Mindanao State University
College of Business Administration and Accountancy
DEPARTMENT OF ACCOUNTANCY
Marawi City
MANAGEMENT ADVISORY SERVICES CONCEPTS, STANDARDS AND PRACTICES
AND MANAGEMENT ACCOUNTING ENVIRONMENT
Accounting 142
MULTIPLE CHOICE. Choose the best statement among the
choices. Shade the letter corresponding to your choice on
the answer sheet provided with this questionnaire.
1.
2.
3.
4.
5.
A management consultant:
a. Is an employee of a client firm 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 a firm.
b. Is a person who is qualified by education,
experience, technical ability and temperament
to replace businessmen on a professional basis
in identifying, defining and solving specific
management
problems
involving
the
organization, planning, direction, control and
operation of a firm.
c. 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 a firm.
d. Should be a CPA, holder of a masters degree so
he may be considered qualified by education,
experience, technical ability and temperament
to advise businessmen on how management
problems could be solved.
Generally, the emergence and growth of
management consultancy may be attributed to the
following factors, except:
a. Growth in size and complexity of business firms.
b. The development of techniques for the solution
of
management
problems
and
the
businessmen’s awareness of how to use them.
c. Complexity in managing and conducting a
business.
d. Need for adequate and timely information in
management decision making.
Some reasons for hiring management consultants are
as follows, except:
a. To render an independent opinion.
b. To provide confidential service in which the
identity of the client is concealed.
c. To provide specialized skills and experience.
d. To help define specific problems and implement
solutions.
Which of the following statements is correct?
a. Audit practice actually stemmed from the
CPA’s MAS practice.
b. Covert symptoms are not easy to perceive, call
attention to and/or remedy.
c. Both covert and overt symptoms may simply be
covered in the CPA’s usual letter to
management prepared at the completion of
the audit.
d. Overt symptoms need a more detailed study
and a logical extension of the CPA’s service.
Management advisory services may be defined as:
a. The process of identifying, measuring and
communication economic information to permit
informed judgment and decision by users of
information.
b. The
function
of
providing
quantitative
information primarily financial in nature, about
economic entities, that is intended to be useful
in making economic decision.
c. The art of recording, classifying and summarizing
in a significant manner and in terms of money,
transactions and events which are in part at
least of a financial character and interpreting
the results thereof.
d. The function of providing professional advisory
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.
6.
MAS can be related to the following areas, except:
a. The conduct of special studies, preparation of
recommendations, development of plans and
programs and provision of advice and technical
assistance in the implementation of the
recommendations.
b. The introduction of new ideas, concepts and
methods to management.
c. The application and use of managerial
accounting, control systems, data processing
and mathematical techniques and methods.
d. The improvement of policies, procedures,
systems, methods and personal relationships.
7.
Following are possible end products of an MAS
engagement, except:
a. A management information system and an
electronic data processing system.
b. A sales reporting system and a cost accounting
system.
c. A blueprint of a construction of a project.
d. An organizational plan with statement of duties
and responsibilities.
8.
Which of the following is incorrect?
a. MAS relates to the future and engagements are
usually recurring.
b. Because of the broad scope covered by MAS, a
wider variety of assignments are usually
encountered.
c. MAS engagements require highly qualified staff.
d. Human relations play a vital role in each MAS
engagement.
9.
MAS areas which are normally related to accounting
and finance functions may include:
a. Preparation of organization and administrative
manuals.
b. Cost reduction studies.
c. Plant layout studies.
d. Development of preventive maintenance
systems.
10. Among the MAS areas which are not related to the
accounting and finance function is marketing, which
may include the following, except:
a. Product profitability analysis.
b. Inventory management studies.
c. Evaluation of sales personnel’s incentive
compensations.
d. Determination of pricing policy.
11. Financial management cases may involve the
following, except:
a. Establishment of capital budgeting procedures.
b. Variance analysis.
c. Study of cost of capital and cost of debt.
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d. Establishment of operating and cash budgets.
12. MAS can be classified according to the practitioners’
ability and/or expertise. Those services which are
considered extensions of the usual accounting work
and require additional training and/or experience
are:
a. Unusual services.
b. Highly specialized services.
c. Somewhat specialized services.
d. Usual services.
13. Which of the following statements is incorrect?
a. The practitioner has the responsibility to
determine the scope of services he is
competent to offer, subject to pronouncements
of his profession and such scope should be
adequate to identify and resolve the client’s
problem symptoms.
b. Should a consultant feel that he cannot
effectively handle the proposed engagement
because of limitations in skills, competence and
economic requirements, the consultant may
refer this to another practitioner whom he thinks
can effectively do the job.
c. It is the responsibility of a practitioner to be sure
that the nature and scope of the MAS he elects
to offer are in conformity with the Code of
Professional Ethics.
d. Each consultant has the responsibility to
evaluate his ability to render MAS of a
professional quality in each specific area and
refrain from representing himself as qualified
and willing to accept work in areas where he
does not possess the required competence.
14. Which of the following statements is incorrect?
a. The role of a consultant in performing MAS
engagements is to improve the client’s use of its
capabilities and resources to achieve the
objectives of the organization.
b. Not all MAS practitioners are bound by the
Code of Ethics for Professional Accountants.
c. Management consulting and other advisory
services are not among the assurance
engagements
performed
by
professional
accountants.
d. In determining the scope or type of service to
be rendered, the practitioner is expected to
maintain independence to enable him to
render his professional judgment and express his
opinions/conclusions
with
honesty
and
objectivity.
15. In cases where clients seek to engage the services of
a consultant to provide solutions and results on a
basis wherein the client expects to be involved only
to a limited extent:
a. There may be a tendency to apply a packaged
solution indiscriminately which inhibits client
participation.
b. The client might get solutions that do not meet
actual needs and the consultant might be
placed in a position inconsistent with his
objective advisory role.
c. The consultant must fully inform the client of the
limitations and risks inherent in these types of
undertaking.
d. All of the above.
16. Which of the following statements relates to full
scope engagements?
a. Once implementation is concluded, the
consultant’s participation is also concluded and
only the consultant’s personnel remain to carry
on the solution.
b. The client does not seek the consultant’s
assistance in achieving the desired result but
only his professional judgment.
c. Any action beyond the point of decision is solely
the responsibility of the client.
d. Client representations from both the working
and decision making levels are required.
17. Which of the following statement is correct?
a. In performing MAS engagement, a practitioner
must act with maturity and objectivity and be
independent in mental attitude.
b. Due personal care is to be exercised in the
performance of an MAS engagement.
c. The MAS practice standards do not apply to
“informal advice” but are applicable only to
structural or organized MAS engagements.
d. None of the above.
18. This principle imposes the obligation on all
professional accountants to be fair, intellectually
honest and free of conflicts of interests.
a. Professional competence.
b. Integrity.
c. Independence in mental attitude.
d. Objectivity.
19. This stage of MAS engagement involves various
activities which may generally be classified as
gathering of information and analysis/evaluation of
information gathered.
a. Negotiating the engagement.
b. Preparing the engagement.
c. Conducting the engagement.
d. Preparing and presenting the reports and
recommendations.
20. It may be considered as the master plan for the
engagement which serves as the framework for
controlling its progress.
a. Engagement plan.
b. Master budget.
c. Engagement work program.
d. Engagement blueprint.
21. Controlling involves the measurement of progress in
attaining the engagement plan and objectives. At
significant engagement points, progress should be
measured in terms of:
a. Time schedule, accomplishments and expenses
incurred.
b. Quality of work, expenses incurred and time
schedule.
c. Time schedule, accomplishments and quality of
work.
d. Quality of work, number of reports prepared
and time schedule.
22. One of the activities involved in information gathering
is recording the information and documenting the
process. This can be accomplished with the use of
engagement working papers which are considered
very useful for the following reasons, except:
a. They
provide
documentation
of
the
engagement.
b. They provide a historical record of the services
to the client.
c. They serve as a contractual agreement when
accepted and approved by the client.
d. They serve as a source of ideas and research
material for future engagements.
23. The long form report:
a. Is restricted to the consultant’s key findings and
recommendations.
b. Is issued to the client when he decides to do the
implementation phase without requesting the
assistance from the consultant.
c. Summarizes the findings to date, work
accomplished in relation to plan and when
appropriate, tentative recommendations.
d. None of the above.
24. An MAS engagement should be evaluated by
comparing actual results with established standards
to assess the quality of the engagement. Criteria for
evaluation are:
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a. Achievement of the engagement’s objectives
as set forth and agreed upon between the
client and the practitioner.
b. Complete satisfaction of the consultant as
regards the results of the engagement.
c. Both A and B.
d. Neither A nor B.
25. Which of the following statements is correct?
a. A management letter is a report submitted by
the CPA to management after the review of the
management controls stating the coverage of
the review and the deficiencies noted during
the review.
b. Management advisory services include the
consultative services to management in its
decision making.
c. Expertise in management advisory services is
acquired by education, auditing and other
experience and actual performance of
management advisory services.
d. Management advisory services include decision
making services performed by practitioner for
management.
26. Which of the following statements is correct?
a. A CPA firm’s primary purpose for performing
MAS is to enable the staff members to acquire
the necessary continuing education in all areas
of business.
b. MAS consultation, which is a type of MAS
engagement, generally involves giving of
advice or information by a CPA in which an
analytical process is applied.
c. Management consultancy is an exclusive field
of practice for CPAs and is regulated by law.
d. An area of MAS which is directly related to the
accounting and finance function is project
feasibility study.
27. Which of the following will not impair the
independence of a CPA in the rendition of
Management Services?
a. The CPA performs decision-making services for
his client.
b. The CPA perform services wherein he is in effect,
acting as an employee of the client.
c. The CPA loses his objectivity and acts in a
manner as if he is advocating for the interest of
his client.
d. The CPA does not extend his services beyond
the presentation of recommendation or giving
of advice.
28. Which of the following statements is correct?
a. In MAS, actions to be taken are identified, the
benefits of which were received in the past.
b. Because the MAS practitioner must be
independent, he must not allow the client to
participate in any phase of his engagement.
c. Although MAS extends beyond the traditional
accounting services, MS practitioners are still
bound by the rules of professional ethics in the
practice of accounting in general.
d. In management audit, a team with a mix of
members who are accountants and nonaccountants
will
provide
a
desirable
combination of specialist and will offer a crossfertilization of ideas from different business fields.
29. The following statements refer to the competence of
CPAs in management services, except:
a. It is the ability to identify client needs, use
analytical approach and process, actual
experience in MS work and research.
b. In concept, it refers to the technical
qualifications of the practitioner and his ability
to supervise and evaluate the quality of work of
his staff assigned to the engagement so as to
be responsible for the successful completion of
the project.
c. It must be retained in the rendition of MS work
and it can be impaired if the CPA performs
decision making for the client or acts as
employee of the client.
d. It is acquired by education, self-study,
attendance to professional development
courses, actual experience in MS work and
research.
30. Which of the following statement is correct?
a. A CPA by virtue of having the necessary
academic preparation and by hurdling the
licensure examinations required to have a CPA
license can readily render management
services to the public.
b. Adequate training and experience in both the
analytical approach and process in the
particular undertaking are requisites for the CPA
to be involved in a management service
engagement.
c. A CPA with MBA and PhD degrees is
automatically qualified to render management
services.
d. Competence as a standard in the rendition of
management services by a CPA may be
equated
to
having
excellent
scholarly
preparation to include the usual baccalaureate
degree, an MBA and other post graduate
studies.
31. Which of the following statement is incorrect?
a. CPAs provide management services to go
around the ethical constraints as mandated by
the Accountancy Act.
b. Businesses hire management consultants to help
define specific problems and develop solutions.
c. Included in the practice of consulting is the
provision of confidential service in which the
identity of the client is concealed.
d. CPAs performing management services may be
considered to be in the practice of
management consulting.
32. CPA’s scope of management services is broad and
covers all of the following, except:
a. Change management engagements.
b. Computerization engagements.
c. Audit, tax and legal engagements.
d. Re-engineering jobs.
33. Which of the following statements is not acceptable?
a. A CPA represents three major players in the
industry in rationalizing the industry’s incentives
before the government public hearings.
b. A CPA shares with a new and substantial client
information regarding another client belonging
to the same industry.
c. A CPA provides consulting services to an existing
audit client.
d. A CPA offers and provides consulting services to
two major competing clients.
34. The following characterize management advisory
services, except:
a. Involve decision for the future.
b. Broader in scope and varied in nature.
c. Utilize more junior staff than senior member of
the firm.
d. Relate to specific problems where expert help is
required.
35. These statements relate to MAS practice standards:
A. A practitioner is to notify the client of any
reservation he has regarding anticipated
benefits.
B. Throughout the engagement, there ought to be
a systematic critical review of accomplishments
and work should be done within the framework
of the Code of Ethics and other professional
standards.
C. During the engagement, should there be
significant
changes between cost and
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anticipated benefits, the client should be
informed.
D. Before the engagements, the practitioner must
make arrangements with, and inform the client
on
significant
matters
related
to
the
engagement, in writing.
Of these statements, which pertains to the practice
standard on client benefit?
a. All statements.
b. Statement A only.
c. Statements A and C only.
d. Statements A, C and D only.
36. After making the preliminary audit arrangements, an
engagement confirmation letter should be sent to
the client. The letter usually would not include:
a. A statement that management letter will be
issued outlining comments and suggestions as to
any procedures requiring the client’s attention.
b. An estimate of the time to be spent on the audit
work by audit staff and management.
c. A statement that management advisory
services would be made available upon
request.
d. A reference to the auditor’s responsibility for the
detection of errors or irregularities.
37. These statements relate to management functions:
A. Managers carry out their planning function by
mobilizing the organization’s resources and
overseeing day to day operations.
B. Managers carry out their control function by
obtaining feedback to ensure that the plans are
being followed.
C. The planning, directing and motivating and
controlling functions of a manager are kept
separate from such manager’s decision making
activities.
D. The manager’s planning function involves
setting of the organization’s goals and
identifying alternatives and selecting the
alternative that best furthers such goals
Of these statements, which are incorrect?
a. Statements A and C only.
b. Statements B and D only.
c. Statements A, C and D only.
d. Statements B, C and D only.
38. Which of the following statements is incorrect?
a. Managerial accounting is as concerned with
providing information to stockholders as it is with
providing information to managers.
b. Managerial accounting focuses more on the
segments of an organization rather than on the
organization as a whole.
c. Managerial accounting need not follow GAAP.
d. Managerial accounting is not mandatory, thus,
not required by an external law or regulation.
39. In which of the following aspects of managerial
accounting is similar to financial accounting?
a. Users of reports.
b. Emphasis between the past and future.
c. Type of data provided to users.
d. Reliance on the accounting database.
40. Following are some of the activities involved in
managerial accounting, except:
a. Determining, accumulating and explaining both
manufacturing and non-manufacturing costs.
b. Assisting
managers
in
developing
the
company’s prices both for internal and external
transactions.
c. Determining the cost behavior.
d. Accumulating and presenting data which may
be used by outside creditors and investors.
41. Managerial accounting is applicable to:
a. Business organizations only.
b. Non-profit organizations only.
c. Both business and non-profit organizations.
d. Neither business nor non-profit organizations.
42. Following are the principles governing the design of
management accounting system, except:
a. The system should help to establish the decision
making authority over the organization’s assets.
b. The information generated by the system should
support planning and decision making.
c. The reports should provide a means for
performance monitoring and evaluation.
d. None of the above.
43. Which of the following statements relating to
Standards of Ethical Conduct for Management
Accountants is correct?
a. A management accountant need not refuse
gifts and hospitality that would not influence or
would not appear to influence their actions.
b. A management accountant should inform his
superiors regarding the confidentiality of
information acquired in the course of their work
and monitor their activities to assure the
maintenance
of
relevant
and
reliable
information.
c. A management accountant should prepare
complete
and
clear
reports
and
recommendations before appropriate analyses
of relevant and reliable information.
d. Management accountants have a responsibility
to disclose all reliable information acquired in
the engagement to intended users.
44. Management accounting includes the following
processes, except:
a. Measurement and identification.
b. Accumulation and preparation.
c. Interpretation and analysis.
d. Communication and delegation.
45. If a management accountant has a problem in
resolving an ethical conflict, the first action that
should normally be taken is to:
a. Resign from the company.
b. Notify the police.
c. Discuss the problem with his/her immediate
supervisor.
d. Remain silent.
46. These statements relate to control:
A. Managerial control and engineering control are
not synonymous.
B. Control from the viewpoint of management
accounting is defined as the process of setting
maximum limits on financial expenditures.
Of these statements, which is correct?
a. Statement A only.
b. Statement B only.
c. Both Statement A and B.
d. Neither Statement A nor B.
47. Management accounting focuses on preparing data
which, although not adequately verifiable for
external users, are more useful to management. This
principle of management accounting considers the
following factors are more important than others:
a. Verifiability, objectivity and accuracy.
b. Conservatism.
c. Relevance, flexibility and timeliness.
d. Consistency and disclosure.
48. In
comparing
management
and
financial
accounting, which of the following more accurately
describes management accounting information?
a. Comparable, verifiable, monetary.
b. Budgeted, informative, adaptable.
c. Required, estimated, internal.
d. Historical, precise, useful.
49. Which of the following statements is incorrect?
a. Cost accounting is a tool for both financial and
managerial accounting.
b. In management accounting, emphasis is given
to identifying or matching costs with functions,
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projects or responsibilities rather than with time
periods.
c. Both management and financial accounting
are subject to mandatory record keeping
requirements.
d. None of the above.
50. Management accounting information:
a. Uses historical cost as the basis for reports to
managers who are making decisions about
future courses of action.
b. Should be developed and provided only if its
benefits exceed its costs.
c. Does not reflect the financial criteria of
verifiability or consistency.
d. Should serve the basic needs of investors and
creditors.
51. Which of the following statements is true when
comparing managerial accounting to financial
accounting?
a. Managerial accounting places more emphasis
on precision than financial accounting.
b. Both are highly dependent on timely
information.
c. Both rely on the same accounting information
system.
d. Managerial accounting is concerned with
external decision makers.
52. Which of the following is true of managerial
accounting rather than financial accounting?
a. The outputs of this accounting system are the
primary financial statements.
b. The methods of this accounting system are
established by an overseeing board.
c. The accounting methods are standardized to
allow comparisons among companies.
d. The accounting system would be unique to
each company.
53. The major reporting standard for presenting
managerial accounting information is:
a. Relevance.
b. Generally accepted accounting principles.
c. The cost principle.
d. The current tax law.
54. Which of the following activities is not usually
performed by a management accountant?
a. Assisting managers to interpret data in
managerial accounting reports.
b. Designing systems to provide information for
internal and external reports.
c. Gathering data from sources other than the
accounting system.
d. Deciding the best level of inventory to be
maintained.
55. How frequent is management accounting report
when compared to report to external users and how
does managerial decision making compare with
external performance evaluation?
a.
b.
c.
d.
Managerial
Accounting
More frequent and
aggregated
Less frequent and
aggregated
Less frequent and
detailed
More frequent
and detailed
Financial
Accounting
More frequent
and detailed
Less frequent and
detailed
More frequent and
aggregated
Less frequent and
aggregated
56. Which consideration influences the frequency of an
internal report?
a. The wishes of the managers receiving the report.
b. The frequency with which decisions are made
that require the information in the report.
c. The cost of preparing the report.
d. All of the above.
57. Management accountants help develop and
maintain reporting systems that are aligned with
organizational structures and that provide useful
information on an organization’s performance.
Management decision processes fall into three
categories that consist of:
a. Non-repetitive, non-programmed and nonstrategic.
b. Repetitive, non-programmed and strategic.
c. Repetitive, programmed and strategic.
d. Non-repetitive, non-programmed and strategic.
58. Which of the following is an incorrect statement?
a. There is no overlap between financial and
managerial accounting.
b. Managerial accounting sometimes relies on
past information.
c. Managerial accounting does not need to
conform to generally accepted accounting
principles.
d. Financial accounting must conform to generally
accepted accounting principles.
59. For managerial reports, the accounting data used:
a. Must be the same accounting data for
reporting to shareholders, but may use different
data for tax purposes.
b. Must be the same accounting data for tax
purposes, but may use different data for
reporting to shareholders.
c. Must be the same accounting data for both tax
purposes and reporting to shareholders.
d. May be different accounting data for both tax
purposes and reporting to shareholders.
60. Managerial accounting creates value by:
a. By forcing managers to analyze historical figures
and interpret the results.
b. By eliminating all pricing and costing errors.
c. By focusing managers attention on the
relationship between financial and nonfinancial factors.
d. All of the above.
61. Which of the following best describes what
performance evaluation should be designed to do?
a. Modify goal and objectives each month.
b. Compare actual results to plan.
c. Establish sales goals and targets.
d. Establish blame.
62. All of the following would be considered staff
functions, except:
a. The vice-president for finance.
b. The vice-president for corporate planning.
c. The
vice-president
for
research
and
development.
d. The vice president for marketing.
63. A staff position:
a. Relates directly to the carrying out of the basic
objectives of the organization.
b. Is supportive in nature, providing service and
assistance to other parts of the organization.
c. Is superior in authority to a line position.
d. None of these.
64. Strategic planning is different from operational
planning in that operational planning:
a. Involves large sums of money.
b. Would be involved in determining production
levels for next quarter.
c. Involves only long range goals.
d. Operational and strategic planning are the
same.
65. In the planning and control process, what is the
proper sequence of events?
a. Set goals, set objectives, develop plans,
implement plans, evaluate performance.
b. Establish a master budget, set standard costs,
develop variance analysis.
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c. Develop engineered costs, develop pricing
targets, calculate contribution margins.
d. Identify variable costs, identify fixed costs,
project the sales mix, determine breakeven.
66. Management accounting is an integral part of the
management process. As such, it provides essential
information for the following objectives, except:
a. Maintaining the current level of resource
utilization as well as internal and external
communication.
b. Measuring and evaluating performance.
c. Planning strategies and controlling current
activities of the organization.
d. Enhancing objectivity in decision-making.
67. In financial accounting, certain rules and regulations
must be followed on how financial statements must
be presented to the reader.
In managerial
accounting, no such restrictions generally apply
because it is:
a. An entirely different field that need not observe
the broad guidelines in financial accounting.
b. Designed to provide management with nonfinancial information for decision-making.
c. Designed to provide accounting and other
financial data to assist management in making
business decisions.
d. A discipline that does not require preparation of
other financial statements.
68. To distinguish between management accounting
and financial accounting, the following statements
are correct, except:
a. Management accounting, in view of its various
integrated recipients should have a separate
data recording and retrieval system from
financial accounting.
b. Financial accounting is bound by GAAP, and
management accounting need not be in
conformity with GAAP.
c. Financial accounting can be regarded as the
process while management accounting can be
regarded as the product of the process.
d. Management accounting output must be
released on time so as not to erode its usefulness
whereas financial accounting output can still be
useful even when delayed.
69. Which of the following is a controller’s responsibility?
a. Tax planning and accounting.
b. In charge of credit and collection.
c. Custodian of funds.
d. Arranging short-term financing.
70. The following are the functions that may be
performed either by a controller or a treasurer:
A. Tax management.
B. Financial reporting and interpretation.
C. Credit management.
D. Sourcing and investing of funds.
E. Reporting to government regulatory agencies.
F. Risk management.
G. Economic appraisal.
H. Planning for control.
Of these functions, which of them relates to that of a
treasurer?
a. Items A, B, G and H only.
b. Items C, D and F only.
c. Items A, B, E, G, and H only.
d. Items C, D, E and F only.
71. You were newly appointed as controller of CZX
Corporation.
Among the jobs your department
would do include the following:
a. Cash receipts, cash disbursements, general
accounting, taxation, financial accounting
analysis, and internal auditing.
b. Financial
reporting,
strategic
planning,
managerial accounting, taxation, financial
statement analysis, and internal accounting.
c. Financial accounting, managerial accounting,
cost accounting, inventory accounting, payroll
accounting,
tax
accounting
and
sales
forecasting.
d. Tax accounting, managerial accounting,
internal auditing and general accounting.
72. The
chief
management
accountant
called
“controller” traditionally performs these functions,
except:
a. The establishment and implementation of the
financial planning process.
b. Financial and management reporting and
interpretation.
c. Protection
of
company
resources
and
economic evaluation.
d. Preparation
of
proposals
for
product
promotions.
73. As business increase in complexity, the function of
controllership has attained top level recognition in
the corporate area. Many areas related to finance
and accounting have been identified with
controllership. One area that becomes controversial
when included under the controller and viewed that
such inclusion violates basic internal control is:
a. Credit and collection.
b. Reporting to government agencies and
taxation.
c. Internal auditing.
d. Long-range financial planning.
74. Which of the following is not a controller’s function?
a. In charge of planning and control.
b. Protection of assets such as adequate insurance
coverage.
c. Interpreting and reporting on effects of external
factors on the business.
d. Arranging short-term financing.
75. Which of the following acts is not performed by an
independent CPA engaged to install an accounting
system?
a. Formulation of the chart of accounts.
b. Design of business and accounting forms.
c. Supervision of application of system and
procedures recommended.
d. Preparation of an accounting manual.
76. Which of the following types of management services
is normally related to accounting and finance?
a. Management audit.
b. Marketing forecasts.
c. Costs determination of alternatives in collective
bargaining agreements.
d. Job evaluation and salary administration.
77. Which of the following types of management services
is not directly related to accounting and finance
functions?
a. Cost analysis of major investment decision.
b. Long range planning.
c. Design, installation and review of budgetary
system.
d. Valuation of capital stock of companies for
purposes of merger or sales.
78. Which of the following is not classifiable as a
management advisory service by CPAs?
a. Systems design.
b. Make or buy analysis.
c. Project feasibility study.
d. Assistance in budgeting.
79. The Revised Accountancy Law incorporates the
Code of Professional Ethics for CPAs. The provision of
management advisory services is among the areas of
public accounting. It is, however, not exclusive to
CPAs. Considering these premises, which of the
following statements is applicable?
a. CPAs in the practice of audit and management
consulting services may advertise and charge
contingent fees.
Prepared by: Mohammad Muariff S. Balang, CPA, First Semester, AY 2013-2014
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b. Management advisory services as a field of
practice is considered as an integral part of
public accounting thus, the Code of
Professional
Ethics
for
CPAs
covers
management advisory services.
c. The practice of management advisory services
should not be extended to existing audit clients
since this will adversely affect the CPA’s
independence.
d. CPAs in the practice of management advisory
services are not bound by the Board of
Accountancy but are bound by the said law in
the practice of audit.
80. Which of the following is not classifiable as a
management advisory service by CPAs?
a. Annual financial planning and budgeting.
b. Information systems.
c. Public relations work.
d. Lease or buy analysis.
MATCHING TYPE. Match the terms listed in Column A with
the best statement describing the term in Column B. Write
your answers on the answer sheet provided with this
questionnaire.
Column A
Column B
1. File memorandum.
2. Contract.
3. Engagement letter.
4. Proposal letter.
5. Confirmation letter.
6. Per diem basis.
7. Bracket quotation.
8. Lump sum.
9. Retainer.
10. Contingency fee.
A. The amount of fees to be
charged is based on the
number of hours consumed by
the practitioner and his staff in
conducting the engagement.
B. A contractual agreement used
when the client has already
agreed that the practitioner will
conduct the engagement.
C. Under this arrangement, the
practitioner quotes a minimum
and maximum fee with the
understanding that the work will
be accomplished within this
range.
D. This arrangement is usually
made for continuous or yearlong engagements.
E. A legal document generally
prepared
by
the
client
incorporating a proposal letter
or engagement letter prepared
by the practitioner.
F. The client is billed a flat but all
inclusive pre-arranged amount
for the entire engagement.
G. An offer of service; when
accepted or approved, it
becomes
a
contractual
agreement.
H. A
fee
calculated
on
a
predetermined basis relating to
the outcome or result of a
transaction or the result of the
work performed.
I. Used when the client thinks that
a proposal letter is unnecessary
or
undesirable
and
oral
understanding may simply be
reached and will serve the
purpose.
J. A brief and concise statement
of an agreement previously
reached with a client.
IDENTIFICATION. Determine what ethical standard do the
items listed below relate. Write your answers on the answer
sheet provided with this questionnaire.
________1. Avoid actual or apparent conflict of interest
and advise all appropriate parties of any
potential conflict.
________2. Prepare complete and clear reports and
recommendations after appropriate analyses
of relevant and reliable information.
________3. Perform
their
professional
duties
in
accordance with relevant laws, regulations
and technical standards.
________4. Communicate unfavorable, as well as
favorable
information
and
professional
judgments or opinions.
________5. Disclose fully all relevant information that
could reasonably be expected to influence
an intended user’s understanding of the
reports, comments and recommendations
presented.
________6. Refrain
from
disclosing
confidential
information acquired in the course of their
work except when authorized or legally
obligated to do so.
________7. Refuse any gift, favor or hospitality that would
influence or would appear to influence their
actions.
________8. Refrain from engaging in or supporting any
activity that would discredit the profession.
________9. Communicate
information
fairly
and
objectively.
________10. Recognize and communicate professional
limitations or other constraints that would
preclude responsible judgment or successful
performance of an activity.
ANALYSIS. Randomly listed below are the seven stages in
the analytical approach and process and the seven
phases in the MAS engagement process. Arrange them
sequentially by writing 1st, 2nd and so on in the space
provided in the answer sheet.
Analytical Approach and Process
________1. Advising and providing technical assistance in
implementing.
________2. Planning and scheduling actions.
________3. Seeking and identifying objectives.
________4. Defining the problem or opportunity for
improvement.
________5. Ascertaining
the
pertinent
fact
and
circumstances.
________6. Evaluating and determining possible solutions.
________7. Presenting findings and recommendations.
MAS Engagement Process
________1. Post-engagement follow-up.
________2. Implementing the recommendation.
________3. Conducting the engagement.
________4. Negotiating the engagement.
________5. Preparing for and starting the engagement.
________6. Evaluating the engagement.
________7. Preparing and presenting
recommendations.
Prepared by: Mohammad Muariff S. Balang, CPA, First Semester, AY 2013-2014
report
and
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