CHAPTER

5 MAS PRACTICE STANDARDS

AND ETHICAL
CONSIDERATIONS
LEARNING OBJECTIVES

After studying Chapter 5, you should be able to:

1. Understand the MAS practice standards.

2. Know the rules in the Code of Ethics applicable to

the practice of management consultancy services
in the Philippines.

3. Understand the Code of Ethics for management

consultants by other international organizations
such as AICPA, IMA and AMCF.

4. Develop and apply techniques in resolving ethical

issues.
 CHAPTER 5

MAS PRACTICE STANDARDS AND

ETHICAL CONSIDERATIONS

MAS Practice Standards

The AICPA's Management Advisory Services Division promulgated and

recommended the eight standards which will serve as guidelines to all MAS
practitioners. These are:

1. Personal Characteristics. In performing Management Advisory Services,

a practitioner must act with integrity and objectivity and be it independent in
mental attitude.

2. Competence. Engagements are to be performed by a practitioner having

competence in the analytical approach and process, and in the technical
subject matter under consideration.

3. Due Care. Due professional care is to be exercised in the performance of

Management Advisory Services engagements.

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 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.

7. Sufficient Relevant Data. Sufficient relevant data is to be obtained,

documented, and evaluated in developing conclusions and
recommendations.
74 Chapter 5

8. Communication of Results. All significant matters relating to the result of

the engagement are to be communicated to the client.

Personal Characteristics

Standard No. I. In performing Management Advisory Services, a practitioner

must act with integrity and objectivity and be independent in mental attitude.

The CPA, while performing Management Advisory Services, practices in a unique

professional environment, evolving from his traditional role in the attestation to the
fairness of financial statements.

Integrity is a highly personal characteristic which ensures that practitioner's

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 tinder review. A practitioner may undertake only those
engagements in which he can maintain an independent mental attitude. This
requirement is based on the practitioner's obligation to the client and on the need
to avoid impairment of public confidence in the profession.

The role which a practitioner assumes in a management advisory service

engagement is fundamental to his maintaining integrity, objectivity and an
independent mental attitude. In all aspects of the practitioner's performance of
management advisory services, he must avoid assuming the role of management,
limiting his services to those of an objective researcher, analyst, or advisor, rather
than a decision maker.

Competence

Standard No. 2. Engagements are to be performed by a practitioner having

competence in the analytical approach and process, and in the technical subject
matter under consideration.
 MAS Practice Standards and Ethical Considerations 75

In each technical area in which a practitioner performs management advisory

services, the services performed are to be of professional quality. Competence in
the professional work involves: (a) the technical qualifications of the practitioners
and (b) the 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.

Competence in performing management advisory services 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.

Competence is acquired and maintained through a combination of education and

experience. Education, beyond that which is initially required for admission to the
profession, includes formal and informal instruction and self-study. Experience
relates to the knowledge and judgment acquired by personal participation in
management advisory services engagements and other business affairs.
Competence may be augmented by research and by consultation with others.

Due Care

Standard Na. 3. Due professional care is to be exercised in the performance of

a management advisory services engagement.

The concept of due care is concerned with what the practitioner does and how he
does it. 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 judgment 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.
76 Chapter 5

Client Benefit

Standard No. 4. Before accepting an engagement, a practitioner is to notify the

client of any reservations he MS regarding anticipated benefits.

Problem definition, identification of objectives, and benefits to be derived should

be considered in structuring the engagements. While in some cases the potential
benefits are obvious both to the client and to the practitioner, an assessment of
anticipated benefits often requires sufficient exploratory work to establish their
reasonableness and also requires the exercise of judgment. Some benefits can be
quantified in financial or statistical terms, but many others are less tangible.

The client's willingness to accept recommendations and his ability to implement

them, should be considered by the practitioner. Unwillingness to accept or
inability to implement appropriate recommendations could impair realization of
potential benefits. If during the course of the engagement the relationship between
anticipated benefits and costs changes significantly, the client should be informed.

Understanding with Client

Standard No. 5. Before undertaking an engagement, a practitioner is to inform

his client of all significant matters related to the engagement.

The significant matters related to an engagement generally include (a) the

Engagement's Objectives, (b) its Scope, (c) the Approach, (d) the Role of all
Personnel, (e) the Manner in which Results are to be Communicated, (f) the
Timetable; and (g) the Fee.

A preliminary discussion or investigation is generally necessary to develop

sufficient information for formulating engagement objectives and identifying
scope. The engagement objectives reflect the results expected to be derived.
There should be a clear expression by the practitioner as to both the engagement
objectives and the extent and nature of the practitioner's involvement.
 MAS Practice Standards and Ethical Considerations 77

Engagement scope should be broad enough to encompass Matters likely to be

significant in developing appropriate recommendations and producing desired
results. Particular attention should be given to inform the client of possible
consequences of significant constraints.

The respective roles and responsibilities of the practitioner and the client should be
defined. Where a third party is involved, it is especially important to establish
which party the practitioner or the client assumes responsibility for third party
performance. Definition of major tasks to be performed, the methods to be used in
reporting engagement status and achievements, and the timing of such reporting
should be established. There should be established. There should be a clear
statement as to the content of the end product.

There should be an expression of when work will commence, the estimated

completion date, and the fee and expense arrangements. These matters should be
recorded in writing particularly for engagements of significant duration or
complexity. This can be done in a formal contract, in a letter of understanding,
or in a file memorandum summarizing the terms of an oral agreement with the
client. Should a significant aspect of the engagement change as work progress,
there should be a new arrangement with the client and a written record thereof.

Planning, Supervision, and Control

Standard No. 6. Engagements are to be adequately planned, supervised and

controlled.

Planning, supervision and control are based directly on the practitioner's

understanding with the client as to the engagement and as to the role of all
personnel concerned.

Planning
Planning is the translation of engagement objectives into a structured set of
activities and events within a targeted time schedule. The resultant
engagement plan is to be used in supervising and controlling the engagement.
 78 Chapter 5

Supervision
Engagement must be performed and supervised by competent personnel. The
practitioner in charge must exercise judgment as to the appropriate amount of
supervision, based on the experience of the persons involved and the
complexity of the engagement.

Control
Effective control requires measurement of progress in meeting the engagement
plan and objectives. Adequate documentations should be maintained to permit
measurement and assessment of progress at significant engagements points.

Sufficient Relevant Data

Standard No. 7. Sufficient relevant data is to be obtained, documented and

evaluated in developing conclusions and recommendations.

A practitioner must exercise his professional judgment in determining the type and
amount of data required. Such determinations take into considerations the nature
and scope of the engagement and related circumstances. The source and reliability
of the data, and any limitations with respect thereto; must be considered in
formulating conclusions.

The amount and formality of documentation will vary according to the nature and
scope of the engagement. The documentation should demonstrate that due care
has been exercised. It should record, as appropriate (a) the evidential matter
obtained and its source, (b) the alternatives considered and (c) the analytical
process leading to specific recommendations.

Communications of Results

Standard No. 8. All significant matters relating to the results of the engagement
are to be communicated to the client
 MAS Practice Standards and Ethical Considerations 79

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 client 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.

Interim Communications

Interim communications are desirable. Interim communication encourages the

involvement of management, helps preserve management's role as decision-maker,
and keeps management informed of progress towards the final conclusions,
recommendations, and accomplishments.

Interim communications should normally summarize (a) findings to date, (b) work
accomplished in relation to plan, and (c) when appropriate, tenta tive
recommendations. They are also used to review problems encountered, to obtain
management decision, and to reassess priorities.

Final Report

A final report should be made to the client upon completion of an engagement to

ensure that results and recommendations are communicated. Reports should be
responsive to the objectives and scope of the engagement. The nature of work
performed and the extent of interim communications will influence the degree of
detail of the final report.
80 Chapter 5

Ethical Considerations

Code of Ethics for Professional Accountants in the Philippines Relevant to

Management Consultancy Services

Professional accountants as defined in the Code of Ethics are "those persons who
hold a valid certificate issued by the Board of Accountancy (i.e., Certified Public
Accountants), whether they be in public practice, (including a sole proprietorship or
partnership), industry, commerce, the public sector or education."

The following provisions in the Revised Code of Ethics for Professional

Accountants in the Philippines are considered applicable and relevant in providing
Management Consultancy services which are among the non-assurance services of
professional accountants.

PART A

Section 100.1 of the Revised Code provides for the following:

"A distinguishing mark of the accountancy profession is its acceptance

of the responsibility to act in the public interest. Therefore, a
professional accountant's responsibility is not exclusively to satisfy the
needs of an individual client or employer. In acting in the public
interest a professional accountant should observe and comply with the
ethical requirements of this Code."

Section 100.4 describes the Fundamental Principles that every professional

accountant, whether he/she be in public practice, private industry, academe or
government services must observe.

A professional accountant is required to comply with the following fundamental

principles:

(a) Integrity

 The principle of integrity imposes an obligation on all professional

accountants to 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:
 MAS Practice Standards and Ethical Considerations 81

(a) Contains a materially false or misleading statement;

(b) Contains statements or information furnished recklessly: or
(c) Omits or obscures information required to be included where such
omission or obscurity would be misleading.
 A professional accountant will not be considered to be in breach of
paragraph 110.2 if the professional accountant provides a modified report
in respect of a matter contained in paragraph 110.2.

(b) Objectivity
 A professional accountant should not allow bias, conflict of interest or
undue influence of others to override professional or business judgments.
 The principle of objectivity imposes an obligation on all professional
accountants not, to compromise their professional or business judgment
because of bias, conflict of interest or the undue influence of others.
 A professional accountant may be exposed to situations that may impair
objectivity. It is impracticable to define and prescribe all such situations.
Relationships that bias or unduly influence the professional judgment of
the professional accountant should be avoided.

(c) Professional Competence and Due Care

 A professional accountant has a continuing duty to maintain professional
knowledge and skill at the level required to ensure that a client or
employer receives competent professional service based on current
developments in practice, legislation and techniques. A professional
accountant should act diligently and in accordance with applicable
technical and professional standards when providing professional
services.
 The principle of professional competence and due care imposes the
following obligations on professional accountants:
o To maintain professional knowledge and skill at the level
required to ensure that clients or employers receive
competent professional service; and
o To act diligently in accordance with applicable technical and
professional standards when providing professional services.
82 Chapter 5
 Competent professional service requires the exercise of sound judgment
in applying professional knowledge and skill in the performance of such
service. Professional competence may be divided into two separate
phases:
o Attainment of professional competence; and
o Maintenance of professional competence.

The attainment of professional competence requires initially a high

standard of general education followed by specific education, training and
examination in professionally relevant subjects, and whether prescribed
or not, a period of work experience. This should he the normal pattern of
development for a professional accountant.
 The maintenance of professional competence requires a continuing
awareness and an understanding of relevant technical professional and
business developments. Continuing professional development develops
and maintains the capabilities that enable o professional accountant to
perform competently within the professional environments.
 Diligence encompasses the responsibility to act in accordance with the
requirements of an assignment, carefully, thoroughly and on a timely
basis.
 A professional accountant should take steps to ensure that those working
under the professional accountant's authority in a professional capacity
have appropriate training and supervision.
 Where appropriate, a professional accountant should make clients,
employers or other users of the professional services aware of limitations
inherent in the services to avoid the misinterpretation of an expression of
opinion as an assertion of fact.

(d) Confidentiality
 A professional accountant should respect the confidentiality of
information acquired as a result of professional and business relationships
and 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. Confidential information acquired as a result of
professional and business relationships should not be used for the
personal advantage of the professional accountant or third parties.
 MAS Practice Standards and Ethical Considerations 83

 The principle of confidentiality imposes an obligation on professional

accountants to refrain from:
(a) Disclosing outside the firm or employing organization confidential
information acquired as a result of professional and business
relationships without proper and specific authority or unless there is
a legal or professional right or duty to disclose; and
0) Using confidential information acquired as a result of professional
)

and business relationships to their personal advantage or the

advantage of third parties.
 A professional accountant should maintain confidentiality even in a social
environment. The professional accountant should be alert to the
possibility of inadvertent disclosure, particularly in circumstances
involving long association with a business associate or a close or
immediate family member.
 A professional accountant should also maintain confidentiality of
information disclosed by a prospective client or employer.
 A professional accountant should also consider the need to maintain
confidentiality of information within the firm or employing organization.
 A professional accountant should take all reasonable steps to ensure that
staff under the professional accountant's control and persons from whom
advice and assistance is obtained respect the professional accountant's
duty of confidentiality.
 The need to comply with the principle of confidentiality continues even
after the end of relationships between a professional accountant and a
client or employer. When a professional accountant changes employment
or acquires a new client, the professional accountant is entitled to use
prior experience. The professional accountant should not, however, use
or disclose any confidential information either acquired or received as a
result of a professional or business relationship.
 The following are circumstances where professional accountants are or
may be required to disclose confidential information or when such
disclosure may be appropriate:
(a) Disclosure is permitted by law and is authorized by the client or the
employer;
(b) Disclosure is required by law, for example:
84 Chapter 5

(i) Production of documents or other provision of evidence in the

course of legal proceedings; or
(ii) Disclosure to the appropriate public authorities of infringements
of the law that come to light and
(c) There is a professional duty or right to disclose, when not prohibited
by law:
(i) To comply with the quality review of a member body or
professional body:
(ii) To respond to an inquiry or investigation by a member body or
regulatory body;
(iii) To protect the professional interests of a professional accountant
in legal proceedings; or
(iv) To comply with technical standards and ethics requirements.
 In deciding whether to disclose confidential information, professional
accountants should consider the following points:
(a) Whether the interests of all parties, including third parties whose
interests may be affected, could be harmed if the client or employer
consents to the disclosure of information by the professional
accountant;
(b) Whether all the relevant information is known and substantiated, to
the extent it is practicable; when the situation involves
unsubstantiated facts, incomplete information or unsubstantiated
conclusions, professional judgment should be used in determining
the type of disclosure to be made, if any; and
(c) The type of communication that is expected and to whom it is
addressed; in particular, professional accountants should be
satisfied that the parties to whom the communication is addressed
are appropriate recipients.

(e) Professional Behavior

 A professional accountant should comply with relevant laws and
regulations and should avoid any action that discredits the profession.
 The principle of professional behavior imposes an obligation on
professional accountants to comply with relevant laws and regulations
and avoid any action that may bring discredit to the profession. This
 MAS Practice Standards and Ethical Considerations 85

includes actions which a reasonable and informed third party, having

knowledge of all relevant information, would conclude negatively affects
the good reputation of the profession.
 In marketing and promoting themselves and their work, professional
accountants should not bring the profession into disrepute. Professional
accountants should be honest and truthful and should not:
(a) Make exaggerated claims for the services they are able to offer, the
qualifications they possess. or experience they have gained; or
(b) Make disparaging references or unsubstantiated comparisons to the
work of others.

Ethical Conflict Resolution

 In evaluating compliance with the fundamental principles, a professional
accountant may he required to resolve a conflict in the application of
fundamental principles.

 When initiating either a formal or informal conflict resolution process, a

professional accountant should consider the following, either individually
or together with others, as part of the resolution process:
 Relevant facts;
 Ethical issues involved;

 Fundamental principles related to the matter in question;

Established internal procedures; and

 Alternative courses of action.

Having considered these issues, a professional accountant should

determine the appropriate course of action that is consistent with the
fundamental principles identified. The professional accountant should
also weigh the consequences of each possible course of action. If the
matter remains unresolved, the professional accountant should consult
with other appropriate persons within the firm or employing organization
for help in obtaining resolution.

 Where a matter involves a conflict with, or within, an organization, a

professional accountant should also consider consulting with those
charged with governance of the organization, such as the board of
directors or the audit committee.
86 Chapter .5

 It may be in the best interests of the professional accountant to document

the substance of the issue and details of any discussions held or decisions
taken, concerning that issue.

 If a significant conflict cannot be resolved, a professional accountant may

wish to obtain professional advice from the relevant professional body or -
legal advisors, and thereby obtain guidance on ethical issues without
breaching, confidentiality. For example, a professional accountant may
have encountered a fraud, the reporting of which could breach the
professional accountant's responsibility to respect confidentiality. The
professional accountant should consider obtaining legal advice to
determine whether there is a requirement to report.

 If, after exhausting all relevant possibilities, the ethical conflict remains
unresolved, a professional accountant should, where possible, refuse to
remain associated with the matter creating the conflict The professional
accountant may determine that, in the circumstances, it is appropriate to
withdraw from the engagement team or specific assignment, or to resign
altogether from the engagement, the firm or the employing organization.

Some Ethical issues

As a consultant achieves multidimensional growth and the firm prospers, the

nature of the problems and challenges he faces evolves. At the outset of his
consulting career, he would be typically concerned about cash flow, marketing,
and developing the expertise required to complete more diverse assignments. In
midcareer during the firm's dramatic growth, the issues become those of finding
the right alliance partners, developing long-term relationships and establishing
proper fee levels. Once the firm becomes a going concern, some ethical challenges
become the unique issues related to its success.
 MAS Practice Standards and Ethical Considerations 87

How would you for instance, respond to these challenges?

1. If a consultant is in demand, should he simply charge the highest fee

possible and not even worry about perceived value?

2. A consultant says that he travels first class, stays on the concierge floor of
the best hotels and prefers limousines over taxis. He believes that he is
worth it and as long as he is honest about it, the client should be billed for
his normal travel preferences.

3. A consultant is seeing three clients on a certain trip. He says that if he

attempts to prorate the expenses, their accounting systems will question
the charges. However, if he simply bills each one for the entire airfare
and lodging, there will not be a single question. He is asking if he
shouldn't make it easier on himself and on the clients and bill each of them
for 100% since he has to visit each one anyway.

4. A competitor of one of the consultant's largest clients wants to hire the

consultant because his reputation has been associated with his client's
success. Is there any problem with taking on competitive organizations?

5. A client offers the consultant first-class airfare to visit its European

offices. The consultant says that he can use his free airline mileage to
take his entire family and by cashing in the first-class tickets, pay for their
food, lodging and recreation. He believes there is no reason to explain all
this to the client since he considers it his personal business.

Most of the above situations have happened to many consultants. There are no
magic answers to ethical dilemmas. In ambiguous situations when policy and
precedent do not apply, this author advises

"Do the right thing. You can't do much better than consistently try to do
the right thing."
88 Chapter 5

in each of the above instances, here is what the author would consider the right
thing to do.

I. Should You Change the Highest Fees You Can Get Away With?

If one is charging on a fee basis and the client is aware of and accepts the
fee, the client obviously has determined that the value is worth the
investment. However, the following should be observed.

a. It is never advisable to overpromise and undeliver. If the consultant is

justifying the high investment through extravagant promises and
providing only marginal delivery, he is not building long -term
potential.

b. If the consultant is charging a per diem or a fee based on some other

fixed standard, there is never an excuse to charge for anything other
than actual hours performed, on-site or off-site. Padding days or
hours goes beyond an ethical transgression — it is theft.

2. Should You Travel First Class and Bill the Client?

If the client approves of a luxurious travel style, there is no problem.

However, the consultant's primary goal is improve the client's condition.
Does the consultant help fiscally through this kind of expense which
anyway has nothing to do with his value or expertise? Does he help
credibility through this kind of image with the client's people? Some
suggestions may be helpful in this kind of situation.

a. If the client does not offer it, don't abuse it.

b. If one wants to travel first class, use limos and the best hotels, charge
the client for economy, taxis and standard hotel rates and shoulder the
luxury travel difference out of his personal pocket.
 MASI Practice Standards and Ethical Considerations 89

c. Even if the consultant is willing to personally pay for the difference in

travel expense (luxury vs. economy), if the use of limos or other bills
causes questions about the "high-priced consultants" refrain from
being too visible or just if it can be helped, travel modestly,

3. Should You Bill More Than One Client for the Same Basic Expenses?

Never double-bill (or. in this case, triple-bill). Send a cover letter with
Statement of Expenses explaining why the client is being charged one -
third of the full amount on some of the receipt (for example, airfare) and
the full amount on others (for example, car rental fees for days working
exclusively for that client). Turn the procedure into an opportunity to
demonstrate your fairness and fiscal responsibility toward that client.

4, Should You Accept an Assignment from a Client's Competitor?

Basically, there is nothing wrong with working for several clients within
the same industry. After all, many prospective clients use "experience in
their industry" as a hiring condition. The following criteria may be used
in accepting an assignment from a client's competitor:

(a) Make it a condition that the consultant will not be asked to do

anything that will reveal confidential information; directly or
indirectly.

(b) Try to assign different personnel to each project.

(c) Inform the present client of the competitor's request and the
tentative project and ask the client if it wishes the con sultant to
decline the offer.

(d) If the new assignment is accepted under the preceding criteria, the
consultant should not divulge anything learned to the current
client;
90 Chapter 5

5. Should You Use Tickets Supplied by Your Client to Bring Your Spouse
Along?

While the consultant might think this as his personal business, the tickets
are the client's. "Innocent" falsehoods can develop into complicated and
unnecessary questions about one's standards. Either tell the client what
one intends to do or he should not do it. If the consultant is uncomfortable
telling the client about it, the chances are strong that what he is doing is
unacceptable.

One of the benefits of building a successful consulting firm is the opportunity and
necessity to ponder on develop criteria for or take an action about ethical issues
with clients and colleagues. Some guidelines that a consultant may find useful in
determining whether he is doing the right thing or not are:

I. Does the activity improve the client's condition or merely his own?

2. Is the activity something that one will be comfortable explaining to the

client?

3. Is the activity something that the consultant could be proud of and would
publicize as a trait?

4. Is there harm being done to anyone without their being able to respond?

5. Is this treatment something the consultant would willingly subject himself

to?

The above questions may not just involve simple yes or no answers. But the very
act of putting the question to the client may be difficult to help one avoid ethical
compromise.
 MAS Practice Standards and Ethical Considerations 91

Code of Ethics for Management Consultants

Code of Conduct for management consultants represents the attitude, principles

and approaches that have been found to contribute most to success and make for
equitable and satisfactory client relationship.

A summary of the Code of Ethics developed by the AICPA, Institute of

Management Consultants and Association of Management Consulting Firms, to
promote the highest quality of performance in the practice of management
consultancy is presented below.

The common principles found in this Code of Ethics can he broadly classified into
four areas:

I. Basic responsibilities
II. Practice standards
III. Fee arrangements
IV. Business conduct

BASIC RESPONSIBILITIES OF MANAGEMENT CONSULTANTS.

Integrity and objectivity

1. Do not knowingly misrepresent facts and never subordinate judgment

to others.

2. Place the interests of clients ahead of personal interests and serve

the client with integrity.

3. Inform the clients of any special relationships, circumstances, or

interests that might influence judgment or impair objectivity.

4. Do riot assure the role of management or take any positions that

might impair objectivity.
92 Chapter 5

Independence

1. Take an independent position with the client, making certain that

advice to a client is based on impartial consideration of all pertinent
facts and responsible opinions.

2. Do not serve an enterprise without independence with respect to that

enterprise.

3. Do not serve a client under terms or conditions that might impair

objectivity, independence, or integrity. Reserve the right to withdraw
if conditions develop that interfere with the successful conduct of the
assignment.

4. Do not serve two or more competing clients in areas of vital interest

without informing each client.

Confidential Information

1. Guard as confidential all information concerning the affairs of a client

that is gathered during the course of a professional assignment.

2. Do not take advantage of material or inside information resulting from

a professional relationship with a client.

3. Do not disclose any confidential information obtained in the course of

a professional engagement except with the client's consent.

II. PRACTICE STANDARDS FOR MANAGEMENT CONSULTANTS.

Professional competence

1. Undertake only engagements that can be completed with

professional competence.
2 . Accept only assignments for which the necessary qualifications are
possessed .
 MAS Practice Standards and Ethical Considerations 93

3. Present qua lifica tions for serving a client solely in terms of

Competence, experience, and standing.

Planning, supervision, and due care

1. Before accepting an assignment, confer with the client or prospective

client in sufficient detail and gather sufficient facts to gain an
adequate understanding of the problem, the scope of study needed
to solve it. and the possible benefits that may accrue to the client.

2. Accept only assignments believed to be beneficial to the clients, and

do not accept any assignment of such limited scope that the client
cannot be served effectively.

3. Adequately plan and supervise an engagement.

4. Assign personnel qualified by knowledge, experience, and character

to give effective service in analyzing and solving the particular
problem or problems involved.

5. Provide the client with a written proposal that outlines the objectives,
scope, approach, and - where possible - the estimated fee or fee
basis for the proposed services, except where client relationships
make it unnecessary.

6. E x e r c i s e d u e p r o f e s s i o n a l c a r e i n t h e p e r f o r m a n c e o f a n
engagement.

7. If conditions change during the engagement, discuss with the client

any changes in the objectives, scope, and approach or other aspects
of the engagement and obtain the client's agreement (preferably in
writing) to such changes before taking action on them.

8. Obtain sufficient relevant data to afford a reasonable basis for

conclusions or recommendations in relation to an engagement.

9. Do not knowingly without permission use proprietary da ta ,

procedures, materials, or techniques that others have developed but
not released for public use.
94 Chapter 5

Reporting results

1. Perform each assignment on an individual basis and develop

recommendations designed specifically for the solution of each
client’s problems.

2. Develop solutions that are realistic and practical and that can be
implemented promptly and economically.

3. Acquaint client personnel with the principles, methods, and

techniques applied, so that tree improvement suggested or installed
can be properly managed and continued after completion of the
engagement.

4. Maintain continuity of understanding and knowledge of client's

problems, and the work that has been done to solve them, by
maintaining appropriate fifes of reports submitted to clients.

5. Do not guarantee any specific result, such as the amount of cost

reduction or profit increase.

6. Do not permit your name to be used in conjunction with any forecast

of future transactions in a manner that could lead to the belief that
you vouch for the achievability of the forecast.

III. FEE STRUCTURE STANDARDS FOR MANAGEMENT CONSULTANTS.

1. Charge reasonable fees that are commensurate with the nature of

services performed and responsibility assumed. Reasonableness is
based on services performed, time required, experience, ability,
reputation, responsibility assumed, and benefits that accrue t o the
clients.

2. Do not offer or render professional services under an arrangement

whereby no fee will be charged unless a specified finding or result is
 ALAS Practice Standards and Ethical Considerations 95

obtained, or whereby the fee is otherwise contingent on the findings

or results of the service.

3. Where feasible, agree with the client in advance on the fee or fee
basis.

4. Do not pay a fee or commission to obtain a client or franchise a

business practice ; do not accept a commission: fee : or other
valuable consideration for recommending products or services.

5. Do not structure pricing or charging practices in a way that impairs

independence or objectivity or contributes to a conflict of interest with
the client.

IV. BUSINESS-CONDUCT STANDARDS FOR MANAGEMENT CONSULTANTS.

1. Strive continuously to advance and protect the standards of the

consulting profession.

2. Contribute to the development and understanding of better ways to

manage corporations, governmental organizations, and other
institutions in our society.

3. Share methods and techniques used in serving clients.

4. Avoid not only professional improprieties but also the appearance of

improprietie s, a nd ne ve r commit a n a ct discre ditable to the
profession.

5. Do not advertise services in a manner that is false, misleading,

deceptive, self-laudatory, or in any other manner derogatory to the
dignity of the profession.

6. Do not concurrently engage in any business or occupation that would

create a conflict of interest in rendering professional services.
96 Chapter 5

7. Do not accept an assignment for a client while another management

consultant is serving that client unless satisfied that any conflict
between the two engagements are recognized by, and have the
consent of the client.

8. Do not make offers of employment to consultants on the staff of

another consulting firm without first informing the other firm.

9. Do not solicit employees of clients, for the purpose of employing

them, except with the client's consent.

10. Do not associate, in a responsible capacity respecting client work,

with any consultant who does not adhere to the code of professional
ethics.

Each consultant has a responsibility to himself or herself, to the profession to live

by this code of ethics and to encourage others to do the same. Enforcement of the
code is everyone's responsibility.