Management Consultant

- An outsider, a 3rd party, who can objectively

review the organizations systems and
procedures, and helps its management identify
managerial and operating problems,
recommend practical solutions to these
problems, and assist in their implementations
when necessary

Which of the following is not a qualification of a

CPA in MAS practice?
A. Familiarity with the clients financial accounting and
internal control systems
B. Analytical experience in problem-solving
C. Professional independence, objectivity, and integrity
D. Auditor of the client

Emergence and growth of Management

Consultancy
1. Growth in size and complexity in business
firms
2. Complexities in managing and conducting a
business
3. Lack of competent staf
4. Trend towards industrialization
5. Need for adequate and timely information in
management decision making
6. Development of techniques for the solution of
management problems, and the
businessmens awareness of their usefulness.
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Reasons for hiring Management Consultants

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
5. Provide temporary personnel
6. Help improve intra-company communications
7. Render an independent opinion
8. Help get results
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A CPA should reject management advisory

services engagement if
A. It would require him to make management decisions
for an audit client
B. The proposed engagement is not accounting related
C. His recommendations are to be subject to a review
by the client
D. He audits the financial statements of a subsidiary of
the prospective client

Historical Development and Evolution of MAS

in the Philippines
Resulted from the need for a more detailed
study after audit and logical extension of the
CPAs services.
Emerged in the Philippines with the passage of
RA 5166 (Accountancy Act of 1967), which
provided for the inclusion of MAS among the
subjects in the CPA Board Examinations
Act was superseded in 1975 by PD 692 (Revised
Accountancy Law)

Inclusions in RA 692
Inclusion of MS among the CPA Board
Examination subjects
Described its coverage as principles and
procedures, methods and techniques involved
in management consulting services that may be
rendered by CPAs in areas such as managerial
accounting, planning and control of operations,
design and appraisal of accounting systems and
financial management related services

People who make information-based decision go

through a series of fundamental steps in their
decision-making process.
1.
2.
3.
4.
5.
6.

Evaluate alternative
Identify constraints
Set objectives
Gather appropriate information
Choose the most acceptable alternative
Identify alternative

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Management Advisory Services (MAS)

May be defined as the function of providing
professional advisory (consulting) services, the
primary purpose of which is to improve the
clients use of its capabilities and resources to
achieve the objectives of the organization

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Characteristics of MAS
1.
2.
3.
4.
5.
6.
7.
8.

Services rendered are for the management

It involves problem solving
MAS relates to the future
It is broad in scope
It involves varied assignments
Engagements are usually non-recurring
Engagements require highly qualified staf
Human relations play a vital role in each
engagement

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Which of the following is not a characteristic of

management advisory services?
A. MAS is broad in concept
B. MAS involves problem-solving afecting the future
operations of the client
C. Beneficiary of the service is management
D. MAS is repetitive as far as the same client is
concerned

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MAS Practice Standards (8)

1. PERSONAL CHARACTERISTICS in performing
advisory services, a practitioner must act with
integrity and objectivity and be independent in
mental attitude.
2. COMPETENCE engagements are to be
performed by practitioners having competence
in the analytical approach and processes, and in
the technical subject matter under consideration
3. DUE CARE due professional care is to be
exercised in the performance of a management
advisory service engagement
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MAS Practice Standards (8)

4. CLIENT BENEFIT before accepting an
engagement, a practitioner is to notify the
client of any reservations he has regarding
anticipated benefits
5. UNDERSTANDING WITH THE 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.
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MAS Practice Standards (8)

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 results of the
engagement are to be communicated to the
client

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Competence in management advisory services is

acquired by
A. Education
B. Auditing and other experience
C. Actual performance of management advisory
services
D. All of the above

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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 performs services wherein he is in efect
acting as an employee of the client
C. The CPA losses 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 recommendations of giving advice
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Stages in MAS Engagements

PRE-ENGAGEMENT
CONSIDERATIONS

1. Negotiating the Engagement

ENGAGEMENT PLANNING

2. Preparing for and starting the

engagement

ENGAGEMENT
MANAGEMENT AND
EXECUTION

3. Conducting the engagement

4. Preparing and presenting the reports
and recommendations
5. Implementing the recommendations

ENGAGEMENT
CONCLUSION

6. Evaluating the engagement

7. Post engagement follow-up

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A Management Advisory Services engagement

generally involves the following activities in what
order?
1.
2.
3.
4.
5.
6.
7.

Post engagement follow up

Implementing the recommendation
Conducting the engagement
Negotiating the engagement
Preparing for and starting the engagement
Evaluating the engagement
Preparing and representing the report and
recommendations
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Fee Arrangements
Per diem
Bracket Quotation
Lump sum or fixed amounts
Retainer

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