WESLEYAN UNIVERSITY – PHILIPPINES

College of Business and Accountancy

Cabanatuan City

STRATEGIC BUSINESS ANALYSIS

MODULE 3
Professional Attributes of Management Consultants and
MAS Practice Standards and Ethical Considerations

LEARNING OUTCOMES
At the end of the module, the learners are expected to be able to know the professional
attributes of Management Consultants. They must also have knowledge on MAS practice
standards and Code of Ethics for Professional Accountants.

BIBLICAL VALUES INTEGRATION

Isaiah 40:31

“But those who hope in the LORD will renew their strength. They will soar on wings like eagles; they
will run and not grow weary, they will walk and not be faint.”

INTRODUCTION
This module will introduce to you the discussion about the professional attributes of
Management Consultants and the MAS practice standards and Code of Ethics for Professional
Accountants.

BODY
Required Readings: Part I, Chapter 4 and 5 of Management Consultancy: Principle and Engagements
by Ma. Elenita Balatbat Cabrera, BBA, MBA, CPA, CMA

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 acivities.

(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

MAS PRACTICE STANDARDSAND ETHICAL

CONSIDERATIONS

AICPA’s Management Advisory Services Division promulgated and recommended the eight standards
which will serve as guidelines to all MAS practitioners. Standards 1, 2 and 3 are general standards
that set the personal qualifications for the practitioner and his orientation in the professional practice
while Standards 5, 6, 7 and 8 establish the practitioner’s relationship with his client and his attitude
towards work.

I. Basic Responsibilities of Management

Consultants

Integrity and Objectivity. Any personal interest and other events or special relationship must be
eliminated
in order to achieve integrity and don’t intentionally misinterpret facts to your advantage.

Independence. The consultant must be away from the influence of the enterprise served because there
must be integrity in the rendered service.

Confidential Information. The only time that the information must be disclosed is by the consent of the
client. Keeping the information makes a good relationship with client. Disclosing information for you
own interest results in service without integrity.

II. MAS Practice Standards

Standard No.1: Personal Characteristics. In performing Management Advisory Services, a

practitioner must act with integrity and objectivity and be independent in mental attitude. He/she
must avoid assuming the role of management, limiting his services to those of an objective researcher,
analyst, or advisor rather than a decision maker.

Integrity ensures that statements of findings and recommendations are free of intentional distortions
or misstatements.

Objectivity is the ability to avoid bias and to maintain an impartial attitude on all matters under
review. Independent mental attitude is based on the practitioner’s obligation to the client and on the
need to avoid impairment of public confidence in the profession.
 Standard No.2: Competence. Engagements are to be performed by a practitioner having
competence in the analytical approach and process, and in technical subject matter under
consideration. Competence is acquired and maintained through a combination of education and
experience. Undertake only those professional services that the member or the member's firm can
reasonably expect to be completed with professional competence.

Competence involves the technical qualifications and ability to supervise the personnel assigned,
to evaluate the quality of work performed, and to accept responsibility to the client for successful
completion of the engagement. It is the ability to identify and define client needs, to utilize the
analytical approach and process, to apply knowledge of the technical subject matter under
consideration, to communicate recommendations effectively, and to assist in implementing the
recommendations. It is acquired and maintained through a combination of education and
experience. Competence may be augmented by research and by consultation with others.

Standard No.3 Due Care. Due professional care must be exercised in the performance of a
management advisory services engagement. It involved diligence and appropriate attention in
carrying out the assignment. It involves diligence and appropriate attention in carrying out the
assignment. It does require systematic critical review by the practitioner, throughout the
engagement of work accomplished and judgement exercised. Due professional care requires that
all work be done within the provisions of the Code of Professional Ethics and other Professional
Standards for CPAs.

Standard No.4: Client Benefit

Before accepting an engagement, a practitioner is to notify the client any reservations he has
regarding anticipated benefits. An assessment of the anticipated benefits often require a sufficient
exploratory work to establish their reasonableness and also requires the exercise of judgement.
Unwillingness (of the client) to accept or inability to implement appropriate recommendations could
impair realization of benefits.”

Standard No.5: Understanding with Client

Before undertaking an engagement, a practitioner is to inform his client of all significant matters
related to the engagement. These include: objectives, scope, approach, role of all personnel, manner
in which results are to be communicated, timetable and fee.

Client Interest - Serve the client interest by seeking to accomplish the objectives established
by the understanding with the client while maintaining integrity and objectivity.

Understanding with Client - Establish with the client a written or oral understanding
about the responsibilities of the parties and the nature, scope, and limitations of services to be
performed, and modify the understanding if circumstances require a significant change during the
engagement.

Communication with Client - Inform the client of (a) conflicts of interest that may occur
pursuant to interpretations of Rule 102 of the Code of Professional Conduct, 2 3(b) significant
reservations concerning the scope or benefits of the engagement, and (c) significant engagement
findings or events.

Professional judgment must be used in applying Statements on Standards for Consulting Services
in a specific instance since the oral or written understanding with the client may establish constraints
within which services are to be provided. For example, the understanding with the client may
limit the practitioner's effort with regard to gathering relevant data. The practitioner is not required
to decline or withdraw from a consulting engagement when the agreed-upon scope of services
includes such limitations.

Standard No. 6: Planning, Supervision and Control. Engagements are to be adequately planned,
supervise and controlled.
 Planning – translation of engagement objectives into a structured set of activities and events
within a targeted time schedule.

Supervision – practitioner must exercise judgement as to appropriate amount of

supervision.

Control – requires measurement of progress in meeting the engagement plan and

objectives.

Standard No.7: Sufficient Relevant Data. Sufficient relevant data is to be obtained, documented
and evaluated in developing conclusions and recommendations.

It should record the following:

The evidential matter obtained and its source
The alternatives considered
Analytical process leading to the specific recommendations

Standard No. 8: Communication of Results

All significant matters relating to the results of the engagement are to be communicated to the client.
The principal findings, recommendations, and accomplishments, and the major assumptions
relied upon, should be conveyed to the client, together with any limitations, reservations, or other
qualifications.

Reports to the clients may be written or oral. When a practitioner does not issue a written report to
the client, he should prepare a file memorandum documenting the significant recommendations and
other pertinent information discussed with the client.

ETHICAL CONSIDERATIONS
Code of Ethics for Professional Accountants in the Philippines Relevant to Management Consultancy
Services

Fundamental Principles
Integrity

All professional accountants should be straightforward and honest in professional and

business relationships. Integrity also implies fair dealing and truthfulness.

A professional accountant should not be associated with reports, returns,

communications or

other information where they believe that the information contains a materially false or
misleading statement contains statements or information furnished recklessly or
omits or obscures information required to be included where such omission or obscurity
would be misleading.

Mitigate actual conflict of interest, regularly communicate with business

associates to avoid apparent conflicts of interest. Advise all parties of any potential
conflicts.

Refrain from engaging in any conduct that would prejudice carrying out duties
ethically.

Refuse any gift, favor, or hospitality that would influence or appear to influence
their actions.

Refrain from either actively or passively subverting the attainment of the

organization’s

legitimate and ethical objectives.

Communicate unfavorable as well as favorable information and professional

judgements and opinions.

Abstain from engaging in or supporting any activity that might discredit the
profession.
 Objectivity

A professional accountant should not allow bias, conflict of interest or undue influence of
others to override professional or business judgements. He should not compromise their
professional or business judgement because of bias, conflict of interest or the undue influence
of others.

Communicate information fairly and objectively

Disclose all relevant information that could reasonably be expected to influence

an intended user’s understanding of the reports, analyses, comments, or
recommendations presented.

Disclose delays or deficiencies in information, timeliness, processing, or internal

controls in conformance with organization policy and/or applicable law.

Professional Competence & Due Care

A professional accountant has a continuing duty to maintain professional knowledge and skill
and

act diligently and in accordance with applicable technical and professional standards. He
should attain and maintain his professional competence.

Maintain an appropriate level of professional expertise by continually developing

knowledge and skills.

Perform professional duties in accordance with relevant laws, regulations, and

technical standards.

Provide decision support information and recommendations that are accurate, clear,
concise and timely.

Prepare complete and clear reports and recommendations after appropriate

analyses of relevant and reliable information.

Recognize and communicate professional limitations or other constraints that would

preclude responsible judgment or successful performance of an activity.

Confidentiality

A professional accountant should not disclose any such information to third parties without
proper and specific authority unless there is a legal or professional right or duty to disclose.

Keep information confidential except when disclosure is authorized or legally

required.

Inform all relevant parties regarding appropriate use of confidential information.

Monitor subordinates’ activities to ensure compliance.

Refrain from using or appearing to use confidential information for unethical or

illegal advantage either personally or through third parties.

Professional Behavior

A professional accountant should comply with relevant flaws and regulations and should
avoid any action that discredits the profession. He should not bring the profession into
disrepute in marketing and promoting his self and his work.

REFERENCE

Management Consultancy: Principle and Engagements by Ma. Elenita Balatbat Cabrera,

BBA, MBA, CPA, CMA