financing asset acquisitions.
c. Credit and collection practices and advice.
d. Analysis of capital investment proposals.
e. Study of alternative methods of financing expansion
f. Survey of pension, retirement and profit sharing plans
g. Preparation of feasibility study for new projects
h. Valuation of capital stocks for companies under
merger or sale
Traditional Services
 4. Project feasibility Studies
Emerging Consultancy Services
5. Global Risk Management Solution
a. Financial risk management
b. Strategic risk management
c. Operational and system risk management
d. Compliance risk management
e. Internal audit services
Emerging Consultancy Services
6. Transaction services
7. Financial Advisory Services
8. Project Finance and Privatization
9. Valuation services
10. Business recovery services
11. Dispute analysis and investigation
12. Computer risk management
13. Application Software Selection and
Implementation
Types of Clients Served
1. Contact clients
2. Intermediate clients
3. Primary clients
4. Unwitting clients
5. Indirect clients
6. Ultimate clients
How Consulting adds Value
The actual output of a consulting service centers on
one or more of the following:
1. provision of information
2. provision of specialist expertise
3. provision of new perspective
4. provision of support for internal arguments
5. provision of support in gaining a critical resource
6. facilitating organizational change
Professional Attributes of Management
Consultants
 Technical skills- include understanding and
experience in a technical discipline such as
information technology, marketing, engineering and
organizational behavior.
 Interpersonal skills- include personal attributes that
make an individual amiable among people and
effective in accomplishing desirable objectives
through people.
Professional Attributes of Management
Consultants
 Consulting process skills- involve the ability to
understand and use the following approach in
solving business problems:
a. identify the cause of problems or inefficiencies
b. identify alternative solutions
c. Select the most desirable alternative
d. Implement the chosen solution
MAS PRACTICE STANDARDS
1. Personal Characteristics. In performing MAS, a
practitioner must act with integrity and objectivity and be
independent in mental attitude.
2. Competence. Engagements are to be performed by a
practitioner having competence in the analytical approach
and process, and in the technical subject matter under
consideration
3. Due Care. Due professional care is to be exercised in the
performance of MAS.
4. Client Benefit. Before accepting an engagement, a
practitioner is to notify the client of any reservation he has
regarding anticipated benefits.
MAS Practice Standards
5. Understanding with client. Before undertaking an
engagement, a practitioner is to inform his client of all
significant matters related to the engagement.
6. Planning, Supervision and Control. Engagements are to
be adequately planned, supervised and controlled.
7. Sufficient Relevant Data. Sufficient relevant data is to be
obtained, documented, and evaluated in developing
conclusions and recommendations.
8. Communication of results. All significant matters
relating to the result of the engagement are to be
communicated to the client
ETHICAL CONSIDERATIONS
 A professional accountant is required to comply with
the following fundamental principles :
1. Integrity
2. Objectivity
3. professional Competence and Due Care
4. Confidentiality
5. Professional Behavior
ETHICAL CONFLICT RESOLUTION
 When initiating either a formal or informal conflict
resolution process, a professional accountant should
consider the following as part of the resolution
process :
-relevant facts
-ethical issues involved
-fundamental principles related to the matter in
question
-established internal procedures
-alternative courses of action
Ethical Conflict Resolution
 When a matter involves a conflict with, or within an
organization, consider consulting with those charged
with governance such as the BODs or the audit
committee.
 If a significant conflict cannot be resolved, seek
advice from the relevant professional body or legal
advisors.
 If after exhausting all relevant possibilities, the
ethical conflict remains unresolved, the professional
accountant should where possible, refuse to remain
associated with the matter creating the conflict.
1. Which of the following is false?
a. New developments and transformations could not result to
management consulting to become more specialized.
b. It is predicted that a consultant’s orientation will be towards being an
insight provider, creator and sharer of information.
c. As consultants grow in number, they tend to develop more
sophisticated means of marketing their services.
d. Because of the more stringent and technical qualifications required in
management accounting, many bright students in accounting ,
management and business schools will be attracted to careers in this
area.
2. Most definitions of consultancy would include such services related to the
following except
a. information technology
b. corporate strategy
c. legal advisory
d. systems and operations engagement.
3. Which of the following statement is incorrect?
a. A consultant is hired because generally he is considered independent, objective
and detached to the problems faced by the organization.
b. An experienced management consultant possesses special knowledge, skills
and a variety of personal attributes that make him the most desirable candidate
to undertake management consulting engagement involving his area of expertise.
c. The use of consultants is generally much more expensive to the company than
hiring full time new managers and employees to provide professional advisory
services.
d. A consultant is considered a catalyst for change that can assist management in
the administration of the business entity.
4. The actual output of a consulting engagement centers on providing the
business organization with the following except
a. valuable information.
b. support for internal arguments.
c. support in acquiring s critical resource.
d. support for contesting tax assessments by the BIR.
5. Which of the following statement is false?
a. CPAs have historically been business consultants to their clients.
b. Management consultants are licensed and regulated by laws.
c. The primary purpose of management consultancy is to improve the firm’s use
of its capabilities and resource to achieve its objectives.
d. Management consultancy services are provided not only to big business
enterprise but also to medium-size and small companies.
Chapter 2
1. Which of the following statements is true?
a. MAS engagements involve routine and are repetitive in nature.
b. Being a CPA automatically qualifies a person to render the entire range of
management services.
c. Management audit is one of the areas of management consultancy that is not
directly related to accounting and finance.
d. The areas of management advisory services are much more limited than the
traditional auditing and taxation services of a CPA.
2. The type of problems faced by an entity that involves conditions that have
worsened and demands urgent action is known as
a. progressive problem.
b. opportunistic problem.
c. corrective problem.
d. unsolvable problem.
3. Which of the following areas will not be classified under Accounting and
Finance Services?
a. Personnel recruitment and training
b. General and cost accounting
c. Marginal income analysis
d. Capital investment
4. The basic analytical process applied in consulting engagements include
1. Definition of problem.
2. Implementation of the recommended solution to the problem.
3. Development of the solution.
4. Identification of objectives.
5. Fact-finding and analysis.
The order in which the above-mentioned steps are generally applied are
a. 1,2,3,4,5.
b. 4,1,5,3,2.
c. 4,5,1,3,2.
d. 4,1,3,5,2.
5. Common outcome desired from business planning and development generally
include the following except
a. increase in market share.
b. development of new products.
c. internal structural reorganizations.
d. better-trained personnel.
Chapter 3
1. The MAS engagement that involves providing assistance to management in
relation to planning, controlling and decision making is
a. Financial Management.
b. Management Accounting.
c. Taxation.
d. Financial Accounting.
2. The following are managerial accounting-related consultancy services that a
CPA may provide except
a. Variance Analysis.
b. Financial Statement Services.
c. Cost Analysis for Managerial Decision.
d. Evaluation of Working Capital Requirements of the Business Entity.
3. This engagement involves the review of compliance with regulatory
requirement and ethical conduct standards.
a. Strategic risk management.
b. Financial risk management.
c. Operational and systems risk management.
d. Compliance risk management.
4. These involve services related to mergers, acquisitions, divestitures, joint
ventures, spin-off and strategic alliance.
a. Strategic risk management
b. Due diligence audit.
c. Compliance risk management.
d. Financial risk management.
5. Services rendered to troubled businesses by emphasizing on the
implementation, rationalization and recovery programs designed to rebuild value.
a. Dispute analysis and investigation
b. Computer risk management
c. Valuation services
d. Business recovery services
6. The following are areas of consideration in determining the scope of services
that a CPA may perform except
a. Independence.
b. Competence.
c. Requirements for specialization.
d. Range of fees that the consultant will earn in each type of service.
7. These are enterprises involved in varied business endeavors such as
merchandising, manufacturing, financial services and are potential consultancy
clients.
a. Professional association
b. Not-for-profit nongovernment organizations
c. Privately-owned business firms
d. Government agencies
8. The following are among the ground rules that a consultant should observe in
providing support for internal arguments in a client except
a. Introduce and explore options which reconcile different positions in a win-win
way.
b. Be sensitive to who is supporting different position in the organization.
c. Build rapport which the client about the strengths and weaknesses of his or her
argument.
d. Provide the client manager information and insights that will strengthen his
position against his adversaries in the organization.
Chapter 4
1. Which of the following statements is true?
a. CPAs are expected to be experts in all areas of management services.
b. A CPAs competence in management services embraces only the analytical
approach and process and not necessarily the technical subject matter of the
areas involved.
c. Engagements may be performed by practitioners even if they have no
competence in the analytical approach and process, and in the technical subject
matter under the consideration.
d. Competence in management advisory services can be acquired by formal
college education, experience in traditional services performed by CPA’s and
actual performance of management advisory services.
2. Which of the following statement is true?
a. It is desirable but not necessary that in performing management advisory
services, a practitioner must act with integrity and objectivity, and be
independent in mental attitude.
b. A person who wants to become a consultant, must first pass the government
board examinations given for the purpose.
c. The CPA’s competence, coupled with his familiarity with the client’s finance
and control systems, business problems, and personnel, places him in logical
position to perform management services for that client.
d. If a firm is not reasonably competent to undertake a specific management
services management, it should employ a specialist to undertake the job on
temporary basis.
3. A personal attribute of a consultant that refers to his/her ability to view
situations in perspective and to take action needed on a calm and controlled basis
without being diverted from a sound, logical and ethical course by outside
pressure.
a. Psychological maturity
b. Courage
c. Physiological equilibrium
d. Judgment
4. A personal attribute of a consultant that refers to his/her ability to anticipate
human reactions to differing situations and establish friendly relations and mutual
confidence with people at all levels and to recognize and respect the rights of
others.
a. Integrity
b. Capacity for logical thinking and reasoning
c. Empathy
d. Ambition
5. Ability of the consultant to focus and direct the individuals in an organization in
a way that brings the whole organization benefits.
a. Ability to develop selling strategies
b. Ability to demonstrate leadership
c. Ability to work effectively as a team member
d. Ability to build rapport and trust with the client.
6. Ability to define objectives and outcomes is an example of a consultant’s
a. rapport-building skills.
b. project management skills.
c. analysis skills.
d. interpersonal skills.
7. A consultant’s ability to identify what information is needed in a particular
situation is an example of
a. rapport-building skills.
b. project management skills.
c. analysis skills.
d. interpersonal skills.
8. Which of the following is considered a manifestation of a consultant’s project
management skills?
a. Ability to draw meaning from the available information and use it to support
decision-making.
b. Ability to manage the financial resources that are to be invested in the
consulting project.
c. Ability to recognize the business entity’s profile of strengths, weaknesses and
capabilities.
d. Ability to assess the business entity’s financial situation.
9. All of the following are manifestations of a consultant’s interpersonal skills
except
a. ability to work effectively as a team member.
b. ability to grasp and represent facts unbiased by prejudice or objectivity.
c. ability and reasoning power to arrive at a wise decision or judgment.
d. ability to absorb and relate facts in a logical and orderly fashion and to reason
inductively and deductively or intelligence.
10. The application of analytical approach and process in consultancy
engagements involves the following except
a. problem definition.
b. identification and analysis of alternative solution.
c. non-selection of the most desirable alternative.
d. implementation of the chosen solution.
Chapter 5
1. Which of the following statements is false?
a. An accounting firm may admit a non –CPA as principal who is a professional
expert in management services to enhance the firm’s competence to offer
management advisory services to clients.
b. The accounting firm is not allowed to advertise that it is offering management
advisory services.
c. A CPA after presenting his report in a management services engagement may
accept further engagement to render advice and technical assistance in the
implementation of his recommendation.
d. A CPA may continue rendering management services to a client even after
conflict of interest has risen if in good faith he was not aware of the same at the
time he accepted the engagement.
2. Which of the following statement is true?
a. In MAS engagement, the independent CPA renders technical advice,
b. A CPA in a management services by independent CPA may involve making
decision for client.
c. Strict adherence to generally accepted accounting principles in MAS is required.
d. A non CPA is prohibited under the revised accountancy law to engage in
professional management advisory services practice.
3. Which of the following statements is correct?
a. A CPA-MAS practitioner need to be concerned with independence in his clients
since the overriding consideration for the MAS engagement is competence.
b. Management advisory services by the independent CPA may involve making
decisions for client.
c. To maintain his independence, a CPA limits his services to that of
recommending and designing an accounting system but leave the actual
implementations and installation to the client.
d. Documentation is not as essential in an MAS engagement as it is in an audit
engagement.
4. Which of the following statement is true?
a. Due professional care may or may not be exercised in the performance of a
management advisory service management.
b. Before accepting an engagement, a practitioner does not have to notify the
client of any reservation he has regarding anticipated benefits.
c. Before undertaking an engagement, a practitioner is to inform his client of
some if not all of the significant matters related to the engagement.
d. Engagements are to be adequately planned, supervised, and controlled.
5. To attain the highest standards of professionalism, highest level of
performance and meet public interest requirement, a CPA who provides
management consultancy services should meet the following basic requirements
except.
a. credibility
b. confidentiality
c. knowledge of up-to-date technical and professional standards.
d. careful selection of clients to include only those big and financially capable
business entities.
7. Should ethical conflicts arise, the professional accountant who is also a
management consultant should observe the following except
a. follow the established policies of the firm to seek resolution of such conflict.
b. review the conflict problem with the immediate superior unless if appears that
the immediate superior is the one involved in the conflict problem.
c. seek counseling and advice publicly with the applicable professional
accountancy body PICPA or regulatory body
d. resign if all possible levels of internal review and courses of action have been
exhausted and submit an information memorandum to an appropriate
representative of the firm.
8. Confidentially of information about a client’s a affairs is one of the ethical
principles that should always be observed by a management consultant. The
following situations allow the consultant to disclose information otherwise
considered confidential except
a. when disclosure is authorized by the client.
b. to produce documents to give evidence in the course of legal proceedings.
c. when disclosure is necessary to protect the professional interests of a
professional accountant in legal proceedings.
d. to respond to an inquiry of shareholders and creditors of the business entity.
9. Management consulting is a non-assurance engagement that may be
performed by professional accountants. If management consultancy service is
provided to the audit client of the same professional accountant during or after
the period covered by the financial statements but before the start of the audit
engagement, consideration should be given to threats to independence, if any,
arising from the consultancy service. If the threat is significant, safeguards are to
be considered and applied as necessary to reduce the threat to an acceptable
level. These safeguards include the following except
a. obtaining the audit client’s acknowledgement of responsibility for the results of
the consultancy service.
b. precluding personnel who provided the consultancy services from participating
in the audit engagement.
c. engaging another firm to review the result of the consultancy services or
another firm to re-perform the non-assurance services to the extent necessary to
enable it to take responsibility for those services.
d. declining acceptance of the audit engagement.
Chapter 6
1. The most important factor in selecting an engagement team is to assign
consultants:
a. with a prior experience in the client’s industry.
b. with a combination of skills and experience in a various business functional
areas as well as in different industries.
c. with the appropriate skills, experience and types of thinking to deal with the
clients problems.
d. who are likely to employ different approaches to problem solving such as highly
imaginative thinking or unusual skill in the interpretation and use of financial and
statistical data.
2. The primary purpose of management advisory services is
a. to conduct special studies, preparation of recommendations, development of
plans and program, and provision of advice and assistance in their
implementation.
b. to provide services or to fulfill some social need.
c. to improve the clients use of its capabilities and resources to achieve the
objective of the organization.
d. to earn the best rate of return on resources entrusted to its care with safety of
investment being taken into account and consistent with the firm’s social and
legal responsibilities.
3. Which of the following contains the best statement on how an accounting firm
should apply the concept of competence in serving clients?
a. If the firm is not reasonably competent to undertake a particular engagement,
it should employ a specialist on a temporary basis.
b. The firm should accept only those engagement which it is qualified to
undertake and asking personnel qualified to give effective service in solving the
particular problems involved.
c. The firm should occasionally accept engagements outside the scope of its
regular services then collaborate with outside specialist on such engagement.
d. If the firm does not have men on its professional staff who are reasonably
competent to solve a client’s problem, it should ask the men to equip themselves
for the task by study, consultation, or other means.
4. A CPA should reject an MAS engagement if
a. It would require him to make management decisions for an audit client.
b. His recommendations are to be subject to review by the client.
c. He audits the financial statements of a subsidiary of the prospective client.
d. The proposed engagement is not accounting-related.
5. Before entering a consulting practice, the prospective consultant should
conduct market research to identify opportunities in the market place. This will
involve the following except.
a. Study of the listening of actively practicing management consultants.
b. Survey of local CPA firms to determine which are offering consulting services.
c. News release (one-full page) in Philippine Daily Inquirer about the opening of
the consultancy firm.
d. Identification of new services that may provide a competitive edge.
6. This individual is normally responsible for the successful completion of
engagements, dealing directly with clients and for “selling” work or consultancy
services.
a. Senior managers
b. Senior consultants
c. Partners
d. Supervisors
7. Factors that must be considered when defining the target level of competence
of management consultants include the following except:
a. scope of practice area
b. client requirement
c. service variety
d. investment required
8. Consultant could trace most of their current engagements to the following
sources except
a. speeches in professional and business organizations
b. referrals from clients
c. advertisement in TV,radio, and newspaper
d. books written
Chapter 7
1. An engagement program contains the following except
a. engagement objectives
b. list of manpower required
c. description of task to be accomplished
d. amount of fees to be earned for each tangible output completed.
2. The activities involved during the negotiation stage of a consulting engagement
include the following except
a. limited survey to ascertain the problem of the business entity and what is
required to reach a solution.
b. identification of the end product of the assignment
c. determination and agreement on the role to be performed by the CPA.
d. agree on the final fee to be charged for the services of the CPA.
3. The engagement proposal letter generally includes the following except
a. objectives and benefits.
b. personnel who will be assigned as Engagement Team members.
c. scope of the work and role of the consultant.
d. fees and billing arrangement.
4. The objectives of an engagement program include the following except
a. to facilities time and efficiency control over personnel assigned to the
engagement.
b. to provide a means for arranging distributing and assigning responsibility for
various segments of an engagement.
c. to provide a means for evaluating whether all segments of the engagements
have in fact been completed.
d. to provide a means of determining exactly how much and when to bill the
client.
5. Which of the following statement is true?
a. In rendering MAS, the CPA does not need the support and cooperation of the
client’s executives and employees
b. Management science involves a problem-solving framework based on
scientific methods and applies mathematical, statistical and probabilistic
techniques to management problem.
c. The management consultancy work program is never prepared by the client.
d. MAS engagement usually involve making decision for the client and assuming
responsibility for the full implementation of the alternative chosen to solve the
entity’s problem.
6. The following area the basic steps in the problem solving process
1. Evaluating the engagement and post-engagement follow-up,
2. Data analysis and diagnosis
3. Solution selection
4. Problem identification and definition and desired outcome.
5. Identification of suitable sources of information and data gathering.
6. Preparation and presentation of the report and recommended solution.
The order in which the above activities should be preferably followed is
a. 1,2,3,4,5,6
b. 4,5,2,3,6,1
c. 4,2,5,3,6,1
d. 4,5,2,6,3,1
7. The problem definition phase of the problem-solving process begins with the
initial recognition of a symptom pointing to the problem and ends with the
complete problem description. Among the key facets of the problem description
are the following except
a. Identify the problem
b. Objectives of the problem
c. Scope of the problem
d. Financial costs of the problem to the company
8. The problem definition phase of the problem-solving process begins with the
initial recognition of a symptom pointing to the problem and ends with the
complete problem description. Among the key facets of the problem description
are the following except
a. Intensity of the problem
b. Time dimension
c. Location
d. Responsibility of creating the problem
9. The problem definition phase of the problem-solving process begins with the
initial recognition of a symptom pointing to the problem and ends with the
complete problem description. Among the key facets of the problem description
are the following except
a. Human elements involved in the problem
b. Support system surrounding the problem
c. Tracking system related to the problem
d. Specific person in charge of managing the problem
10. The following pitfalls should be avoided by the consultant in identifying the
problem in a consultancy engagement, except
a. mistaking symptoms for the underlying problem
b. unqualified acceptance of the opinion of others
c. measuring the financial loss caused by the problem
d. overlooking the different and various causes of the problem
Chapter 8
1. Solution development phase of the problem-solving process involves the
following steps
1. Detailed development of the selected solution
2. Choice of the preferred solution alternative
3. Generation of solution alternative
In what order should the above-listed activities be performed?
a. 1,2,3,4
b. 4,3,2,1
c. 2,1,3,4
d. 4,3,1,2
2. The following can generally conduct a post-implementation evaluation except
a. special audit team selected from among the managers of the client
organization.
b. an internal audit team
c. external team of consultants
d. independent external audit team
3. In conducting a post-engagement follow-up, the following areas will be covered
except
a. proposal
b. engagement program
c. source data
d. fee earned on each important part of the engagement.