OVERVIEW OF MANAGEMENT SERVICES
I.
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State whether the type of Mgt. Services given below is ( R ) related to acctg.
and finance or ( NR ) not related to acctg. and finance. Write the letter of your
choice on the blanks provided.
Cost determination alternatives in collective bargaining contract. NR
Job evaluation and salary administration. NR
Cost analysis of major investment decision. R
Marketing OR sales forecast. NR
Studies related to financial aspect of pension plan. R
Long range planning. NR
Setting up or improvement in internal control. NR
Technical and marketing aspect of project feasibility studies. NR
Analysis of financial statements. R
Production planning, scheduling, and control NR
Evaluation of capital stock of companies for merger or sale purposes. R
Operations research NR
Financial analysis of project feasibility studies NR
Plant layout studies.NR
Design, installation or review of budgetary system R
Personnel recruitment, selection and training NR
Review of existing organizational structure NR
Cost analysis and control R
Design installation or review of accounting system R
Management audit. NR
Project feasibility study. NR
Industrial engineering. NR
Development of management – oriented acctg. reporting system. R
Development of compensation program. NR
Operations audit. NR
Evaluation of the applicability and economic cost savings of using mechanized
equipment. R
Revision of pension plan. NR
Establishment of budgetary control. R
Long-range planning. NR
Cost production studies. NR
III. Multiple Choice ; Management Advisory Services
1. Professional competence, due professional care, planning and supervision, and sufficient
relevant data are general standards for MAS practice, including
a. Role of MAS practitioner
c. Association with forecasts
b. Understanding with client
d. Communication of results
2. Which of the following is not one of the steps in MAS engagement?
a. Implementation
c. Analysis
b. Informal meeting with client
d. Design
3. A certified public accountant’s scope of mgt. services is broad and covers all of the
following except
a. audit engagement
c. Re-engineering job
b. computerization engagements
d. Change mgt. engagements
4. Which of the following is not an area in MAS practice
a. Conducting special studies
b. Reviewing and suggesting improvement of policies, procedures, systems and
methods, etc.
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MAS
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c. Marketing and public relations work
d. Introducing new ideas, concepts and methods
Prof. Ma. Teresa B.
5. The following characterize mgt. advisory services except
a. Broader in scope and varied in nature
b. Utilize more junior staff than senior members of the firm.
c. Involve decision in the future.
d. Relate to specific problems where expert help is required.
6. The form of communication with a client in MAS consultation should be
a. Either oral or written
b. Oral with appreciate documentation in the work papers.
c. Written and copies should be sent to both mgt. and the board of directors.
d. Written and a copy should be sent to mgt. alone.
7. Which of the following statements is not acceptable?
a. A CPA provides consulting services to an existing audit client.
b. A CPA provides consulting services to two major competing clients.
c. A CPA shares with a new and substantial client information regarding another client
belonging to the same industry.
d. A CPA represents three major players in the industry in rationalizing the industry in
rationalizing the industry’s incentives before government public hearings.
8. State if the following statements regarding the CPA’s practice of MAS are true or false.
I.
Although MAS extend beyond the traditional acctg. services MAS practitioners are
still bound by the rules of professional ethics in the practice of acctg. in general.
II.
All the provisions of the code of Professional ethics for CPA’s in public acctg.
without exceptions must be observed by those in MAS.
a. True, True b. True, False
c. False, True
d. False, False
9. A persuasive characteristics of CPA’s role in mgt. consulting services engagements is that
of being a (an)
a. independent practitioner
b. confidential reviewer
c. objective advisor
d. computer specialist
10. According to profession’s standards, which of the following would not be considered
consulting services requirements for CPAs?
a. Supervising staff who are assigned to the engagement.
b. Maintaining independence from the client.
c. Complying with statements on standards for consulting services.
d. Obtaining an understanding of the nature, scope and limitations of the engagements.
11. According to professions’ standards, which of the following would be considered
consulting services?
Advisory services Implementing services
Product services
a.
Yes
Yes
Yes
b.
Yes
Yes
No
c.
Yes
No
Yes
d.
No
Yes
Yes
12. The technical standards that apply to MAS engagements require the MAS practitioner to
do all of the following except
a. Maintain independence from the client.
b. Give support for and clearly identify any quantifiable results that are based on
estimates.
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MAS
Prof. Ma. Teresa B.
De Jesus
c. Obtain an understanding concerning the nature, scope, and limitations of the MAS
engagement to be performed.
d. Take no position which might impair the practitioner’s objectivity.
13. A
a.
b.
c.
d.
e.
practitioner should reject an MAS engagement if
It would require him to make management decisions for audit client
His recommendations are to be subject to review by the client
He audits the financial statements of a subsidiary of the prospective client
The proposed engagement is not accounting related.
A and C
14. The CPA who undertakes the performance of MAS engagement should bear in mind that
the results should
a. be communicated in quantitative terms
c. not be explicitly or implicitly
guaranteed
b. not be set forth as quantitative terms
d. increase the client’s earnings
capabilities
15. Competence in mgt. advisory services is required by
a. Education
c. auditing and other experiences
b. Actual performance of mgt. advisory services
d. all of these
16. Factor that must be considered when defining the target level of competence of
management consultants 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
c. Psychological equilibrium
b. Courage
d. Judgment
TRUE OR FALSE QUESTIONS
1. The primary purpose of Management Advisory Services is to provide advice and
technical assistance to help the client improve use of its capabilities and resources.
TRUE
2. For an audit client, an MAS practitioner shall not assume a role of management or any
position that might impair his objectivity. TRUE
3. Recommendations and comments as direct result of observations during audit
compilation and review are part of MAS engagement or consultations. FALSE
4. The general and technical standards for MAS practice are both applicable to MAS
engagements and consultations. TRUE
5. One who is not a CPA and performs an MAS service for a client of a PICPA member is
an MAS practitioner. FALSE
6. One of the general standards for MAS practice specifies that a practitioner’s name can
be used in a manner which may lead to the belief that he vouches for the achievability
of a forecast. FALSE
7. An understanding (oral or written) with client should determine the nature, scope and
limitations of services to be performed. TRUE
8. An MAS practitioner is not allowed to secure the assistance of other qualified
professionals in order to complete the engagement. FALSE
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MAS
Prof. Ma. Teresa B.
De Jesus
9. Where a practitioner is asked to respond to an inquiry concerning MAS matter
unrelated to the engagement, both the inquiry does not fall within the definition of MAS
consultation. FALSE
10. Professional competence includes the ability to effectively communicate and assist in
implementation of recommendations. TRUE
11. An MAS practitioner should plan and supervise engagement in order to provide
reasonable assurance that work is in accordance with understanding with client. TRUE
12. The engagement plan should be developed that can be modified as necessary during
engagement. TRUE
13. An MAS practitioner in determining the nature and quality of information should
exercise personal judgment. FALSE
14. The practitioner should not guarantee results of MAS engagement either implicitly or
explicitly. TRUE
15. Final reports in MAS engagement may be oral or written depending on the
understanding with client. TRUE
16. The nature of MAS consultations may be in the course of a telephone conversation,
non-business meetings, or they may occur at a meeting in the client’s office. TRUE
17. The role of practitioner in MAS engagement serves as an objective advisor while MAS
consultation the practitioner serves as general business advisor. TRUE
18. An MAS practitioner may perform MAS service in a specific area although lacks
competence in that particular area. FALSE
19. In MAS consultations, the practitioner should be careful to avoid misleading the client
into believing that he guarantees the benefits the client seeks. TRUE
20. The code of professional ethics that specifically deals with the expression of an
opinion does not apply in MAS practice. TRUE
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