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1. CONSULTATIONS
The practitioner provides counsel in a short
time frame, based mostly on existing personal
knowledge about the client, the technical
matters involved, the circumstances, client
representations, and the mutual intent of the
parties.
Example:
- Suggesting computer software for
further client investigation.
THE SIX (6) CONSULTING SERVICES ARE:
2. ADVISORY SERVICES
3. IMPLEMENTATION SERVICES
4 . TRANSACTION SERVICES
The practitioner’s function is to provide services
related to a specific client transaction, generally
with a third party.
Example:
- Insolvency services and analysis of a potential
merger or acquisition.
THE SIX (6) CONSULTING SERVICES ARE:
6. PRODUCT SERVICES
The practitioner’s function is to provide the
client with a product and related professional
services in support of the installation, use, or
maintenance of the product.
Example:
- Sale and delivery of packaged training
programs and sale and installation of
systems development methodologies.
CONSULTING PROCESS
– THE ANALYTICAL APPROACH AND PROCESS APPLIED
IN A CONSULTING SERVICE
ACTIVITIES INVOLVED IN A CONSULTING PROCESS
1. Determination of client objectives
2. Fact – finding
3. Definition of the problems or opportunities
4. Evaluation of alternatives
5. Formulation of proposed action
6. Communication of results
7. Implementation
8. Follow - up
FACTORS FOR THE EMERGENCE AND GROWTH OF
MAS CONSULTANCY
- They are already familiar with the client and his business, and enjoy
the client’s confidence.
The services listed above are not necessarily exhaustive nor complete. The
practitioner may offer other services not mentioned above depending on
the practitioner’s competence, experience, technical ability, and
professional integrity to meet or deliver such other services he offers.
ROLE OF CONSULTANTS AND CLIENTS IN MAS ENGAGEMENTS
- The client seeks only an impartial and objective study of a case and
the resulting recommendations. These involve only the first 5 stages
in the analytical approach and process.
3. IN INFORMAL ADVICE
- Its structure is informal and no presumption should exist that an
extensive study has been performed.
3. Client interest
- The MAS practitioner shall serve the client interest by seeking to
accomplish the objectives established by the understanding with the
client while maintain integrity and objectivity.
TECHNICAL STANDARDS
BENEFITS
- Specific advantages from preparing Project Feasibility Studies may
be delineated, considering the different interested parties that may be
benefited by the study:
a. Proponents/Promoters/Organizers of new projects – it serves as a
basis for ascertaining the practicability / workability of proposed
projects.
b. Creditors – it serves as a basis for the creditors to decide whether
or not to provide financial assistance and to determine the appropriate
terms and conditions of such assistance.
c. Stockholders / Investors – to decide whether to invest in the
project of not.
PROJECT FEASIBILITY STUDY
(PROJECT STUDY OR FEASIBILITY STUDY)
BENEFITS (continued)
d. Management of existing firms – to ascertain the feasibility of
expansion programs. It also serves as a basis in deciding on the
possibility of taking over existing business, as well as the extent of the
capital outlay required.
e. Government Instrumentalities – to evaluate the project’s social
desirability and to check if the project meets the applicable legal
requirements, as well as to determine the level or extent of incentives
that may be granted.
f. National Economy as a Whole – a project study assists in
minimizing the risk of failure of business ventures. Thus, wastage of
valuable resources is reduced, thereby accelerating economic growth.
MAJOR ASPECTS OF A PROJECT STUDY
I. Summary of Project
A. Name of firm
B. Location head office / factory
C. Brief description of the project
1. History of business
2. Nature or kind of industry
3. Type of organization
4. Officers of the business and their qualifications
FEASIBILITY STUDY GUIDELINE (continued)
(from the University of the Philippines Institute of Small-Scale Industries)
2. Demand
a. Consumption for past ten years
b. Major consumers of the product
c. Projected consumption for the next five years
FEASIBILITY STUDY GUIDELINE (continued)
(from the University of the Philippines Institute of Small-Scale Industries)
4. Competitive Position
a. Selling price – include a price study indicating the past domestic and
import prices, the high and low prices within the year, and the effect
of seasonality, if any.
b. Competitiveness of the quality of the product.
FEASIBILITY STUDY GUIDELINE (continued)
(from the University of the Philippines Institute of Small-Scale Industries)
4. Competitive Position
a. Selling price – include a price study indicating the past domestic and
import prices, the high and low prices within the year, and the effect
of seasonality, if any.
b. Competitiveness of the quality of the product.
FEASIBILITY STUDY GUIDELINE (continued)
(from the University of the Philippines Institute of Small-Scale Industries)
C. Projected Sales
1. Expected annual volume of sales for the next five years considering the
demand, supply, competitive position, and marketing program
FEASIBILITY STUDY GUIDELINE (continued)
(from the University of the Philippines Institute of Small-Scale Industries)
10. 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. complexity in managing and conducting a business.
c. the development of techniques for the solution of management problems and the
businessmen’s awareness of how to solve such problems
d. Need for adequate and timely information in management decision -making
MULTIPLE CHOICE
11. Some reasons for hiring management consultants are as follows, except
a. to help define specific problems and implement solutions
b. to provide specialized skills and experience
c. to provide confidential service in which the identity of the client is concealed.
d. to render an independent opinion.
16. In providing advisory services, the CPA, or the independent accounting firm, applies
an analytical approach and process, which typically involves the following, except
a. ascertaining the pertinent facts and circumstances.
b. seeking and identifying objectives.
c. defining the problem or opportunity for improvement.
d. evaluating and implementing possible solutions.
MULTIPLE CHOICE
21. MAS areas which are normally related to the accounting and finance functions may
include
a. establishment of budgetary controls.
b. preparation of organization and administrative manuals.
c. plant layout studies.
d. development of preventive maintenance systems.
22. MAS areas which are not normally related to the accounting and finance functions
may include
a. preparation of accounting systems and procedure manuals.
b. development of management oriented accounting and reporting systems.
c. cost reduction studies.
d. operation research.
MULTIPLE CHOICE
23. Among the MAS areas which are not related to the accounting and
finance functions is marketing, which may include the following, except
a. product profitability analysis.
b. determination of pricing policy.
c. inventory management studies
d. evaluation of salesmen’s incentive compensations.
26. MAS may be classified according to the practitioners’ ability and /or
expertise. The services which may be offered readily by the practitioner based
on his basic training and background are called
a. Usual services.
b. Somewhat specialized services.
c. Highly specialized services.
d. Unusual services.
MULTIPLE CHOICE
27. MAS may be classified according to the practitioners’ ability and/or
expertise. Those services which are considered extensions of he usual
accounting work and require additional training and/or experience
a. usual services
b. somewhat specialized services.
c. Highly specialized services.
d. unusual services.
28. MAS may be classified according to the practitioners’ ability and /or
expertise. The services which may be offered readily by the practitioner
based on his basic training and background are called
a. Usual services.
b. Somewhat specialized services.
c. Highly specialized services.
d. Unusual services.
MULTIPLE CHOICE
29. Management advisory services classified as usual services include
a. giving advice on dividend policy and plans for expansion.
b. analysis of financial and operating statements for management, stockholders,
banks, and others.
c. advising on accounting and tax matters relative to estate planning in cooperation
with legal and insurance counsel.
d. Calculations on government contracts and allocating costs in compliance with
reporting requirement.
.
MULTIPLE CHOICE
36. Which of the following statement(s) is (are) correct?
1. The scope of services offered by consultants should be adequate to identify
and resolve the client’s basic problems and not just problem symptoms.
2. 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.
3. It is the responsibility of a practitioner to be sure that the nature and scope of
the management advisory services he elects to offer are in conformity with the
Code of Professional Ethics.
4. 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.
a. Statements 1, 2, 3, & 4 c. Statements 2, 3, & 4
b. Statements 1, 2 & 4 d. Statements 1 & 4
.
MULTIPLE CHOICE
37. Which of the following statements is incorrect?
a. A CPA engaged in the practice of MAS is bound by the Code of Ethics for Professional
Accountants.
b. Management consulting and other advisory services are among the assurance
engagements performed by professional accountants.
c. Not all MAS practitioners are bound by the Code of Ethics for Professional Accountants.
d. It is the responsibility of a practitioner to b sure that the nature and scope of the
management advisory services he elects to offer are in conformity with the Code of Ethics
for Professional Accountants.
38. The role of an independent accounting firm (or consultant) in performing Management
Advisory Services is
a. to provide advice and technical assistance, and should provide for client participation in
the analytical approach and process.
b. to provide advice and technical assistance, but should not provide for client participation in
the analytical approach and process.
c. to improve the client’s use of its capabilities and resources to achieve the objectives of the
organization.
d. To provide advice and technical assistance and should provide for the consultant’s
participation in the implementation of the recommendation.
MULTIPLE CHOICE
39. 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 n these types
of undertaking.
d. All of the above.
40. It refers to the systematic, objective, and rational method of solving business problems
a. Analytical approach and process
b. PERT/CPM
c. Simulation method
d. Sensitivity analysis
MULTIPLE CHOICE
41. The analytical approach and process may be summarized into three broad stages –
analysis, design, and implementation. He analysis sage consists of
a. Planning and scheduling actions to achieve the desired results, as well as advising and
providing technical assistance.
b. Ascertaining the pertinent facts and circumstances, seeking and identifying objectives,
and defining the problem or opportunity for improvement.
c. Evaluating and determining possible solutions and presenting findings and
recommendations.
d. All of the above
42. The analytical approach and process may be summarized into three broad stages –
analysis, design and implementation. The design stage consists of
a. Planning and scheduling actions to achieve the desired results, as well as advising and
providing technical assistance in implementation.
b. Ascertaining the pertinent facts and circumstances, seeking and identifying objectives,
and defining the problem or opportunity for improvement.
c. Evaluating and determining possible solutions and presenting findings and
recommendations.
d. All of the above
MULTIPLE CHOICE
43. The analytical approach and process may be summarized into three broad stages – analysis,
design, and implementation. The implementation stage consists of
a. Planning and scheduling actions to achieve the desired results, as well as advising and
providing technical assistance.
b. Ascertaining the pertinent facts and circumstances, seeking and identifying objectives, and
defining the problem or opportunity for improvement.
c. Evaluating and determining possible solutions and presenting findings and recommendations.
d. All of the above
44.. Which of the following statements is incorrect?
a. Full scope engagements require client representations from both the working and decision-
making levels.
b. The consultant’s role in full scope engagement should be limited to that of an objective adviser;
and in the implementation stage, his job is merely to provide technical assistance, degrees of
which depend on the knowledge and experience available in the client’s organization.
c. In carrying out full scope engagements, the consultant should participate up to the
implementation stage and should see to it that the client management accepts overall
responsibility for implementation of the chosen course of action.
d. Once implementation is concluded, the consultant’s personnel remain to carry on the
solution.
MULTIPLE CHOICE
45. In special study engagements,
a. The consultant’s contribution is to give advice on the overall program and the
organization and composition of the participating groups, to provide technical assistance
to the working level, to monitor progress and to report on this and other important
matters to the senior management group.
b. The client does not seek the consultant’s assistance in achieving the desired result, but
only his professional judgment.
c. Client representations from both the working and decision making levels are required.
d. Any action beyond the point of decision is solely the responsibility of the consultant.
46.. In informal advice,
a. The nature of the services rendered is informal and therefore, no presumption should
exist that an extensive study has been performed to identify and consider pertinent
facts and alternatives.
b. Any action beyond the point of decision is solely the responsibility of the consultant.
c. Once the implementation is concluded, the client’s participation is concluded, and only
the consultant’s personnel remain to carry on the solution.
d. the consultant need not be independent in mental attitude.
MULTIPLE CHOICE
47. Which of the following is incorrect.
a. Before accepting an engagement, a practitioner is to notify his partner of any
reservations he has regarding anticipated benefits.
b. Before undertaking an engagement, a practitioner is to inform his client of all matters
related to the engagement.
c. The MAS practice standards are applicable not only to structural or organized MAS
engagements, but also to “informal advice”
d. All of the above
48.. Which of the following statements is incorrect?
a. Sufficient relevant data are to be obtained, documented, and evaluated in developing
conclusions and recommendations.
b. All significant matters relating to the results of the engagement are to be communicated
to the client. .
c. Engagements are to be adequately planned, supervised, and controlled.
d. In performing MAS, a practitioner must act with maturity and objectivity and be
independent in mental attitude.
MULTIPLE CHOICE
49. It requires a practitioner to be, among other things, honest and candid within the
constraints of client confidentiality.
a. Integrity c. Maturity
b. Objectivity d. Independence in mental attitude
50.. The principle imposes the obligation on all professional accountants to be impartial,
intellectually honest, and free of conflict of interests.
a. Integrity c. Maturity
b. Objectivity. D. Independence in mental attitude
51. It refers to the ability of the practitioner to maintain his role as an objective
adviser or consultant without making any attempt to make decisions for the
management.
a. Maturity c. Integrity
b. Objectivity d. Independence in mental attitude
MULTIPLE CHOICE
52. It refers to the practitioner’s ability to identify and define client needs, select and
supervise appropriate staff, apply an analytical approach and process appropriate to the
engagement, apply knowledge of the technical subject matter under consideration,
communicate recommendations effectively, and when required, assist in implementing
recommendations.
a. Due professional care c. Professional competence
b. Planning and supervision d. Client benefit
53. The Practitioner, before starting an engagement, should first make written
communications to inform the client of all significant matters related to the engagement.
Examples of such significant matters are the following, except
55. In MAS engagements, sufficient relevant data should be obtained, documented, and
evaluated in developing conclusions and recommendations. In the course of the
engagement, the following should be documented, except
58. It may be considered as the master plan for the engagement which serves as a
framework for controlling its progress. It can be used as a planning tool that documents how
the engagement will be carried out, organizes the engagement into scheduled and logical
sequences, and indicates the various tasks necessary to achieve the objectives of the
engagement.
a. Engagement work program c. Engagement blueprint
b. Master budget d. Engagement plan
MULTIPLE CHOICE
59. Engagements should be adequately planned, supervised, and controlled. 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 quality of work
b. Accomplishments, time schedule and expenses incurred.
c. Quality of work, number of reports prepared, and time schedule
d. Accomplishments, number of personnel who played a role in the engagement, an
attendance of the participants in the engagement.
60. 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
3. Management consultancy is an exclusive field of practice for CPAs and is regulated by law.
4. An area of MAS which is directly related to the acco9unting and finance functions is
project feasibility study.
67. Which of the following is not an area related to the performance of MAS by independent
accounting firms?
a. MAS is confined only to such areas as financial accounting, auditing, and tax services.
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 non-
accountants will provide a desirable combination of specialists and will offer a cross-
fertilization of ideas from different business fields.
MULTIPLE CHOICE
70. The following statements refer to 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.
a. MAS utilizes more junior staff than senior members of the firm
b. MAS involves decision for the future.
c. Mas is broader in scope and varied in nature.
d. MAS relates to specific problems where expert help is required.
MULTIPLE CHOICE
72. The following statements relate to MAS practice standards.
Which of the statemts pertain(s) to the MAS practice standard on Client Benefit?
a. All the statements b. Statements 1, 3 & 4only
b. Statements 1 & 3 only c. Statement 1 only
MULTIPLE CHOICE
73. As a consultant the CPA/MAS practitioner should
a. Conduct his engagement as if he is a member of the client’s organization.
b. Exercise administrative control over the client’s staff to avoid necessary delays in
implementation.
c. Encourage dependence of client on the consultant’s staff to as to pinpoint clear
responsibility in implementing systems.
d. Not take responsibility for making decisions and policy judgments in MAS
engagements.
74. Management services of certified public accountants cover all of the following, except
a. audit, tax and legal services
b. Organizational development
c. Systems design, development, and implementation
d. Project feasibility studies and planning
MULTIPLE CHOICE
78. Mr. X, a CPA firm’s partner-in-charge of quality assurance and review, is arguing with Mr.
Y, the consulting partner, regarding the question on independence as Mr. Y is presently
rendering consulting services to Kambal Co., an audit client of the firm. Related to this
issue of independence, all of the following statements are not valid, except:
80. 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 advisory services would be made available upon request
d. A reference to the auditor’s responsibility for the detection of errors or
irregularities.
MULTIPLE CHOICE
81. A CPA engaged in MS practice may not
a. Disclose confidential information unless authorized or legally obligated.
b. Act as independent auditor of the same client-firm
c. Accept other employment while serving as management consultant.
d. Be independent in mental attitude.
82. A CPA in public was engaged by a client who has little accounting and management
experience to perform MAS. After presenting several alternative solutions and the probable
outcome each, the CPA decided to implement the best alternative solution and assumed full
responsibility for which the client agreed.
a. The CPA dis just the right thing
b. The CPA should have asked the client first if he (the client) is capable to implement the
solution before doing it himself.
c. The CPA should not have implemented the best alternative solution and should not
have assumed full responsibility even if the client agreed, for these should have been
done by the client.
d. The CPA was correct in implementing the solution, but full responsibility should have
been assumed by the client.
MULTIPLE CHOICE
83. M and S are partners in an MAS firm. One of the firm’s clients is X Corporation, wherein
M is a board member. X corporation is not an audit client. X Corporation is negotiating an
MS engagement with the MAS firm.
a. It is unethical for the MAS firm to accept the engagement because it is a violatin of the
Standards on Independence.
b. It is unethical ofr the MAS firm to accept the engagement because S has financial
interests in X Corporation, hence he loses his independence as practitioner.
c. It is not unethical for the MAS firm to accept the engagement since X Corporation may
not be considered as a sister company of the MAS firm
d. It is not unethical for the MAS firm to accept the engagement, as long as there is a full
disclosure of the relationship to all parties at the outset of the engagement and in any
written final report.
MULTIPLE CHOICE
84. An MS client asked for internal control system evaluation. During evaluation, the
practitioner suggests that certain changes are necessary in handling some accounts. The
client agrees. However, he (the client) requests that his former consultant supervise the
installation.
The practitioner knows that such former consultant lacks sufficient experience to provide the
necessary technical direction and supervision, In this case, the practitioner should
a. Tell the client everything he knows about the former consultant so he could be
prevented from supervising the installation.
b. Prevent the former consultant to supervise the installation, but he should not tell the
client anything abut his (former consultant’s) capabilities.
c. Should encourage the former consultant to attend a seminar/workshop to learn the
basics of engagement supervision.
d. Decline the engagement if the client insists that the former consultant supervise the
installation, and the necessary technical competence would not be provided even
through other means.
MULTIPLE CHOICE
a. The performance of consulting services for an attest client does not, in and of itself,
impair independence.
b. The understanding with the client may limit the practitioner’s effort with regard to
gathering relevant data. In this case, the practitioner is required to decline or withdraw
from a consulting engagement when the agreed upon scope of services includes such
limitations.
c. In a consulting service, the client develops the findings, conclusions and
recommendations presented.
d. Implementation services involve putting into operation a plan or recommendation the
practitioner has accepted.