MS Environment - Assessment

Which of the following statements is false?

General Feedback
CPAs provide management services to go around the ethical constraints as mandated by the Accountancy Act.
''CPAs provide management services to go around the ethical constraints as mandated by the Accountancy
Act''. it is correct. a false statement because CPA’s who are in the practice of MS are still covered by the
provisions of the Accountancy Act of 2004 and the Code of Ethics for Professional Accountants since they are
still CPAs in the practice of their profession, except those provisions that pertain to the expression of opinion of
financial statements under audit.it is incorrect. are true statements with regard to the practice of management
advisory services.it is incorrect. are true statements with regard to the practice of management advisory
services.it is incorrect. are true statements with regard to the practice of management advisory services.

People who make information-based decision go through a series of fundamental steps in their decision-making process.
i. Evaluate alternative.
ii. Identify constraints.
iii. Set objectives.
iv. Gather appropriate information.
v. Choose the most acceptable alternative.
vi. Identify alternative.
The most desirable sequence in the above steps is:
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iii, ii, iv, vi, i, v
''iii, ii, iv, vi, i, v'' is the answer. The normal decision-making process follows the sequence of a reasoned scientific
conclusion, as follows: set objectives, identify constraints, gather information, identify alternative, evaluate alternative,
and choose the best alternative. On the given, the sequence is 3-2-4-6-1-5.

The following statements refer to competence of CPAs in management advisory services, except
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It must be retained in the rendition of MAS work and it can be impaired if the CPA performs decision-making
for the client or acts as employee of the client.

The activities in a management system’s control process can be grouped into four:
i. Measurement of actual performance.
ii. Deciding and implementing corrective action.
iii. Determining standards of performance.
iv. Comparing actual performance versus standards and analyzing results.

The above activities must be done in this sequence:

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The control process referred to here is the operating control process. It is done after the planning process is
completed.

Choice ''iii, i iv, ii'' is correct. The general steps followed in the operating control process are: establishment of
control standards (or standards of performance), measurement of actual performance, comparison of actual
performance with established standards and analysis of variances, decision and implementation of
remedial/corrective actions.

Which of the following statements is not acceptable? A CPA shares with a new and substantial client
information regarding another client belonging to the same industry .
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& A CPA-advisor should not make a decision on behalf of the management. Additionally, the CPA
advisor should comply with provisions contained in Accountancy Act of 2004 and the Code of Ethics for
Professional Accountants and those guidelines mentioned in the MS Practice Standards.
it is incorrect because it is acceptable for a CPA advisor to do because they do not violate any provisions in the
Accountancy Act of 2004, Code of Ethics for Professional Accountants, and does not run counter to any of the
MS Practice Standards.''A CPA shares with a new and substantial client information regarding another client
belonging to the same industry'' . it is correct. because is not acceptable for a CPA-Advisor to share with a client
any classified, material, confidential, or substantial information regarding another client. This relates to the rule
and ethics of “confidentiality with the client” of which the CPA is bound to observe and uphold.
it is incorrect because it is acceptable for a CPA advisor to do because they do not violate any provisions in the
Accountancy Act of 2004, Code of Ethics for Professional Accountants, and does not run counter to any of the
MS Practice Standards.it is incorrect because it is acceptable for a CPA advisor to do because they do not
violate any provisions in the Accountancy Act of 2004, Code of Ethics for Professional Accountants, and does
not run counter to any of the MS Practice Standards.

A management advisory services engagement generally involves the following activities in what
order?
I. Post engagement follow-up.
II. Implementing the recommendation.
III. Conducting the engagement.
IV. Negotiating the engagement.
V. Preparing for and starting the engagement.
VI. Evaluating the engagement.
Preparing and representing the report and recommendations
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''IV, V, III, VII, II, VI, and I''. is the correct sequence of activities involving management services engagement.
The practice of management advisory services begins from negotiating the engagement, then preparing for and
starting the engagement, conducting the engagement, preparing and presenting the report and recommendation,
implementing the recommendation, evaluating the engagement, and post-engagement follow-up.

Which of the following is not a characteristic of management services?

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''None of the given'' is the correct answer. All of the given choices are areas that relate to management services,
such as design and/or installation of accounting system, financial analysis for project feasibility study, and cost
analysis of major investment decisions.
Competence in management advisory services is acquired by
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All of the above.

Management services of certified public accountants cover all of the following, except:
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MS includes all areas of serving management outside the traditional services of auditing, tax, and legal
practice. MS is done in the areas of finance and accounting, industrial engineering, marketing, production,
logistics, human resources, information and communications technology, operations research, quality control,
customer services, marketing, and others which are of concern to management.
''Audit, tax, and legal services''. it is correct. The practice of management advisory services (MS) does not cover
those traditional and originating fields of accountancy such as auditing, tax services, and legal services. These
traditional areas of services by CPAs have already been in existence before the advent of the MS practice, and
have already developed extensive and highly technical body of knowledge where a specialized area of
competence is available.

Which of the following is not a characteristic of management advisory services?

General Feedback
MS is repetitive as far as the same client is concerned
The choice "MS involves problem-solving affecting the future operations of the client" is incorrect. Some of the
characteristics of management advisory services are: (a) MS is broad in concept, (b) involves problem-solving
affecting the future operations of the client, and (c) its beneficiary of service is the management. Other
characteristics of MS are: it does not adhere to GAAP, it deals with specific organizational problems, it uses
knowledge and techniques adopted from different fields of science, and it is also covered by the standards
governing the practice of accountancy.The choice "Beneficiary of service is management" is incorrect because it
indicates a characteristic of management services.The choice ''MS is repetitive as far as the same client is
concerned'' is a false statement, hence, the correct answer. MS is not repetitive as far as the same client is
concerned. Once a particular problem area of operations is solved, the same is not expected to recur lest the
solution applied is ineffective which would in return speak of the incompetence of the CPA-Advisor.
A certified public accountant’s scope of management services is broad and covers all of the following except:
General Feedback
The correct choice is "audit engagements". External auditing is a different professional practice of CPAs from
that of management services. Auditing provides an independent expression of opinion on the reliability and
accuracy of the financial statements as of and for a given period of time with regard to activities that had been
completed. External auditing which is a traditional and specialized field of accountancy had already developed
its core professional principles, standards, systems and approaches that make it a stand-alone specialized field
of accountancy, and not covered in the MS engagements. Management services provide professional
competence involving technical competence on future matters relevant to managing the activities of an
enterprise.The other choices are activities involving management services, hence, incorrect ansers. Change in
management engagement deals with minimizing organizational uncertainties for better preparation and use of
resources which will lead to favorable results Re-engineering job is for a strategic and structural change in the
entirety of the organization or any of its major systems and processes with the aim of simplifying work and
processes for better productivity, lesser error leading to favorable economic results. Computerization
engagements relate to the dynamic field of information technology.
Indicate the statements as either true or false.
1. CPAs in MS practice must observe the general provision of the Code of
Professional Ethics for CPAs, as well as the provision thereof of CPAs in Public
Accounting, except those provisions of expression of opinion on financial statements.
2. Management consultancy is an exclusive field of practice for CPAs and is
regulated by law.
3. Although management services (MS) extend beyond the traditional accounting
services, MS practitioners are still bound by the rules of professional ethics in the
practice of accounting in general.
(rpcpa) 1) True 2) False 3) True

1) Statement 1
2) Statement 2
3) Statement 3
Identify the following statements as true or false.
1. MS principally involves the consultative services to management in his decision making.
2. MS consultation, unlike MS engagement, generally involves advice of information by a CPA in
which an analytical process is applied.
3. Because the CPA must be independent, he must not allow the client to participate in any phase
of his engagement. (rpcpa)
Statement Statement Statement
1 2 3
True False False

Which of the following is not a characteristic of management services?

MS engagements are recurring.

Indicate whether the following statements is (are) true or false.

1. A CPA firm’s primary purpose of performing MS services is to enable the staff
members to acquire the necessary continuing education in all areas of business.
2. In management audit, a team with a mix of members who are accountants and
non-accountants will produce a desirable combination of specialists and will offer a
cross fertilization of ideas from different business fields.
3. An area of MS which is directly related to accounting and finance functions is
project feasibility study. (rpcpa)
1) True
2) False 1) Statement 2 2) Statement 1
A CPA should reject management advisory services engagement if
General Feedback
A statement on when should a CPA reject management advisory services engagement.
The Revised Accountancy Law incorporates the Code of Professional Ethics for CPAs. The provision of
management advisory services is among the areas for public accounting. It is, however, not exclusive to CPAs.
Considering these premises, which of the following statements is applicable?
General Feedback
Management advisory services as a field of practice is considered as an integral part of public accounting thus,
the Code of Professional Ethics for CPAs covers management advisory services.

Which of the following statements is true?

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Adequate training and experience in both analytical approach and process in the particular undertaking are
requisites for the CPA to be involved in a management service engagement.

A CPA should reject management advisory services engagement if

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A statement on when should a CPA reject management advisory services engagement.

As a consultant, the CPA practitioner should Not take responsibility for making decisions and policy judgments
in MS engagements.

The following characterize management advisory services, except:

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Utilize more junior staff than senior members of the firm
The following statements refer to competence of CPAs in management advisory services, except
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It must be retained in the rendition of MAS work and it can be impaired if the CPA performs decision-making
for the client or acts as employee of the client.

MS Practice Standards - Assessment

Which of the following is not a qualification of a CPA in MS practice? Auditor of the client

Which of the following statements is true? Adequate training and experience in both analytical approach and
process in the particular undertaking are requisites for the CPA to be involved in a management service
engagement

During an audit, an employee, with whom you have developed a good working relationship, informs you that she has
some information about top management which would be damaging to the organization and may concern illegal activities.
The employee does not want to go public with the information and does not want her name associated with the release of
the information. Which of the following actions would be considered inconsistent with the Code of Ethics and the
Standards? Assure the employee that you can maintain her anonymity and listen to the information.

Competence in management advisory services is acquired byAll of the above.

After preliminary audit arrangement has been made, an engagement confirmation letter should be sent to the client. The
letter usually would not include: A statement that management advisory services would be made available upon request

Which of the following will not impair the independence of a CPA in the rendition of management services?
The CPA does not extend his services beyond the presentation of recommendations of giving of advice

Mr. Rey Carlos, a CPA firms’ partner-in-charge of quality assurance and review is arguing with Mr. Fortuna, the
consulting partner regarding the question on independence as Mr. Fortuna is presently rendering consulting services to T.
Ang and Nga Co., an audit client of the firm. Related to this issue of independence, all of the following statements are not
valid except: The client is the ultimate decision maker and the auditor/ and or consultant should not make decisions for the
client

The following statements refer to competence of CPAs in management advisory services, except It must be retained in the
rendition of MS work and it can be impaired if the CPA performs decision-making for the client or acts as employee of the
client

These statements relate to MS standards.

i. A practitioner is to notify the client of any reservation he has regarding anticipated
benefits.
ii. Throughout the engagement, there ought to be a systematic critical review of
accomplishments and work should be done within the framework of the Code of Ethics and
other professional standards.
iii. During the engagement, should there be significant changes between cost and
anticipated benefits, the client should be informed.
iv. Before the engagement, the practitioner must make arrangement with, and inform the
client on significant matters related to the engagement in writing.

Of these statements, which pertains to the practice standard on client benefit? Statements I and iii only

Competence in management advisory services is acquired byCompetence