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PURPOSE:
The Primary Purpose of Management Advisory Services (MAS) is to help improve client’s use of its
capabilities and resources in order to achieve its objectives.
In conducting MAS, the CPA should function only in the capacity of advisor and not as decision maker or
member of management. MAS are engagements or consultations and NOT recommendations and comments as
direct result of observations during audit or review.
DEFINITIONS:
MANAGEMENT ADVISORY SERVICES – The function of providing service and technical assistance where the
primary purpose is to help the client improve the use of its capabilities and resources to achieve its objectives.
MAS ENGAGEMENT – The form of MAS in which an analytical process in applied to a study or project.
MAS CONSULTATION – The form of MAS based on existing personal knowledge about the client, its
circumstances, the matters involved, and the mutual intent of the parties.
MAS PRACTITIONER – One who performs a MAS service for a client of a PICPA member or a PICPA member who
himself performs such service.
MAS LETTER OF PROPOSAL – It is written by the CPA and constitutes the CPA’s understanding of the work to be
done in an MAS engagement. It should contain the objectives, scope, approach, role of personnel, timing and fees,
benefits of the proposed plan, and the manner in which the end-results are to be communicated.
GENERAL STANDARDS:
1. Professional Competence – only such activities that a practitioner can reasonably expect to complete
with professional competence should be undertaken.
2. Due Professional Care – A practitioner should always exercise due care in the performance of any MAS
service.
3. Planning and Supervision – Every MAS engagement should be properly planned and supervised.
4. Sufficient Relevant Data – A practitioner should obtain sufficient relevant data to afford a reasonable
basis for conclusions or recommendations.
5. Forecasts – Practitioner’s name shall not be used in a manner, which may lead to the belief that he
vouches for the achievability of a forecast.
TECHNICAL STANDARDS:
1. Role of MAS Practitioner - an MAS practitioner should not assume the role of management or act in any
manner that would impair his objectivity.
2. Understanding with Client - An oral or written understanding should be reached concerning the nature,
scope, and limitations of the engagement.
3. Client Benefit - The client should be advised of any reservations regarding the potential benefits of a
proposed engagement. Specific results should never be implicitly or explicitly guaranteed. Any
quantifiable results, which are estimated should be identified as estimates and proper support should be
provided. '
4. Communication of Results - All significant information, including any limitations, qualifications, or
reservations, should be presented to the client.
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MAS ENGAGEMENTS
A MAS practitioner must apply his knowledge and skill with reasonable care and diligence. He does not, however,
assume responsibility for infallibility.
1. Should be obtained in order to complete engagement in manner consistent with client understanding:
a. May be obtained by interview, observation, computation, research, analysis and review of client
documents.
b. Nature and quality of information necessary will vary with scope and circumstances of
engagement.
2. Professional judgment should be exercised in determining what constitutes sufficient relevant data. The
practitioner should consider:
a. Objectives, nature and scope of engagement
b. Cost of gathering data versus the benefits of added data
c. Intended use of results
d. Source, reliability and completeness of data.
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2. Management should always be able to make decisions by reviewing and approving the findings,
conclusions, recommendations and other results.
MAS CONSULTATIONS
The practitioner should exercise the care that advice is clearly communicated and that it does not generate a
degree of reliance that is inappropriate in light of qualifications that apply to the advice.
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2. Where the practitioner believes that the information provided is insufficient, he should consider
qualifying his advice or refraining from giving any advice.
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AREAS OF KNOWLEDGE IN MAS ENGAGEMENT:
1. Organization and management methods
2. Office and management functions
3. Systems and procedures
4. Data and processing methods
5. Quantitative methods
6. Financial Management
2. Limited, Special Study Engagement - In this engagement the client is seeking an impartial or objective
study of a particular area such as the selection of computer equipment. The practitioner participates
through the analysis and design steps with the client carrying-out the implementation step himself.
3. Limited Client Involvement - The practitioner should be cautious of limited client involvement in the
engagement. The client must be able to both assume complete responsibility for the changes in his
organization and carry on the program after implementation.
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The AICPA defined management advisory services (MAS) as "the function of pro viding professional
advisory (consulting) 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". The AICPA also states that MAS "can relate to areas
such as:
In providing MAS, a practitioner applies an analytical approach and process typically involves the
following:
Should the client decide that the practitioner may proceed with the engagement, the latter may also be involved
in:
The MAS practitioner combines knowledge and experience in applying the aforemen tioned analytical approach
and process in such areas as:
The foregoing definitive description of MAS includes almost limitless variety of ac tivities that there is a
need to have some simplifying guides and aids to describe or summarize the activities that comprise MAS
practice.
The broad areas of Management Advisory Services have been classified into two groups namely:
A. Areas of MAS which are normally related to the accounting and finance functions.
This classification is based on the fact that some areas of MAS basically require the professional training of
CPAs and among these are the following:
This function is based on the fact that some areas of MAS require training in professions other than that of a
CPA and among them are the following:
Aside from the foregoing, the services of a management consultant may be sought by individuals or families
who are desirous of improving their finances or who are on the brink of insolvency. The services involved are
classified under personal finance.
Personal Finance. This is a relatively new field in management services. Individuals or families solicit
advice from management consultants for reasons such as to improve their finances, avoid insolvency and to
maximize returns on their savings. These require financial planning and control and investment management.
Based on the foregoing enumeration, it is apparent that to perform the services as enumerated under group
B, the CPA's background knowledge would not suffice. Independent accounting firms performing these services
engage the services of CPAs who have expanded their own knowledge and expertise in these areas thru formal
study (i.e., advanced studies) or training and experience. They also engage the services of nonaccounting
personnel such as engineers (chemical, electrical, mechanical, etc.) mathematicians, psychologists, marketing
men and others.