Acc228 - Week 1&2

c. Describe professional attributes of management consultants.
Big Picture in Focus: ULOa. Explain the basic consideration in

management advisory service.
Metalanguage
In this section, the most essential terms relevant to the study of accounting plus and
to demonstrate ULOa will be operationally defined to establish a common frame of
reference as to how the texts work in your chosen field or career. You will encounter
these terms as we go through the study of accounting plus. Please refer to these
definitions in case you will encounter difficulty in the in understanding accounting plus
concepts.
1. Consultant. It is someone who has expertise in a specific areas and
offers unbiased opinion and advise for a fee.
2. Management Advisory Services. A professional services provided by
independent accounting firms which primary purpose is to improve the
client’s use of its capabilities and resources to achieve the objectives
of the organization.
3. Management Consulting. An independent and objective advisory
service provided by a qualified person to clients in order to help them
identify and analyze management problems or opportunities.
Management consultants also recommended solutions or suggested
actions with respect to these issues and help, when requested, in their
implementation.
4. Consultation. This consists of providing advice and information during
a short time frame. This advise and/or information is provided orally
during one or more discussions with client.
Essential Knowledge
To perform the aforesaid big picture (unit learning outcomes), you need to fully understand
the following essential knowledge laid down in the succeeding pages. Please note that you
are not limited to exclusively refer to these resources. Thus, you are expected to utilize other
books, research articles and other resources that are available in the university’s library e.g.
ebrary, search.proquest.com etc., and even online tutorial websites.
1. INTRODUCTION
A consultant is not an employee but an independent contractor usually self-employed,
contracted to perform a short-term or long-term task and maybe paid on an hourly,
daily or project basis or other fee arrangement. Anyone can become a consultant but
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becoming a successful consultant is not that easy. It requires expertise and good
business skills and even a motivation to provide a consulting services to others for.
2. EVOLUTION OF MANAGEMENT ADVISORY SERVICES

Traditionally, CPA firms provide auditing service, designing and installing of
accounting system to their clients and tax services. When CPA’s found some problems
during the course of their engagement in their client’s business, they normally reported
it to their clients and give some suggestions for corrective actions. And then, their
clients engaged CPA to make a thorough investigation to solve the business problem.
Because of that situation, many firms offer a separate professional service which is
the consulting service. Because of the rapid development in businesses with the
corresponding increase in its complexity, the demand for the consulting service also
increases. The management advisory services extend to the other areas of the
business which create a pressure to the CPA’s in maintaining the independence.
Therefore, the accounting firm must limit itself to providing advice and technical
assistance to clients and avoid taking managements decisions that might impair its
independence.
2.1. Developing Trends
The practice of management consultancy has been evolving because nowadays it
specializes in information systems, automated offices, financial analysis and modelling
budget and cost controls, organization structures, personnel compensation, strategic
planning and in the other areas of business environment. Improvement in business
education is another trend. A better-trained entrants into the consulting profession who
are quality graduates and undergraduates from a business courses may become a
catalyst for the advancement of better management concepts and techniques. Change
in management culture and growth in the size and complexity of the business also
propelled the need for management consultants. Competition may also cause the
business to have a consultants to stand in the market. Technological advancement
may also drive the need for a specialized skills in the computer environment.
2.2. Future Prospects
Because of the development and transformations, the following are the predictions
from a veteran management consultant:
2.2.1 Management consulting will become even more specialized. Consulting
firms will need to continually add new specialties, just as manufacturing
firms add new products.
2.2.2 The consultant’s orientation will be towards being an insight-provider,
creator and sharer of information.
2.2.3 Management consulting firms will tend either to remain small or to become
quite large. Small firms will prosper by focusing upon narrow areas of
specialization while large firms will have to develop and offer a wide range
of services to sustain their high costs of operations.
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2.2.4 As consultants grow in number, they will develop more sophisticated means
of marketing their services.
2.2.5 Bright graduates of accounting, management and business schools will
continue to be attracted to careers in management consulting.
2.3 The Consulting Industry

Consultancy includes the following consulting industries:
2.3.a. Information Technology (IT).
2.3.b. Consulting and system integration.
2.3.c. Corporate strategy.
2.3.d. Operations management.
2.3.e. Human resources management.
2.3.f. Outsourcing.
2.4. Main Types of Consultant Firms

2.4.1. IT Firms
IT companies have increasingly looked towards consulting as a means of increasing
revenue. The recent trend has been to buy consulting business, for example, IBM’s
purchases of PwC Consulting. As a result, IBM has significantly increased its market
shares in consulting businesses.
2.4.2. Accounting Firms Offering Consultancy

A major change in US accounting practice occurred following the Anderson’s woes
and the consequent implementation of the Sarbanes-Oxley law. Many accountancy
firms have sold off their mainstream consulting operations either to management or to
other consultancies (particularly IT). Consultancy services are still offered but they
tend to have narrow focus around financial and transactions (mergers and acquisition)
services.
2.4.3. Major Consulting Only Firms

There are a number of large firms with global reach. They offer range of services nut
their core business is consulting. The big names are MCKinsey & Co.; Accenture and
Mercer Management Consulting; IBM; Atos KPMG Consulting; Deloitte Consulting
and Cap Gemini Ernst & Young.
2.4.4. Independents
Many individuals run their own consulting services as sole traders, as small limited
companies and partnerships. They offer a range of services, often quite specialized.
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Professional bodies such as PICPA offer professional training and accreditation and
provide a forum for all important networking.
2.5. Career Structure in Consulting Firms

Management consultancies can be hierarchal in their structures especially the larger
firms. The following are the common roles in management consultancies in ascending
order of seniority.
2.5.1. Analysts
Most graduates would start here. They are responsible for gathering information and
processing it for the consulting team. Only large firms offer this positions.
2.5.2. Consultants
These are either analysts who have been promoted after a couple of years or those
who have been in industry and have moved to consulting as a career change.
Consultants undertake the evaluation of the client business and make
recommendations on its behalf.
2.5.3. Senior Consultants or Manager

More experienced consultants have responsibility for leading a consulting team in
undertaking a projects on behalf of a client. They would typically have 3-5 years of
consulting experience and have already demonstrated their ability to take on the
responsibility of running small consulting projects. They would also be more involved
in dealing with members of the client team.
2.5.4. Business Development Managers

They are responsible for developing the firm’s product and building its relationship with
clients. They will also be involved in some large, complex consulting projects at a
strategic level. Most at this level would have 5-10 years of consulting experience.
2.5.5. Directors or Partners

They are the most experienced consultants who take responsibility for the
development of the organization as a whole and who lead its strategic companies and
will have overall responsibility for projects. They are expected to have 10 years or
more of experience in the practice of consultancy.
3. NATURE OF MAS BY INDEPENDENT ACCOUNTING FIRMS
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Management advisory services by the independent accounting firms can be
described as the function of providing professional advisory (consulting) services and
the primary purpose of which is to improve the client’s use of its capabilities and
resources to achieve the objectives of the organization.
Management consulting can also be described as an independent and objective
advisory service provided by qualified persons to clients in order to help them identify
and analyze management problems or opportunities. Management consultants also
recommended solutions or suggested actions with respect to these issues and help,
when requested, in their implementation.
An engagement consists of that form of management advisory or consulting service

in which an analytical approach and process is applied in a study or project. This
approach typically involves:
1. Ascertaining the pertinent facts and circumstances.
2. Seeking and identifying objectives.
3. Defining the problem or opportunity for improvement.
4. Evaluating and determining possible solutions.
5. Presenting findings and recommendation, and
6. Implementing the solutions, if appropriate.
And following the client’s decision to proceed, the independent accounting firm may
also be involved in:
- Planning and scheduling actions to achieve the desired results, and
- Advising and providing technical assistance in implementing,
in combination with knowledge and experience in such areas as:

- Organization and management methods
- Office and management functions
- Systems and procedures
- Data processing methods
- Quantitative methods (mathematics, statistics, etc.) and
- Financial management,
To produce solutions such as:

- A management information system
- A sales reporting system
- A cost accounting system
- A work engagement program
- Improved production control
- An organization plan with statements of duties and responsibilities, or
- An electronic data processing system.
4. RATIONALE FOR USING MANAGEMENT CONSULTANTS

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Consultants, although, they are not expected to be familiar with the organization as
the manager and administrator but they are engaged by the client’s administrator
because consultants are generally has lesser cost of service they provide than hiring
a new manager or employee.
Four (4) valuable reasons of hiring management consultants:
4.0.1 Independent viewpoint
A consultant is considered independent, objective and detached to the
problems faced by the organization. The consultant is not involved in the
internal policies of the organization, his or her suggestions tend to be
accepted as unbiased.
Consultants are retained as impartial adviser without any vested interest in
the outcome of the recommendations. When there are issues inside the
organization, an internal employee may not be able to see the problems or
may not be sufficiently objective, so the consultant can perform a competent
and thorough analysis of the issues. Psychologically, it is easier for the
personnel to take external advice rather than the internal advice of someone
who may be acting out of self-interest.
4.0.2 Professional advisor and counsellor

An experienced management consultant possesses special knowledge,
skill, and variety of personal attributes that make him the most desirable
candidate to undertake and engagement involving his areas of expertise.
Furthermore, an experienced consultant can introduce new ideas into the
organization that were gleamed from other engagement. Although the law
does not restrict the practice of management consultancy only among
CPA’s, business firms generally prefer CPAs to act as their management
consultant. Because of the persuasive nature of accounting, the academic
training and examination of requirement for the CPA certificate, a CPA has
broad base on which to build a management services practice.
Consultants are hired to provide in-house training to keep staff informed a
new management and supervisory techniques or technical knowledge and
to improve employee morale.
4.0.3 Temporary professional service

Hiring a new managers to provide professional advisory service is more
costly than hiring a consultant. Sometimes, business organization
encountered a short-lived or cyclical need in the operation and through this,
consultant can provide a temporary professional service to them. Consultant
may be hired on a project, seasonal, or new funding basis. When hiring a
consultant, client can avoid the long-term commitment for the salaries and
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fringe benefits that would have been when hiring a skilled permanent
employee.
4.0.4 Agent of Change

A management consultant can act as a catalyst for change and stimulating
ideas in a highly structured organization that otherwise might be resistant to
change due to size, bureaucracy, and institutionalized nature.
4.1. Independent Accounting Firm’s Role in MAS

The role of an independent accounting firm in performing management advisory
services is “to provide advice and technical assistance which should provide for
client participation in the analytical approach and process. Specifying this as
the proper role recognizes both the appropriate place of MAS and the realities
of practice. This is the only basis on which the work should permit it to be done.”
Consultant should not carry out the recommendations he made since he has no
authority to marshal client resources and make management decisions. If he allow to
take the role of management, then he ceases to be a consultant. In other words,
accounting firm should avoid making management decisions or taking positions that
might impair the firm’s objectivity.
5. CPA’S OBJECTIVE IN ENGAGING IN MAS

An independent accounting firm’s purpose in engaging in MAS is “to utilize the
essential qualifications it has available to provide advice and technical
assistance which will enable client management to conduct its affairs more
effectively.”
The essential qualifications are based in part on attributes acquired in conducting
other aspects of practice and include the following:
5.0.1 Technical competence.
5.0.2 Familiarity with the client’s finance and control systems and his business
problems.
5.0.3 Analytical ability and experience in problem solution.
5.0.4 Professional independence, objectivity and integrity.
Self-Help: You can also refer to the sources below to help

you further
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*Agamata, F. T. (2012). Reviewer in management advisory services. Manila:
GIC Enterprises & Co., Inc.
*Bobadilla, D. (2015). Comprehensie reviewer in management advisory
services. Manila, Philippines: Lares Bookstore.
*Bragg, S. M. (2011). The controller’s function: The work of the managerial
accountant (4th ed.).New Jersey: John Wiley & Sons.
*Cabrera, M. E. (2009). CPA reviewer :Management advisory services (2009
ed.). Manila: GIC Enterprises & Co.
*Cabrera, M.B. (2011). Management consultancy. Philippines: GIC
Enterprises & Co., Inc.
*Jackson, S. R.(2009). Managerial accounting: A focus on ethical decision
making ( 5th ed). Mason, OH: South – Western Cengage Learning.
Let’s Check
Questions:
1. Why do small companies need the services of management consultants?
2. Distinguish between consultation and engagement.
3. What advantages do CPAs have over other professional in so far as providing

business advisory services to their clients are concerned?
4. What impact on management consulting practice would technological

developments and globalization have on management consultancy profession?
5. Give and explain briefly at least four reasons for using management
consultants.
Let’s Analyze
Question:
1. Which of the following statements is false?
A. New developments and transformation could result to management
consulting becoming more specialized.
B. It is predicted that a consultant’s orientation will be towards being an insight-
provider, creator and sharer of information.
C. As consultants grow in number, they tend to develop more sophisticated
means of marketing their services.
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D. Because of the more stringent and technical qualifications required in
management consulting, more not-so-bright graduates of accounting,
management and business schools will be attracted to career in this area.
2. Most definition of consultancy would include such service related to the

following except
A. Information Technology
B. Corporate Strategy
C. Legal Advisory
D. Systems & Operation Management
3. Which of the following statements is incorrect?

A. A consultant is hired because generally he is considered independent,
objective and detached to the problems faced by the organization.
B. An experienced management consultant possesses special knowledge,
skills and a variety of personal attributes that make him the most desirable
candidate to undertake management consulting engagement involving area
of expertise.
C. The use of consultants generally much more expensive to the company than
hiring a full time new managers and employees to provide professional
advisory services.
D. A consultant is considered a catalyst for change that can assist
management in the administration of the business entity.
4. The actual output of a consulting engagement centers on providing the

business organization with
A. Valuable information
B. Support for internal arguments.
C. Support in acquiring a critical resource.
D. Support for contesting tax assessment by the BIR.
5. Which of the following statements is false?

A. CPAs have historically been business consultants to their clients.
B. Management consultants are licensed and regulated by laws.
C. The primary purpose of management consultancy is to improve the firm’s
use of its capabilities and resources to achieve its objectives.
D. Management consultancy services are provided not only to big business
enterprise but also to medium-size and small companies.
In a Nutshell
List down below all the things that you have learned from this ULO.
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1. ____________________________________________________________
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2. ____________________________________________________________
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3. ____________________________________________________________
___________________________________________________________.
4. ____________________________________________________________
___________________________________________________________.
5. ____________________________________________________________
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6. ____________________________________________________________
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7. ____________________________________________________________
___________________________________________________________.
8. ____________________________________________________________
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9. ____________________________________________________________
___________________________________________________________.
10. ____________________________________________________________
___________________________________________________________.
Q&A Lists
Do you have any questions?
Questions/ Issues Answers
1.
2.
3.
Keyword Index
Analysts Engagement
Business Development Managers Independence
Consultant Management Advisory Services
Consultation Management Consulting
Directors or Partner Senior Consultants or Manager
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Big Picture in Focus: ULOb. Identify areas of management advisory

services.
Metalanguage
For you to demonstrate ULOb, you will need to have an operational understanding
of the following terms below. Please note that you will also be required to refer to
the previous definitions found in ULOa section.
1. Re-engineering. It is the complete redesign of a process with an emphasis
on finding creative new ways to accomplish an objective.
2. Operational Audit. It is also known as management audits and performance
audits, are conducted to evaluate the effectiveness and efficiency of the
operations.
Essential Knowledge
1. TYPES OF MAS ENGAGEMENTS

Management services engagements maybe classified in six dimensions:
1.0.a Nature of the problem,
1.0.b Service delivery area,
1.0.c Phase(s) of the analytic process,
1.0.d Techniques and methodologies applied,
1.0.e Industry (or nature of organization) to which the client belongs, and
1.0.f Geographical area(s) where the engagement take place.
1.1 Nature of the Problem

Classification of problems according to their situation:
1.1.a Corrective Problem
Involves a situation in which conditions have worsened. It usually
arises suddenly and demands urgent action. Defying the problem is
often much less difficult than determining the preferable course of
actions. An example of a corrective problem is the sudden drop in
productivity within a critical department. A consultant is expected to
suggest corrective actions that will return the situation to its previous
state.
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1.1.b Progressive Problem

It involves an existing situation that can be improved. For example, the
firm may have been acquired by the firm’s competitors but the firm’s
procedure have remained unchanged. The firm has continued to
employ old procedures in spite of significant growth in transactions and
development in computer technology. In such a situation, the
consultant may determine that computer-based transactions
processing system are likely to provide considerable improvements to
the situation.
1.1.c Opportunistic Problem

It involves a situation in which a future opportunity exists. For example,
a firm might have excessive cash and cash equivalents available. On
the surface, the problem is that the funds are not earning a desirable
rate of return. The consultant’s responsibility in this situation is to
search out and recommend opportunities for more effective use of the
funds. Obviously, opportunistic problems are likely to lead to more risky
as well as more potentially rewarding courses of action than are
corrective and progressive problems.
1.2 Service Delivery Areas

Service delivery areas, i.e., the functions or activities in which the problem
situation exists may be classified in a number of ways. One classification plan
for instance, employs the following groupings:
1.2.1 General Management
1.2.2 Manufacturing
1.2.3 Personnel
1.2.4 Finance and accounting
1.2.5 Marketing
1.2.6 Procurement
1.2.7 Research and development
1.2.8 Packaging
1.2.9 Administration
1.2.10 International operations
Within each principal area are several narrower areas. For instance, under
finance and accounting, the following may be the subject of management
advisory services.
1.2.4.a General Accounting
1.2.4.b Cost accounting
1.2.4.c Short-term planning, budgeting and control
1.2.4.d Credit and collections
1.2.4.e Long-range financial planning
1.2.4.f Capital investment
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1.2.4.g Marginal income analysis

1.2.4.h Financial planning
1.2.4.i Valuation and appraisal
1.2.4.j Taxes
1.2.4.k Financial information and planning
1.3 Application of the Analytics Process

The analytical process in a consulting engagement includes:
1.3.a Identifying the objectives,
1.3.b Defining the problem,
1.3.c Finding out the facts,
1.3.d Developing the solution, and
1.3.e Implementing the solution.
An engagement could involve one or more or all of these phases and generally
cannot be totally isolated. For example, defining the problem situation will
probably involve identifying objectives and determining at least the pertinent facts
of the problems.
1.4 Techniques and Methodologies Applied
Every engagement has methodologies and models being applied. For
example, capital investment planning can be aided by a discounted cash flow
model such as present value or internal rate of return model. Information
systems planning and design can be aided by a structured methodology.
1.5 Industry or Nature of Organization

A client who is the subject of an engagement may be a privately owned
business firm, a government agency, or not-for-profit non-governmental
organization, a professional association or some other type of organization.
1.6 Geographical Areas

A consulting engagement may be restricted to a single location, such as the
home office of the client. It may also involve multiple locations such as the
several production plants and warehouses of a larger manufacturing firm. It
may even involve locations in foreign countries.
2. AREAS OF MAS PRACTICE

Management consulting can relate to areas such as:
2.a The management functions of analysis, planning, organizing and controlling.
2.b The introduction of new ideas, concepts and methods to management.
2.c The improvement of policies, procedures, systems, methods and organizational
relationships.
2.d The application and use of managerial accounting, control systems, data
processing, and mathematical techniques and methods, and
2.e The conduct of special studies, preparation of recommendation.
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Because of wide areas of management consultancy, the following are the general type
of consultancy work:
2.i Business planning and development or project feasibility studies
2.ii Information system consulting
2.iii Management / operations audit
2.iv Business process improvement / reengineering
2.v Other such as
2.v.a Marketing research
2.v.b Marketing Strategy development
2.v.c Developing promotional campaign
2.v.d Planning sales force activity
2.v.e New product development
2.v.f Developing proposal for financial support
2.v.g Staff recruitment
2.v.h Exporting and international market
2.1. Business Planning and Development or Project Feasibility Studies
One of the broadest project types is ‘business planning’ or ‘business development’.

Businesses has the ambition to grow and develop. A project of this type is a great
opportunity. It offers the consultant a broad remit to contribute to the development of
the business. In business development project, the first task of the consultant is to
establish exactly what the client wants from this project. Maybe, sometimes the client
has something specific in mind. However, here are the common outcomes desired
from business development:
2.1.1 Growth of the business within its core markets by capitalizing on market
growth or market share increase;
2.1.2 Expansion of the business into new market sectors;
2.1.3 Development of new products;
2.1.4 Increasing profits through cost-reduction programs;
2.1.5 Internal structure reorganizations.
Effective consultants can use the project proposal to establish exactly what the client
wants and to manage his or her expectations about what can realistically be achieved.
2.2. Information Systems Consulting

Managers need information to make good decisions. Businesses used management
information system to collect and organize such information and must present it to
managers in usable form. But nowadays, management information system are usually
based on computer technology. Therefore, they require a technical expertise to
implement it. Because of this, consultants, even if non-technical, can add value in
developing an understanding of the information needs of the business, the way in
which information flows around the organization and the competitive advantage that
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might be gained through investment in information technology. Consultancy practice

in this way provides progress in the technical implementation and helps ensure that it
will be rewarding.
2.3. Management / Operations Audit

Operational audit also known as management audits and performance audits, are
conducted to evaluate the effectiveness and efficiency of the operations.
2.4. Business Process Improvement / Reengineering

In process reengineering, a business process is diagrammed in detail, questioned and
then completely redesigned (1) to eliminate unnecessary steps, (2) to reduce
opportunities for errors, and (3) to reduce costs. A business process is any series of
steps that are followed to carry out some task in a business.
Re-engineering is the complete redesign of a process with an emphasis on finding
creative new ways to accomplish an objective. Re-engineering has sometimes been
described as taking a blank piece of paper and starting from scratch to design a
business process. Re-engineering prescribes radical, quick and significant change. It
involves developing new ways to perform existing activities and ways to stop
performing non-value added activities. The downside of reengineering is that the
employees may not support in process reengineering because of the fear that they
may lose their jobs. Since if the process reengineering is successful in eliminating non-
value added activities, there will be less work to do and management tempted to
reduce payroll. Therefore, process reengineering when carried out insensitively,
can undermine employees’ morale and will ultimately fail to improve its bottom
line (i.e., profitability).
In implementing business process improvement, involvement by virtually all of the

employees is required. Each employee must be aware of the following:
a. The goals of the program,
b. The process by which the program will be implemented and evaluated, and
c. The employee’s role in making the program a success.
It is also important to offer employees a continual opportunity to retrain and adapt their
skills to the rapidly changing work environment. If the employees recognize a
commitment by their organization to ensure that their skills are current and useful, they
will in turn be more likely to commit to the organization’s continuous business process
improvement.
2.5. Other Types of Consultancy Work
2.5.1. Marketing Research

Marketing research is the process through which managers discover the nature of the
competitive environment in which they are operating. The objective of marketing
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research is to obtain information which managers can use dedicate valuable resources
in a more reliable way.
Types of marketing research:
2.5.1.1. Primary research is information collected for the specific project. This
is further subdivided as follows:
2.5.1.1a. Quantitative research provides answers to questions
when those answers need to be expressed in statistical or
numerical form. It aims to answer the ‘how much, how
often and how many’ questions that mangers pose.
2.5.1.1a. Qualitative research provides answers to questions that
do not demand a quantified answer. It provides the insights
that answer managers’ who, what and why’ questions.
2.5.1.2. Secondary research is based on information that has been

collected earlier for reasons other than the project at hand. It takes the
form of existing reports, articles and commentaries that just prove to be
relevant to the project.
2.5.2. Marketing Strategy Development

A marketing strategy defines the approach the business will take in order to get the
customers’ attention and critically, get them to spend their money on the business
products or services.
2.5.3. Developing Promotional Campaigns

A promotional campaign is any program of activities dedicated to informing customers
about a product, stimulating their interest and encouraging purchase. Examples
include advertising and public relations campaigns, sales drives, direct mailing,
exhibitions and in-store demonstrations.
2.5.4. Planning Sales Force Activity

For many businesses, especially small and medium-sized ones, the sales team is the
primary promotional tool. Expenditures on sales forces activity is one of the most
important investments the firm will make. Detailed and thoughtful planning of sales
force activity is a process which offers real returns. This is an area in which the
consultant can offer valuable support. Some of the key issues that might be addressed
include the following:
2.5.4a Overall organization of the team
2.5.4b Sales team training
2.5.4c Sales team motivation
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2.5.4d Planning sales campaigns
2.5.5. New Product Development

Research and development, marketing and sales, production, purchasing and human
resources will all be called in upon to make a contribution. New product development
is often undertaken by interdisciplinary teams, which cut across departmental
boundaries.
The consultant can offer support to the new product development program in
number of ways. The most important include:
2.5.5a Understanding the customer’s need though market research;
2.5.5b Technical advice on product development;
2.5.5c Identifying and contracting suppliers of critical components;
2.5.5d Development of marketing and PR campaigns to support the launch;
2.5.5e Developing promotion campaigns to get distributors on board;
2.5.5f Financial planning and evaluation of the return on new product
investment.
2.5.6. Developing Proposals for Financial Support

Consultants are often called in to offer advice I four critical areas:
2.5.6a Evaluation of the business’s investment stocks;
2.5.6b Identification of funding providers and how they might be contracted;
2.5.6c Developing an understanding of the criteria employed by funding
providers and how these might be addressed;
2.5.6d Developing communications with funding providers, particularly in
relation to proposals and business plans.
2.5.7. Staff Recruitment

A staff consultant can be of value in this area. Important contributions to recruitment
projects might include:
2.5.7a Assessing the firm’s human resources requirement and identifying skill
and knowledge gaps, both currently and predicting for the future;
2.5.7b Creating advertisements (with insights into both message and medium)
to attract the right people;
2.5.7c Developing assessment criteria interview procedures and, possibly,
psychometric testing candidates;
2.5.7d Advice on the reimbursement packages new recruits will expect.
2.5.8. Exporting and International Marketing
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Most large firms have an international if not truly global dimension to their operations.
Many high-growth firms soon recognize the opportunity the international stage offers
them as a route for expansion. For most businesses, moving into the international
arena is a step into the unknown.
The most successful moves into international operations are those which are based
on sound preliminary research and thorough understanding of what to expect.
In particular the consultant can supply:
2.5.8a An overall insight into regional, social and macroeconomic development;
2.5.8b An analysis of the growth and evolution of specific markets;
2.5.8c An evaluation of consumer needs and requirements and how these are
being satisfied currently;
2.5.8d Information on regulatory and legal issues;
2.5.8e Details of the existing supply structure and competitors present;
2.5.8f An investigation into distribution channels and possible partners;
2.5.8g Information on advertising and promotional opportunities.
3. MANAGEMENT CONSULTANCY SERVICES BY CPAS

3.1. Traditional Services:
3.1.1. Managerial Accounting
This engagement involves providing assistance to management related
to planning and controlling business operations as well as decision
making. Examples are
3.1.1a. Financial statement analysis.
3.1.1b. Budget and their preparation.
3.1.1c. Cost analysis planning and control.
3.1.1d. Variance analysis.
3.1.1e. Cost analysis for managerial decisions.
3.1.1f. Development and installation of responsibility accounting
and evaluation of responsibility center.
3.1.1g. Establishment of internal reporting system.
3.1.1h. Assistance in preparation of reports to employees,
stockholders, SEC and others.
3.1.2. Design and appraisal of accounting system

This will involve
3.1.2a. Development of an accounting system for a newly-
organized firm.
3.1.2b. Revision, partial or complete, of an existing accounting
system.
3.1.2c. Extension of the present accounting system to cover new
business activities.
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3.1.2d. Accounting service in general.

3.1.2e. Accounting machines installation.
3.1.2f. Internal control studies and installations.
3.1.3. Financial Management-related Services

Examples are:
3.1.3a. Study of working capital requirements.
3.1.3b. Study of methods of financing asset acquisitions.
3.1.3c. Credit and collection practice studies and advice.
3.1.3d. Analysis of capital investment proposals.
3.1.3e. Study of alternative methods of financing expansion.
3.1.3f. Survey of pension, retirement and profit sharing plans.
3.1.3g. Preparation of feasibility studies for new projects.
3.1.3h. Valuation of capital stock of companies for purposes of merger or
sale.
3.1.4. Project Feasibility Studies
3.2. Emerging Consultancy Services

3.2.1 Global Risk Management Solution
This involves managing the totality of risks – financial, operational and
systems, and strategic to improve financial and business performance.
It also covers determination of critical risks that firm faces, development
of recommendation to reduce risk expose and identification of
opportunities for growth and expansion. Areas of risk management
services include
3.2.1a Financial risk management

Examples: 1. Measurement of risk-adjusted return on capital
and link performance evaluation to creation of
shareholder value
2. Model reviews of derivative valuations
3.2.1b Strategic Risk Management

Example: 1. Review of a whole business unit, departures,
function or process so that senior management can
fully understand the risks of the operation.
3.2.1c Operational and Systems Risk Management

Examples: 1. Controls and assurance services.
2. Technology risk services
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3. Operational risk services, corporate governance
3.2.1d Compliance risk management

Example: 1. Review of compliance with regulatory
requirement and ethical conduct standards
3.2.1e Internal Audit Services
1. Assessment of the units’ performance against
professional standards and peer organization
2. Development of new internal audit function
3. Review of controls of key business processes
3.2.2 Transaction Services

These involve services related to mergers, acquisitions, divestitures,
joint ventures, spin-off, and strategic alliance. Examples: Due diligence
services to uncover potential financial and strategic risks and rewards.
3.2.3 Financial Advisory Services

3.2.4 CPAS provide comprehensive, financial, economic and strategic advice
to companies with complex business problems and disputes, Examples
are services related to investment banking, fraud and dispute
analysis, intellectual property disputes, etc.
3.2.5 Project Finance and Privatization

This involves management advisory services related to partnership
between the public and private sectors in delivering infrastructure and
services or privatization and project finance. Examples of these services
are (1) development of the commercial structure for a deal, including risk
mitigation and contracts, (2) development of a financial structure to get
the right mix of financial instrument in a tax efficient package.
3.2.6 Valuation services

These include service that guide clients through complex business
transactions such as acquisition or divestiture of investment, debt
structuring and finance-raising, entry to major stock exchange, mergers.
3.2.7 Business Recovery Services

CPAS provide services to troubled businesses by emphasizing on the
implementation and rationalization and recovery programs designed to
rebuild value. Examples of these services are creditor services, business
regeneration, hands on turnaround, insolvency / executory services,
insurance services such as collectability of reinsurance recoveries,
collections, disputed claims, etc.
3.2.8 Dispute Analysis and Investigation
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Most common types of services under this category are environmental

analysis, real estate damage, investigative services, construction
disputes, investigative services, economic and financial analysis.
3.2.9 Computer Risk Management

Management consultants help client understand and manage their
business risks relating to the implementation and use of technology.
Examples are implementing mission critical business systems such as
electronic commerce, network sensitivity, etc.
3.2.10 Application Software Selection and Implementation

The management consultant assists clients in prioritizing their needs,
identifying the right software (from groupware to decision support) and
tailoring it to meet their specific requirement.
4. DETERMINING THE SCOPE OF SERVICE

Generally, CPAS may perform the entire range of MAS as long as it is consistent
with their professional competence, ethical standards, and responsibility. The
independent accounting firm in reaching a decision as to the scope of its
management advisory services should be guided by certain criteria such as
competence and independence. It should likewise consider its depth of knowledge
and experience required in the various subject areas and kinds of problems and
solutions with which the firm might become involved.
4.1. Responsibility to establish scope of services
The accounting firm has the responsibility to determine the scope of
services it is competent to offer to the public.
4.2. Independence
The accounting firm, when providing MAS should give particular consideration
to both independence and the appearance of independence. It is suggested
that a CPA rendering MAS and at the same time serving the same client as
independent auditor should not make management decisions or take positions
which might impair his objectivity and independence.
4.3. Competence
Independent accounting firms have the responsibility of evaluating their ability
to render MAS of a professional quality in each specific area. Competence in
professional work involves both the technical qualifications of staff personnel
and the firm's ability to supervise and evaluate the quality of the work
performed.
4.4. Requirements for specialization
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The requirements for specialization in certain areas may limit the scope of MAS
offered by any given independent accounting firm. As a consequence, the firm
may decide to exclude areas of service which are already provided by others in
the profession.
4.5. Identification and resolution of client's basic problems

The scope of services offered by the independent accounting firm should be
adequate to identify and resolve the basic client's problems and not just
problem symptoms.
4.6. Referrals
Referral of MAS work to other independent accounting firms is another way of
developing that firm's capability. The referral arrangement ay also provide for
an effective means by which independent accounting firms could develop
cooperation thereby expanding their knowledge and scope of service toward
providing the full range of MAS.
4.7. Code of professional ethics

It is the responsibility of the independent accounting firm to assure itself that
the nature and scope of the MAS it elects to offer are in conformity with the
code of professional ethics.
5. TYPES OF CLIENTS SERVED
Process consulting can be enhanced by an appreciation of the different types of client

involved. It is suggested that the consultant interacts with a number of individuals
within the client organization and that the concept of the individual client may be
problematic. Rather, the consultant interacts with a network of individuals who play
subtly different roles. The proposed six client types are:
5.a. Contact Clients
The contact client is the person, who first approaches the consultant and
proposes that the consultant addresses a problem or issue on behalf of the
organization.
5.b. Intermediate Clients

Intermediate clients are members of the organization who become involved in
the consulting project. They will work with the consultant and provide
information. They will sit on meetings and influence the way the project unfolds.
Intermediate clients may be the actual recipients of the final report.
5.c. Primary Clients

The primary client is the person or persons who have identified the problem or
issue the consultant has been called in to address and who are most
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immediately affected by it. It is they who will be willing to pay in order to have
the issue resolved.
5.d. Unwitting Clients

Unwitting clients are members of the organization who will be affected by the
intervention of the consultant. They do not initiate the project and have no direct
or formal control over it. They are not aware that they will be affected by the
project.
5.e. Indirect Clients

Indirect clients are members of the organization who will be affected by the
intervention of the consultant and who are aware that they will be affected.
However, the consultant is not aware that the project will have an impact on
them. Indirect clients may feel either positive or negative about the consultant's
intervention. They can be very influential behind the scenes and, unbeknown
to the consultant, can facilitate or hinder the progress of the project.
5.f. Ultimate Clients

Ultimate clients are the total community that will be affected by the consultant's
intervention. This will include members of the organization and, possibly,
members of the organizations which come into contact with the client
organization. The ultimate client group forms the universe of whose interests
the consultant must take account when progressing with the project.
5.1. Groups of clients that CPAS can provide MAS

5.1.1. Privately-owned business firms
Business enterprises involved in merchandising, manufacturing, banking,
transportation, insurance, food services, education, telecommunications
and others are potential consultancy clients.
5.1.2. Governmental agencies and organizations

Many governmental organizations engage management consultants at one
time or another. For instance, management consultants have been engaged
by the BIR, SEC, Bureau of Customs, Department of Health, Department of
Environmental and Natural Resources and many more.
5.1.3. Not-for-profit nongovernmental organizations

Organizations such as hospitals, research institutions and charitable
institutions are increasingly using management advisory and consulting
services particularly on areas of proper raising of funds and revenues while
reducing costs.
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5.1.4. Professional associations

Associations organized by professionals (lawyers, medical doctors, etc.) often
need advice and assistance with respect to management and organizational
problems.
5.1.5. Others
A catchall category to include such groups as labor unions, sports
organizations, and religious organizations will also provide potential clients of
management consultants.
Self-Help: You can also refer to the sources below to help you
further
Let’s Check
Questions:
1. To what general areas can management consulting relate?
2. Who can be management consultants?
3. Distinguish between the three (3) types of problems a business entity may
face.
4. Give examples of management consultancy services that may be provided to

the following establishments:
a. Food chain
b. Insurance company
c. Hospitals
d. Sports organization
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e. Bureau of Internal Revenue
5. Give examples of management consultancy services that could be provided

in the following areas:
a. Manufacturing
b. Finance and accounting
c. Marketing
d. International operations
e. Procurement of materials and supplies
Let’s analyze
Questions:
1. Which of the following statements is true?
A. MAS engagement involve routine and repetitive in nature.
B. Being a CPA automatically qualifies a person to render the entire range of
management services.
C. Management audit is one of the areas of management consultancy that is
not directly related to accounting and finance.
D. The areas of management advisory services are much more limited than
the traditional auditing and taxation services of a CPA.
2. The type of problems faced by an entity that involves conditions that have
worsened and demands urgent actions is known as
A. Progressive problem
B. Opportunistic problem
C. Corrective problem
D. Unsolvable problem
3. Which of the following areas will not be classified under accounting and
finance services?
A. Personnel recruitment and training
B. General and cost accounting
C. Marginal income analysis
D. Capital investment
4. The basic analytical process applied in consulting engagements include

1. Definition of problem.
2. Implementation of the recommended solution to the problem.
3. Development of the solution.
4. Identification of objectives.
5. Fact-finding and analysis.
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The order in which the above-mentioned steps are generally applied are
A. 1, 2, 3, 4, 5.
B. 4, 1, 5, 3, 2.
C. 4, 5, 1, 3, 2.
D. 4, 1, 3, 5, 2.
5. Common outcomes desired from business planning and development

generally include the following except
A. Increase in market share
B. Development of new products.
C. Internal structural reorganizations.
D. Better-trained personnel
In a Nutshell
List down below all the things that you have learned from this ULO.
1. ____________________________________________________________
___________________________________________________________.
2. ____________________________________________________________
___________________________________________________________.
3. ____________________________________________________________
___________________________________________________________.
4. ____________________________________________________________
___________________________________________________________.
5. ____________________________________________________________
___________________________________________________________.
6. ____________________________________________________________
___________________________________________________________.
7. ____________________________________________________________
___________________________________________________________.
8. ____________________________________________________________
___________________________________________________________.
9. ____________________________________________________________
___________________________________________________________.
10. ____________________________________________________________
___________________________________________________________.
Q&A Lists
Do you have any questions?
Questions/ Issues Answers
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1.
2.
3.
Keyword Index
Re-engineering Information system consulting
Operational audit Marketing research
Corrective problem Primary research
Progressive problem Secondary research
Opportunistic problem
Big Picture in Focus: ULOc. Described professional attributes of

management consultants.
Metalanguage
For you to demonstrate ULOc, you will need to have an operational understanding
of the following terms below. Please note that you will also be required to refer to
the previous definitions found in ULOa and ULOb section.
1. Technical Skills. These includes understanding and experience in a
technical discipline – such as information technology, marketing,
engineering and organization behavior.
2. Interpersonal Skills. These include personal attributes that make an
individual amiable among people and effective in accomplishing desirable
objectives through people
3. Consulting Process Skills. These includes the ability to apply the analytical
approach and process in this problem-solving exercise.
Essential Knowledge
1. PROFESSIONAL ATTRIBUTES OF MANAGEMENT CONSULTANTS

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According to Professor J. Owen Cherrington of Brigham Young University, a renowned

academician, a management consultant must possess the following broad areas of
skills:
1.1. Technical Skills
1.1.1. Education Requirements
The education required to obtain the necessary technical skills for management
consulting depends on the area of specialization. Some generalizations can be
made, however, concerning the amount of education is required, the common
core requirement and the experience possessed by most consultants.
These include both understanding and experience in a technical discipline -
such as information technology, marketing, engineering and organizational
behavior.
1.1.1.1. TECHNICAL TRAINING

1.1.1.1.a. Length of Education
A bachelor's degree is a prerequisite and many, if not most people going
into management consultancy today have one or two graduate degrees.
Undergraduate programs generally teach the "how" rather than the
"why". Graduate programs help develop tolerance for the uncertainty
and ambiguity inherent in business problems.
1.1.1.1.b. Type of Education
Educational programs usually include a technical degree and a general
degree. For instance, a person might obtain a general business degree
at a bachelor's level and specialize in information technology after
earning a master's degree in computer science and information
management.
1.1.1.2. COMMON CORE REQUIREMENT

Regardless of a person's area of specialization, the following common
core courses should be included in the educational program.
1.1.1.2a. Communications
1.1.1.2b. Mathematics and statistics
1.1.1.2c. Computer data processing
1.2. Interpersonal Skills or Developed Attributes
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In addition to education and experience, several personal attributes are critical for the
success of a management consultant. These are:
1.2.1. Intelligence or capacity for logical thinking and reasoning
This refers to the consultant's degree of mental organization and development
that enables him / her to absorb and relate facts in a logical and orderly fashion
and to reason inductively and deductively.
1.2.2. Integrity
This pertains to the number of attributes, such as moral and ethical soundness;
fairness; equity; ability to distinguish between right and wrong: honesty;
dependability; freedom from corrupting influence or practice; and strictness in
the fulfillment of both the letter and the spirit of agreements made regardless of
personal considerations.
1.2.3. Objectivity
The consultant must have the ability to grasp and to represent facts, unbiased
by prejudice. He / She is also independent.
1.2.4. Understanding of people (human relations; empathy)

The consultant must have the ability to anticipate human reactions to differing
situations; to establish and maintain friendly relations and mutual confidence
with people at all levels; and to recognize and respect the rights of others.
1.2.5. Judgment
This refers to the management consultant's ability and reasoning power to
arrive at a wise decision, a course of action or a conclusion, especially when
only meager or confused facts are available.
1.2.6. Courage
This refers to the consultant's strength of mind and character that enables him
/ her to encounter disagreement, difficulties, and obstructions with firmness of
spirit and determination, and to consider them as challenges rather than
something to be avoided or feared; the ability to stand by one's convictions
regardless of pressure.
1.2.7. Ambition
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A management consultant must have the desire and motivation to earn and
obtain full recognition for the attainment of professional status.
1.2.8. Psychological maturity

This pertains to the consultant's ability to view situations in perspective and to
take action needed on a calm and controlled basis without being diverted from
a sound, logical and ethical course by outside pressure.
1.2.9. Physiological equilibrium

A consultant needs a high-energy level to (1) support his / her intellectual and
emotional activities, (2) enable him / her to withstand pressure and frustration,
and (3) avoid physical illness.
1.1.10. Relationship-building skills

1.1.10.a. An ability to build rapport and trust with the client
Rapport is hard to define - but it is easy to recognize. Two people have
a rapport when they communicate with ease and work together
effectively. It is clear that they have a trust in each other and a
commitment to each other. Rapport is not confined to face-to-face
communication. It is a feature of all communication. Rapport can be
built through written and verbal communications as well.
1.1.10.b. An ability to question effectively

Questioning is one of the fundamental communication skills.
Questioning is not only a way to get information (though this is
important). It is also a way to build rapport and to control the direction
of a conversion. Effective questioning skills are an important plank in any
manager's leadership strategy. They are especially important for the
consultant.
1.1.1.0.c. An ability to communicate ideas succinctly and precisely

A consultant brings a special level of expertise to a business. He or she
must offer something the business cannot offer itself. This may mean
that the consultant is working in an area with a high technical content,
for example finance or marketing. Areas such as these and many others
have a language all their own. The consultant must be cautious about
using this language directly to the client. After all, the client is not
interested in the consultant's knowledge of a technical area but in his or
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her ability to use that knowledge in a way which creates value for the
business.
A consultant has most impact when he or she talks the same language
as the client. Ideas must be related in a way that is succinct and precise
and uses no more technical jargon than the client is comfortable with.
Converting technical ideas into plain language is not always easy. But
it is important and is a skill of its own which can be developed with
practice.
1.1.10.d. An ability to negotiate objectives and outcomes

A consulting project must have definite objectives and outcomes. The
value the project is expected to deliver to the client business must be
explicit. However, the consultant and the client do not always agree, in
the first instance at least, on what those outcomes should be. The client
may not have a clear idea of what is wanted for the business. If he or
she does have a definite idea it may be beyond the scope of what the
consultant is in a position to offer realistically. It may be that the
consultant is not convinced that what the client is demanding as an
outcome is absolutely right for the business. Such disagreements can
often occur with student consulting projects where the client's
expectations are very high and there is a need to reconcile commercial
with educational outcomes. Whatever the source of any disagreement,
the project outcomes must be defined and agreed by consultant and
client. This is a process of negotiation that results in the formal project
brief. The need to negotiate is not an admission that there is necessarily
a conflict between the client and the consultant. Rather, it is a recognition
that the consultancy exercise will work best when both client and
consultant have clear expectations as to what will result from the
consulting exercise and what the responsibility of both parties will be in
achieving them. The consultant must be aware that disappointment in
consultancy (for both client and consultant team) results more from
unclear expectations than from poor outcomes.
1.1.10.e. An ability to convince through verbal, written and visual mediums

In business, having good ideas is not enough. Ideas must be used to
encourage people to follow them as courses of action. They must be
used to encourage the business's managers to implement plans and its
backers to make supportive investment decisions. Ideas must be
communicated in a way that convinces people they are good and are
worth implementing. This conviction comes as much from the 'how' of
communication as from the ‘what’, that is, from the form of the
communication as well as its content. This Conviction results if ideas are
communicated in a manner that is appropriate to the audience; for
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example if the communication uses the right language, is of the right

length and adopts a proper style. This applies to communication in any
situation and whether the medium is verbal, visual or written.
1.1.10.f. An ability to use information to make a case for a particular course of

action
Of course, ideas must have some substance if they are to deliver real
value. Communication of ideas must be backed up with information.
This includes both facts and interpretation of facts. The logic of that
interpretation must be clear. Different people in the client business will
seek and will be convinced by different corroborating information, at
different levels and presented in different ways. Some information will
be included in an initial communication. Other parts may be kept back
as a response to questions and challenges.
Knowing when to use particular information, and how to use it to
convince, is an important communication skill for the consultant,
especially as a consultant's ideas are likely to be under close scrutiny by
the client business, certainly more so than those of internal managers.
1.1.10.g. An ability to develop selling strategies

Effective selling calls for a definite, well-developed and quite well-
understood set of skills. Selling of goods and services is a specialist
management activity. However, all managers are involved in selling their
ideas all the time. Consultants must certainly sell their ideas. But they
must also sell themselves and their own organizations as providers of
ideas. This is a particular challenge for consultants involved in general
management rather than some specialist area. A business may readily
accept that it lacks technical knowledge in product development,
information technology or finance. However, few businesses will readily
admit to being deficient in general management skills. The consultant
can draw on a variety of formal selling skills. These must be used
appropriately though. Consultancy, as a 'product,' does not usually
respond to a 'hard sell' approach. Rather, a formal selling approach
should be used as the tactic in a well-thought-through selling strategy.
This strategy should aim to communicate what the consultant can
genuinely offer the client and be used to build a long-term, mutually
rewarding relationship.
1.1.10.h. An ability to work effectively as a member of a team

Many consulting tasks (especially those of major significance) require a
team effort. As a minimum they will demand that the consultant and
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client work together. Usually they will involve an extended management

team in the client business. Often the consulting task will have significant
resource implications and will be complex to deliver. The scope of its
demands will be beyond the capabilities of one individual, certainly in
time and perhaps in technical knowledge. Delivering the project will
require the consultant to work as part of a team. Good team working is
essential for business success and not just in consulting. It is a skill in
itself. It demands many things. It requires, for example, a careful
definition of individual roles in relation to the team as a whole. It also
requires well-honed interpersonal, motivation and conflict-resolution
skills. Most of all, perhaps, it demands a willingness to align the interests
of the individuals who make up the team with the overall task the team
must address. This requires an ability to advocate individual interests
and yet, when necessary, to compromise individual concerns for the
interests of the group as a whole. If the team is to develop a productive
coherence through which its members can make individual
contributions, it must be actively managed.
1.1.10.i. An ability to listen effectively

1.1.10.i.1. As an active part of communication, listening represents a skill
that can be improved. Some points to improve one's ability to
listen are as follows:
1.1.10.i.2. Actively concentrate on what is being said. It is easy for the mind
to drift.
1.1.10.i.3. Keep track of, and mentally summarize, the key themes in what
is being said.
1.1.10.i.4. Keep an ear out for particularly relevant ideas or facts.
1.1.10.i.5. Identify and mentally record key phrases.
1.1.10.i.6. Note the speaker's use of metaphor and imagery.
1.1.10.i.7. Use your own paralanguage and body language to encourage the
speaker (this does help active listening - try it).
1.1.10.i.8. When appropriate, ask questions to explore key points further.
1.1.10.i.9. Summarize the speaker's points and ask him or her to confirm
your understanding.
1.1.10.i.10. If possible, support active listening with note taking. The
project log is a good place to keep such notes.
1.1.10.i.11. Avoid concentrating on preparing your own response while
the other person is speaking. Don't feel you must answer right
away. It is perfectly acceptable to take a few seconds to reflect
on what has been said and then respond. In fact, this will make
it clear that you are concentrating on what the speaker is saying
and will motivate them.
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You will find that with a little practice active listening, far from detracting from
your ability to prepare responses, positively enhances it, not least because your
responses will be relevant to the other speaker.
1.1.10.j. An ability to demonstrate leadership

Leadership is an ability to focus and direct the individuals in an
organization in a way that brings the whole organization benefits.
Leadership is perhaps the most valuable commodity a senior manager
can offer his or her organization. Leadership draws together a variety of
relationship skills - not least articulation of vision, motivation and
communication - into a coherent behavioral strategy.
It should not be thought that a consulting team can have only one,
permanent lead and that the remainder of the team must be followers.
Such an assumption lies behind many intragroup conflicts. Leadership
is not an inherent and fixed property of an individual. It is situational;
that is, it arises out of the conditions of a particular situation in which
people interact in a particular way. Leadership may shift between
members as the project evolves and the situation changes. The
individual who shows leadership for the team may not be the same
person who shows leadership towards the client business or towards
people from outside the team offering support to the project. In
professional consulting, as in business generally, leadership up the
formal reporting hierarchy, from subordinate to superior, may be as
important as traditional leadership down it.
A consulting project is one of the best opportunities a student will be
given to recognize the nature and value of leadership, and to develop
leadership skills.
The project management, analysis and relationship skill areas do not
work in isolation. They must operate in conjunction and in balance with
each other. Relationship building must be based on a proficient analysis
of the business and the people in it. Project management must be aimed
at delivering negotiated outcomes. Good project management skills
offer a base on which can be built a trust that outcomes will be delivered.
And so on.
1.1.10.1. Common Barriers to Effective Communication Between the

Client and the Consultant
Consultants need to be aware of specific types of barriers that may hamper
communication between him / her and the clients. Diagnostic ability is
extremely important because it allows consultants to understand the
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circumstances surrounding the communication situation and the pitfalls that

may affect it. The following are the most common barriers and the
recommended approach that may be adopted by the consultant to avoid or
correct them:
1.1.10.1.a. Know-It-All-Attitude and / or prejudice of some personnel of the
client.
It is very likely that the consultant will encounter an individual who is a
"know-it-all" and anything the consultant says will be probably rejected
by this person. The consultant should try to develop approach the
person from his or her own perspective. Use well- thought-out and
logical reasoning that leads up to a particular action. Disagree, if
necessary, but do not denounce overtly the position of the individual to
improve any future working relationship with him or her.
1.1.10.1.b. Inability to understand technical language

This may arise when the consultant interacts with a non-expert client and
employees who are unable to understand technical language. The
consultant should exercise care when using words that may be
misunderstood by the receiver and seek immediate feedback when
necessary in order to ensure that the meaning the receiver gives to a
technical word is what was intended by the sender.
1.1.10.1.c. Inadequate background or knowledge

Closely related to the technical language barriers are background or
knowledge difference. When dealing with clients or client employees
who have varied backgrounds and expertise, audience analysis is
essential. The consultant should have patience and empathy for the
receiver. Provide additional information for clarification and be prepared
to explain things more thoroughly to individuals who need explanation
for better understanding.
1.1.10.1.d. Resistance to change

Effecting change within individuals including concerned managers is
generally a different task. They have a natural tendency to resent change
when it is perceived as a threat to their work and this tendency can affect
communication. The consultant should seek the support of the client
and its employees and encourage their input regarding the proposed
change. If change is recommended, explain it in a positive manner in
order to reduce their anxieties. By being open and by encouraging
participation, you will provide a better climate for implementing change.
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Davao del Norte
Telefax: (084) 655-9591, Local 116
1.1.10.1.e. Information overload

Any individual has a limit when dealing with information and exceeding
this limit can hamper effective communication of information. Try to
guide clients by helping them manage their time, set priorities and
delegate work responsibilities to others. If an individual, for the moment,
appears to be overloaded with work, try not to give additional assignment
to him / her. An idea may be rejected no matter how ingenious it is.
Exercise good judgment and timing when confronted with this situation.
1.1.11. Project management skills
1.1.11.a. An ability to define objectives and outcomes
An objective state what the project is going to achieve for the client.
However, not every statement is a good objective. A stated objective
must be subject to a critical review. Is it well defined? Will the
organization know when it has achieved the objective? Is the objective
achievable, given the external market conditions that face the business?
Is it realistic, given the business's internal resources?
1.1.11.b. An ability to develop formal plans
A plan is a course of action specified in order to achieve a certain

objective. Critical aspects of planning include defining tasks, ordering
them and understanding the resource implications of the task sequence;
in particular, identifying who will be responsible for carrying out the tasks
and the financial implications of their activities. A plan must be properly
articulated and communicated if it is to work.
1.1.11.c. An ability to sequence and prioritize tasks
Even a simple plan will demand that different people carry out a number
- often a considerable number - of tasks at different times. Those tasks
must be co-ordinated within the shape of the overall project. Timetabling
will be important. It will be possible to carry out some tasks only after
others have been carried out first. Some tasks may be performed
alongside each other. Some tasks must be given priority over others if
resources are to be used effectively. Prioritization must be undertaken
both by individuals and between individuals on the project team.
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Davao del Norte
Telefax: (084) 655-9591, Local 116
A project in which task order and priority have been well defined will be
delivered in a shorter time period and at lower cost than one where they
have not.
1.1.11.d. An ability to manage the financial resources that are to be invested in

the consulting project
All management activity demands that money be spent. Keeping track

of that expenditure is a critical management responsibility. Profiles of
expected expenditure - budgets - must be set before the project starts
so that the resource requirements may be understood. These budget
must be managed. Actual expenditure must be monitored against
anticipated expenditures. A project, no matter how good its outcomes,
runs the risk of disappointing the client if it turns out to be more expensive
than anticipated. For these reasons developing an awareness of budget
management issues and recognizing the skills necessary for managing
them are valuable parts of the consulting learning experience.
1.1.11.e. An ability to recognize the human expertise necessary to deliver the

project
A particularly important aspect of recognizing the human expertise

necessary to deliver a project is to understand how the various members
of the consulting team can specialize their roles. Consultants must work
as part of a team. This team will be an adjunct to the management team
at the client business.
Productive team working is crucial for consulting success. One area
where team working and project management skills meet is in deciding
who will do what. Not every member of the team can or should attempt
to undertake every task. It is unlikely, given people's individual
preferences, that they would wish to. A lot of value can be created by
differentiation activities and allowing an individual in the team an
opportunity to specialize his or her contribution.
1.1.11.f. An ability to manage personal time
The management of personal time is an important aspect of project

management. They are worth investing in. Not only do they allow time
to be used productively, they also mean that last- minute panics are
avoided. This reduces stress. Relaxed management is more effective,
engenders confidence, and makes learning easier and much more
enjoyable.
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Davao del Norte
Telefax: (084) 655-9591, Local 116
1.1.12. Analysis skills

1.1.12.a. An ability to identify what information is available in a particular situation
Decision-makers demand information. A good decision-maker is active

in auditing the information that is available to be used in a decision-
making situation. However, at an immediate level it will demand effective
questioning of those with experience of the business and its situation to
get them to share the information they have (and which they may not
even know they have). This process involves both problem definition
and questioning skills.
1.1.12.b. An ability to identify what information is needed in a particular situation
Having identified what information is available in a situation a consultant

must decide which information is pertinent to the decision in hand. The
information that is needed to make the decision an effective one must
be distinguished from that which is merely a distraction. The balance will
lie in the nature of the decision, its significance to the consulting project
and the business, and the type of information available.
1.1.12.c. An ability to process that information to identify the important
relationships within it
Information on its own is not much use. It must be processed in order to

identify the important relationships within it. Drawing conclusions
demands an understanding of patterns of relationships and causal
linkages that connect businesses, their customers and their
environments.
1.1.12.d. An ability to draw meaning from that information and use it to support
decision-making
Once connections have been made and conclusions drawn it is

necessary to identify the impact of those conclusions on the courses of
action open to the client business and their significance to the consulting
project.
This process of information has both 'private' and 'public' aspects. The
private aspect involves a detached and reflective consideration of what
the information means and what, in consequence, is the best option for
the business. The public aspect demands using information to make the
case for a particular course of action, to advocate particular options, to
convince others of the correctness of that course and to meet the
objections. These two aspects do, of course, go hand in hand.
The 'intuitive' side of analysis is often supplemented by the use of formal
techniques that can help business decision-making.
1.1.12.e. An ability to recognize the business's profile of strengths, weaknesses
and capabilities
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Davao del Norte
Telefax: (084) 655-9591, Local 116
All businesses are different. They develop strengths that allow them to
deliver certain sorts of value to particular customers in a special and
valuable way. They have weaknesses that leave them open to attack by
competitors. A variety of conceptual frameworks can be used to guide
the exploration of a firm's strengths, capabilities and weaknesses.
1.1.12.f. An ability to recognize the opportunities and challenges the environment
offers the business
A business's environment presents a constantly shifting kaleidoscope of

possibilities. Some offer new opportunities to serve customers better
and so grow and develop the business. An ability to evaluate the
opportunities and threats its markets offer the business is a fundamental
prerequisite to devising rewarding consulting projects and defining their
objectives.
1.1.12.g. An ability to assess the business' s financial situation
Financial performance is a fundamental measure of a business's

success. An analysis of a company's financial situation offers a route to
understanding its performance in its marketplace, the risks to which it is
exposed and the resources it has available to invest in the future.
Financial analysis is easiest and most rewarding when undertaken with
the guidance of formal ratio methods.
1.1.12.h. An ability to evaluate the business' s markets and how they are
developing
A market is the total of demand for a particular good or service. The

growth of the business will be sensitive to the development of its
markets.
An analysis of trends in the business's markets, combined with a
consideration of the firm's capabilities, can be used to define consulting
project outcomes that make a real contribution to the business's
development.
1.1.12.i. An ability to assess the business' s internal conditions
The business must have internal conditions that are flexible and
responsive to new possibilities and have the resources needed to
innovate in an appropriate way. The business must have the capacity
to grow in response to those possibilities or be able to hold of the
resources it will need to invest in growth. These resources include
human skills as well as productive capacity.
1.1.12.j. An ability to analyze the way in which decision-making occurs within the
business
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Davao del Norte
Telefax: (084) 655-9591, Local 116
Generally, businesses rarely recognize good ideas instantly and pursue

them without question. Usually a consultant must convince the client
business that what he or she is suggesting is a real opportunity. To do
this an effective consultant must understand decision-making in the
business and use this knowledge to his or her advantage. This demands
knowing who is involved in the decision-making process and the roles
different individuals play. Analyzing the decision-making processes in
the client business is a first stage in building relationships with individuals
in the business.
1.3. Consulting Process Skills

Most engagements undertaken by consultants will involve the solution of problems.
Hence, the consultant should have the ability to apply the analytical approach and
process in this problem-solving exercise. This process consists of four areas:
1.3.1. Problem definition phase
This phase has the purpose of fully describing the underlying problem. It begins
with the initial recognition of a symptom pointing to the problem and ends with
the complete description of the problem.
1.3.2. Identification of Alternative Solutions

This is described as the fact-finding and analysis phase which involves the
gathering of facts needed to solve the problem and analyzing these facts in
order to clarify the requirements of the best solution.
1.3.3. Selection of the most desirable alternative

Also known as the solution development phase, this involves the selection of
the optimal solution to the problem and developing a detailed plan of action.
This plan of action should include the rationale for its selection; expressed in
terms of benefits and advantages, the schedule of its installation and the
needed resources.
1.3.4. Presentation
1.3.5. Implementation phase

This phase has the purpose of putting the detailed plan into operation and
should be the least difficult to do if the previous phases have been performed
well.
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Davao del Norte
Telefax: (084) 655-9591, Local 116
It may, however, involve a high degree of logistic complexity. In some

situations, the deviations due to changed circumstances in the environment
may become so great that there may be a necessity to recycle back to previous
phases.
Self-Help: You can also refer to the sources below to help you
further
Let’s Check
Questions:
1. Describe the nature of the following skills that consultants must possess:
a. Technical skills
b. Interpersonal skills
c. Consulting process skills
2. In what ways may a person wanting to become a management consultant

acquire the technical, interpersonal and consulting process skills?
3. Describe briefly the following personal attributes that a management

consultant should possess:
a. Integrity
b. Objectivity
c. Empathy
d. Judgment
e. Courage
4. Give and explain briefly at least five (5) project management skills that a
management consultant must possess.
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Davao del Norte
Telefax: (084) 655-9591, Local 116
5. Describe the consulting process skills of a management consultant.
Let’s Analyze
Questions:
A. CPAS are expected to be experts in all areas of management services.
B. A CPA's competence in management services embraces only the analytical
approach and process, and not necessarily the technical subject matter of
the areas involved.
C. Engagements may be performed by practitioners even if they have no
competence in the analytical approach and process, and in the technical
subject matter under consideration.
D. Competence in management advisory services can be acquired by formal
college education, experience in traditional services performed by CPA's
and actual performance of management advisory services.

A. It is desirable but not necessary that in performing management advisory
services, a practitioner must act with integrity and objectivity, and be
independent in mental attitude.
B. A person who wants to become a consultant, must first pass the government
board examinations given for the purpose.
C. The CPA's competence, coupled with his familiarity with the client's finance
and control systems, business problems, and personnel, places him in
logical position to perform management services for that client.
D. If a firm is not reasonably competent to undertake a specific management
services engagement, it should employ a specialist to undertake the job on
temporary basis.
3. A personal attribute of a consultant that refers to his / her ability to view

situations in perspective and to take action needed on a calm and controlled
basis without being diverted from a sound, logical and ethical course by outside
pressure.
A. Psychological maturity
B. Courage
C. Physiological equilibrium
D. Judgment
4. A personal attribute of a consultant that refers to his / her ability to anticipate

human reactions to differing situations and establish friendly relations and
mutual confidence with people at all levels and to recognize and respect the
rights of others.
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Davao del Norte
Telefax: (084) 655-9591, Local 116
A. Integrity
B. Capacity for logical thinking and reasoning
C. Empathy
D. Ambition
5. Ability of the consultant to focus and direct the individuals in an organization in

a way that brings the whole organization benefits.
A. Ability to develop selling strategies
B. Ability to demonstrate leadership
C. Ability to work effectively as a team member
D. Ability to build rapport and trust with the client.
6. Ability to define objectives and outcomes is an example of a consultant's

A. rapport-building skills.
B. project management skills.
C. analysis skills.
D. interpersonal skills.
7. A consultant's ability to identify what information is needed in a particular

situation is an example of
A. rapport-building skills.
B. project management skills.
C. analysis skills.
D. interpersonal skills.
8. Which of the following is considered a manifestation of a consultant's project

management skills?
A. Ability to draw meaning from the available information and use it to support
decision-making.
B. Ability to manage the financial resources that are to be invested in the
consulting project.
C. Ability to recognize the business entity's profile of strengths, weaknesses
and capabilities.
D. Ability to assess the business entity's financial situation.
9. All of the following are manifestations of a consultant's interpersonal skills

except
A. ability to work effectively as a team member.
49
Davao del Norte
Telefax: (084) 655-9591, Local 116
B. ability to grasp and represent facts unbiased by prejudice or objectivity.

C. ability and reasoning power to arrive at a wise decision or judgment
D. ability to absorb and relate facts in a logical and orderly fashion and to
reason inductively and deductively or intelligence.
10. The application of analytic approach and process in consultancy engagements

involves the following except
A. problem definition.
B. identification and analysis of alternative solution.
C. non-selection of the most desirable alternative.
D. implementation of the chosen solution.
In A Nutshell
Based on the topics discussed in this ULO, state what you have learned from this
lesson.
I have learned that …

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50

Acc228 - Week 1&2

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c. Describe professional attributes of management consultants.

Big Picture in Focus: ULOa. Explain the basic consideration in

2. EVOLUTION OF MANAGEMENT ADVISORY SERVICES

2.3 The Consulting Industry

2.4. Main Types of Consultant Firms

2.4.2. Accounting Firms Offering Consultancy

2.4.3. Major Consulting Only Firms

2.5. Career Structure in Consulting Firms

2.5.3. Senior Consultants or Manager

2.5.4. Business Development Managers

2.5.5. Directors or Partners

3. NATURE OF MAS BY INDEPENDENT ACCOUNTING FIRMS

An engagement consists of that form of management advisory or consulting service

in combination with knowledge and experience in such areas as:

To produce solutions such as:

4. RATIONALE FOR USING MANAGEMENT CONSULTANTS

4.0.2 Professional advisor and counsellor

4.0.3 Temporary professional service

4.0.4 Agent of Change

4.1. Independent Accounting Firm’s Role in MAS

5. CPA’S OBJECTIVE IN ENGAGING IN MAS

Self-Help: You can also refer to the sources below to help

2. Distinguish between consultation and engagement.

3. What advantages do CPAs have over other professional in so far as providing

4. What impact on management consulting practice would technological

2. Most definition of consultancy would include such service related to the

3. Which of the following statements is incorrect?

4. The actual output of a consulting engagement centers on providing the

5. Which of the following statements is false?

Big Picture in Focus: ULOb. Identify areas of management advisory

1. TYPES OF MAS ENGAGEMENTS

1.1 Nature of the Problem

1.1.b Progressive Problem

1.1.c Opportunistic Problem

1.2 Service Delivery Areas

1.2.4.g Marginal income analysis

1.3 Application of the Analytics Process

1.5 Industry or Nature of Organization

1.6 Geographical Areas

2. AREAS OF MAS PRACTICE

2.1. Business Planning and Development or Project Feasibility Studies

One of the broadest project types is ‘business planning’ or ‘business development’.

2.2. Information Systems Consulting

might be gained through investment in information technology. Consultancy practice

2.3. Management / Operations Audit

2.4. Business Process Improvement / Reengineering

In implementing business process improvement, involvement by virtually all of the

2.5. Other Types of Consultancy Work

2.5.1. Marketing Research

2.5.1.2. Secondary research is based on information that has been

2.5.2. Marketing Strategy Development

2.5.3. Developing Promotional Campaigns

2.5.4. Planning Sales Force Activity

2.5.4d Planning sales campaigns

2.5.5. New Product Development

2.5.6. Developing Proposals for Financial Support

2.5.7. Staff Recruitment

2.5.8. Exporting and International Marketing

3. MANAGEMENT CONSULTANCY SERVICES BY CPAS

3.1.2. Design and appraisal of accounting system

3.1.2d. Accounting service in general.

3.1.3. Financial Management-related Services