athe nature and scope of management services ‘s.3prfessionl practice in accountancy. palate the importance of analytical approach and process toMS practice Explain the MS Practice Standards, identify and explain the MS engagement process Enumerate the characteristics of MS engagements. Prepare MS proposel letter. ‘conceptualize an MS engagernent work program. Understand the charging and biling of clients in the MAS Torr ceiee, Sone ee aekes engagements. Ratonalize the importence of MAS practice ina changing business environment. CHAPTER MS CONCEPTS, PRACTICES, AND STANDARDS 2 Heralding the Unprecented Growth of the MS Profession. The numbers tell -awepractioe of management advisory services has already approached the maturing stage of iis televonce. Inthe lest two decade®, the emerging and significant wave of advisory services has made consultants and advisers, ether individual or frm, more visible in rendering Weir {echnical expertise to management, The combined revenues from advisory services of he {eur biggest accounting frms amounted jo USD 45.26 billion or 38.5% of ther totalrevenves. Deloitte Touche Tohmatsu Series, ine. its published financial staternents for the fiscal Year of 2017 reported total revenue from consulting and financial advisory cervcas yratunting to USD 17.9 billion accounting for 45.43% of its total posted revenue forthe said period. (www.dell.com). pricewaterhouseCooners International Limited Company in its financial reparts for 2077 Fparshed That USD 1225 bilion was generated from its advisory services accounting for 52.51% ofits total revenues for the said period (worn pwe.com) mst and Young Global Limited reported in its 2017 fiscal year financial statements that 36.93% or a folal of USD 11.6 bilion were generated from advisory, transactions, and ‘coounting services (wreey.com), while KPMG reported a USD10.88 bilion revenues from its advisory services accounting to 38.56% of ts tote revenue in 2017 (wer komg.com) ven ourlocal accounting firmshave shown considerable acceleration revenues emanating ftom the advisory services group In the recent years, In accountancy, this eld of practice is sometimes teleried to 25 management services, advisory services, business advisory services, or financial and advisory services. The market demands for innovative services “The inereasing complications in terms of customer behavior, demands, needs and wants, whether discovered or created, have contibuted toa great shiftin menaaing organizations. Business organizations have gredually geared towards service orientatica ob justin erms of product quality but morein terms of process onbow the senviceis delivered. Organizational res aes roesis weeded ‘to mest and beat competion, not toexist to survive . “The impact of technological revolution has deeply influenced the way things are done in 2 society organization and at individual levels. Conveniens ang SOMA tea a eremance S6ramanel ete ty ofthe Jaged in setting the strategic goals and policies of the enterprise, Magers piste scr cevelops operating standards ond systems and oteeeg mubtdlvectheoulacttebisiness nes ‘emmarens onc resus are expected to be precise The nteneity of meeting businees Berwalan betng competion gravitated managers to discover and develop new ways of CHAPTER MS CONCEPTS, PRACTICES, AND STANDARDS 4 -Feancing > agh> reve ants? wit juan ‘The manager ofthe management tears engaged to increase the wealth ofthe business “organization, First, fnancingis secured and converte into mutfarious productiveresources {o support operating activities. Cashis converted into machines, materials, men, methods. fd market o produce and dtibute goods and sree tat il generate revenues and, expectedly, profit leading to more liquidity. These conversion processes once put into ——————_ ‘operations and realities would mean complex structure of interconnecting ectvites towards Tee" MS 2 viablebusiness cyte Italeo exposes the organization into varied business risks attendant m= {o the uncertainties ofthe investmert and operating processes. As organizations strive to "='SA*7eN ‘make money throughthe business oyele it also expoces sel to theinevitableriskof business 7 ‘where investments may not be recoveredin ful. Add to the inherent and non-contrliable Fiske of the market and fiancal environment and this would surely make management & {lcipine of tremendous intellectual challenges. {nallofhis functional activites, the manager exercises his decisionmaking power This is ‘an authority bestowed to him by those who have entrusted their wealth end have given the ‘manager the lsctetoanry power o use their money withthe ambit of business expectations, ‘tics, and good governance. At the end, these business stakeholders would expecta fai fof ther mon secured, In performing his duties, the manager would be needing the assistance of other experts in ‘unning the business affairs. He may ether employ the expert or outsource his services as, an independent professional contractor. If the manager opts forthe later, he may engage ‘the services of an independent CPA or other professionals. nsependert CPA ot other professionals. ‘The CPA as advisor or consultant ‘The practice of management advisory services arise when an independent certified public _accountantis contracted by a manager to render his professional and business expertise 19 ‘help define problems and recommend solutions except those coveredin auditing, assurance, ‘ax and legal services. ‘The}ob ofan advisors to provide advice and technical assistance to managers. Anadvisoris anindependent and competent professional accountant wha enjoys thetrustané confidence of the manager. ‘The practice of advisory services is essentially consultancy in nature. The advisor’ job isto Identify the clients problem and recommend solutions accordingly. The pattern ar format of the CPA-pracione’s business advisory approach from one setting to another one client to another, s not govemed by specific standards and processes. Thiss because clients have ‘their naturel und unique way of being uifferent from each other. Thats, they have afferent ‘organizational objectives, strategies, core competencies, and structures leading to more differences inthe detalls oftheir standards and systems. see oe talc fev nieee MS CONCEPTS, PRACTICES AND STANDARDS CHAPTER 1 (€A) and nol. 28.312 expert nancial auditing expert legal exper, mansgement expert or ‘ranagerent consultant ‘he fed of mangement serces has been vated refered fo 39 advisory service, sk Trays transaction analysis, nancial and advisory services, business nance sevice, ‘business and finance aéwsory services tras seth airy Gorpaate finance sec rein adotver levels. This is ony to diferente the sence tom He acitntal audi, ‘Brand legal sernces rendereé by CPAS ‘Analytical approach and process Mas involves the use of anahytical approach and process applied an engegement. Based gna 19 primer released by the Philipine Insitute of Ceties Pubic Ac bentonts (PCPA), “analytical approach and process “ypicaly involves more than an incident effort devoted to dome combination of aaivites in determining client objectives, faclsindng, epportunty, problem definition, evaluation of alternatives, formulation and follow-ip". Analytical 3 involves 8 professional competence tofind facts and define the ‘este problems (nat the symptoms), identify altemative solutions, and to edopt the moet applicable solution under the crcumstances. Areas of MS Practice The gene MS ietraceable fromthe tradional CPA sens of using te, andra scouting. ean extension these tadtonal series, GPAs are also made nv ss cvs suchas Gpertiona| advice - counseling management in its analysis, planning, orgarizn operating end controlling functions. ot = Spel tues ~ conducting socal tudes, roposing plans and programs anprovéng (guidance and technical aesietance in ther implementation, Organizational anaysis - reviewing and suggesting improvement of policies procedures, ayer __ ystems, methods, and organizational relationships. + Innovations ~ intreducing new epproaches, methods, techniques, and zoncepts to weryacns management The advisory services rendered by CPAs may be divided into two areas: (1) pioneering -consuteney serves, and (2) emerging consultancy services 0 Pioneering services The pioneering MS services ae listed in Table 7.1. The ist represent the startup sewvices_ performed by CPA practitioners in the advent of advisory years. Over a stretch of several decades the services have been shifting and continuously updating to flexin withthe changes land demands of managerial envionment. Other services that may be rendered depend on ‘the practitioners competence, technical ability and professional integrity. CHAPTER? MS CONCEPTS, PRACTICES, AND STANDARDS. ‘Table 1.1. Ploneering MS Services anager SNaraperen opus mt ee = cece sn, coms te, ot: eee a mete "Ecce one tan—| Sepc Sin emen eee pisese eee aie ees 1 Seca nam eee Ee memes: Sater ener meg semen! : ebdeeatioees = : Semabeasseeeeerens Fert + Oreteton ad persons Trans fey ornate ‘igecotce ad antrate mara poten "Erotaere octal badpting + SoG owt of ca. are rants on pers 1 Staton an snl somcoeton = rameslamiyst forgot stuses * Devaopent ef esoen rg pene 1 Blaticime of cpertng and eoch * Rearar pisnbeet ‘see ‘tates of nonce reucion sens + Carne stok auton ferpupones Gating cos of era couecive Dosing Crmges onda (en soot pace | oyoemerss nds engineering : _ © oman amin shading wd cont 1 Rantiout ste Fenny ragement ies Mueralsconel yer cesign ae devant Drv neocon SescOTe Deveopmant of won sana Pach mnagerem wuss ae ass 2 Norn etl anger erktina rode era aay {Pag pb and deternatn 1 Maat arcs Diiton cost ens 1 Seman neni Compensaon evaton ‘pacing resnch~ involves the use of materatet Rechnigues ie. ines pegurmig. iene omrraning Gat on, re Cen gry io. Eraion sabes reeson. ara, forsog ‘novels an toe ose opera poles. ‘The traditional advisory services are split ino two: those relating to nance and accounting ‘services and those not relating to finance and accounting services. ‘Those relating to finance and accounting include financial accounting, management ‘accounting, nd financial management. Those not relating to finance and accounting include all other areas rendered in the field of advisory services.Se — MS CONCEPTS, PRACTICES AND STANDARDS (CHAPTER T 7 Emerging consultancy services “The advisory services of top ofobal accounting fu nots of op soba ims organically change to accommodate ular demands om cers vse ofthe actenl aut an eto tars gerces. The fastpaced dynamism in managerial environment Feshress ef approaches, suations, and contngencies characterizing today's business world have pushed orth changes inthe terminology used to describe advisory services : . Based on the cursory website survey of large CPA firms, the emerging advisor include those presented in Table 1.2 below: "Seren Table 1.2. Emerging MS Services ‘+ Transaction and Restturng + Rsk Consulting gin mating See oe ek camtng oo Smetana ar ener | oo = ifsc: ree as a SSS. | ees zeae, Soc. fea 1206 avy spre to most eqn proved coma : consulting and ado services ince coporte edvson, manogement accountng, Maran rescuces and pty ile, baness vaya, ‘esucuna.heaherey, fasion mace ii tsimae tno, Yenc ecuning “ial fweigee” aed feat, buss nlgence,enanced coponte eprtng sanhe ma ‘etimement planning, health and safety, and environmental legislaion. ina ais re tate ‘emerging dimension in advisory services has been extremely critical ng the Ms Standards ‘Petalty and amoralty. ethics, andiegality- Second, he must also be guided by techrical ‘Standards in the. conduct of MS work Al standads are governed by the GPA prec Practoners spiral lavs, canons, ss i ing on ced es a STEIN Tes rcs oe cond wrnge at tds See ang Koran, lar religious waitings) and those observed and practice societal CHAPTER1 MS CONCEPTS, PRACTICES, AND STANDARDS ways off. Jate tothe practitioners relationships with nis client. his colleegues, fe fellowmen, and the society in general. The dynamism of these relationships create Eregna MS tkpectations and standards inherently aimed to protect and foster the interest of the society sion andthe professional practitioners in partic. In this Ingeneral, and that of the pofe regard, he Philppine CPA precitioners have the Cadeat Ethics fr Professional Accountants Inthe Philippines to respect and comply with 3b are meant to promote compliance, faimess and just professionals have the Constution, or equivalent legal document, of is country to serve as the primary guide n respecting legal standards, Moreso, Philippine GPAS have Republic Act {9298 or the Accountancy Act of 2004, together withits Implementing Rules end Regulation, to legally guide them in their practice of accountancy. tice to all men Fundamental Principles for CPAs in the Philip ‘The Code of Ethics for Professional Accountants inthe Philippines, Section 15. states that To drderto achieve the objectives ofthe accoyntaney profession, professional sccountantshave {Gobeerve numberof prerequisites or fundamental principles. The seme ode, n Section ‘V6, memtions the fundamental principles of integrity, objectvity, professional competent ante ayers oles belmour: The traf a poraon ae resented lc for emphasis, The annotations ar ofthe authors. performing professional services. “Integrity requires a member to be, among ether things, honest and candid within the ‘constraints of cent confidentiality. Service and the pubic trust should nat be suborcinated to personal gain and advantage. Integrity can accommodate the inadvertent ertor and the honest difference of opinion, it cannot accommodate deceit or subordination of principle” (AICPA, Code of Professional Ethis, Section I) Integrity is ahallmarkin the accounting profession. CPA practitioners being inthe business ‘of providing relevant business information must, tal times, act with integrity. Information Coming from a person with questionable Integrity isnot s eiable and relevant information. “The best way forthe CPA te promote and shield his practice and that of the entire profession 8 isto The MS engagement program ‘Ar engagement program isa written detailed plan of work tobe performed in carrying out “the MaS engagement. it normally includes the following +The objectives and description of the work to be performed, {The description of the measureble output atthe end of the particular work, A lst eng description of requited personnel. ‘The estimated date of start and completion The MAS erigagement progrem is usuelly prepared by the advisor and is reviewed with the Client. ttcoul also be jointly developed by the CPA and the client, ‘Amang others, it provides the following Distribution of responsibilty, Determinstion ofthe completion of various parts of the engagement, Specific approaches and techniques to be undertaken; esis forthe preparation and comparison of the program reports, Specific approaches and techniques to be undertaken: and Basis forthe preperation and comparison of the program reports, Sauneneememeenmenneeenn SE CHAPTER 1 MS. CONCEPTS, PRACTICES, AND STANDARDS 2 Forecasts Forecast a Estimates ae rmeasured results of fture actions ana eens. Thay arboth used m making Buses decisions. The practtione must ot vouch forthe achievailty ofthe forecasts. Nether should the pacttone allow his name tobe used which ay lead othe babe that nes vouching for the achivabilty ofthe forecacts Role of an MS practitioner “The tole of an MAS practitioners that ofan advisor ‘Thepracttioner must not assume therole ofthe managerin making decisions. He shouldnot take any postion which may impairhis objectivity in performing the engagement. He should ‘lways maintain impeccable independence to enable him to render his professional Judgment and opinion with utmost objectivity. Characteristics of an MS engagement ‘An MAS engagements the folowing characteristics Future orientation... ‘Opportunities and the development ofthe applicable solutions ae geared towards the trgaperent approaches and processes vary om one lent osncher, fom one siuaton to another from time fo tne “Highly. quale vat, Tecnicly quai sais tobe angagt to complerent the ied level of experise tobe applied nthe MAS engagements Divert. MAS engagernent vary in scope nati and prblam 10 be ented and {pporunts tobe stile hereby necestitng Hex n approach a Consultancy Fees ‘The service tobe rendered bythe CPA practeneie nt ee: weld etal costs thm ich shoul be recovered frm th cent al rule in’setting The cost of consultancy shall consist ofthe folowing and shall be presented inthe agreement vith the cient 28 to client futurebenafts ofthe cent. — [Non-recurring, MAS engagements are non-repetive in nature. The applicable° MS CONCEPTS, PRACTICES AND STANDARDS. CHAPTER “ony gin, Tate re erunertons ob ptt the craton tattg puvonnalne se Sreciyengepecer es sl tan at consulting sevice super mening sch cag, emeritus by wing so cna cea cutie! tactormey be based on Sromat —Gyethead cst fo cover the incerta, genera, din letrative, nd management ect. expenses of the: other than those related tothe po 10 cover the welfare ond benefit ofthe 28 a percentage of sa coneultant’s staff, Moragrant ees emurwaton of potesona trowhow ar epeise the amount of the fee shall be iad sa percentage of tre sm oe ee ea ‘overhead costs and social charges depending on the complexi ‘ofthe services and ‘other considerations. th ee ~ _Rembuseble costs. These include all other expenses associated wt the execution ofthe services. These costs may be classified onthe falloning. + Based on agreed fixes rate, payable at agreed unit rates wit stat, Sesedon agreed actual cots, tobe supported with ivatces another sopping * Escalation, These are agustmentsof the biling rates and reimbursable costs based on TapenpeT —_fedrates to cope with price movements. It ludes cont ditional ‘eexoo" work within the scope of services that may tun oUt to te necessary athe sa ‘progresses or costs that would exceed the estimates set forth. m Methods of billing clients The following are several of the standerds ways of billing clients onthe advisory services: Actual fees charges as Billing is done on the basis of the actual ime spent bythe staff multiplied by the hourly rates agreed upon, Flat o« fixed fee basis. Client is billed a flat but alLinclusive pre-eranged amount for the ‘tire engagement. Marimum fee basis. Client is charged on a per diem basis withthe arrangement thet fotal charges will not exceed a certain agreed maximum amount. + Retainer basis. Paid a fixed predetermined fee for all services tendered during 8 Aesignated period of ime, say (on a monthly or semi-annual basis, * _ Qusatnocket expenses such as traveling expenses and the lke, attributable directly to iasoemantcae ‘ME professional service SEE 8 Performed fora particular cent would normally be chaged “DUekae —l0theclentinadction othe profession tee , CHAPTER MMS CONCEPTS, PRACTICES, AND STANDARDS. 20 (Sasa Following are sample correspondence relating to MS engagement services ‘Table 1.3. MS engagement proposal letter for Compensation Analysis and Government Compliance (cPAletteread February 21,2014 (MR. ROBERT SANCHEZ President, Norther Bus Lines Pasay Cty, Metro Manila ear Mr Sencher: ‘Study and Analysis onthe Newly Mandated Sus Personnel Compensation Scherne Sg sana’ andits Related Systems and Services in efo DOLE Order 118 12 Basis of activities ‘This to formalize my engagement with regard to the ongoing special advisory services in {elation to the adoption, development, migration, and implementation of DOLE Department ‘Order 118 12 series of 2012. This special service has been understood and agreed to ‘be outside ofthe scope but is complementary to my regular avieory work to Raymond ‘Transportation, Scope of work ‘This consulting and advisory service shall consist ofthe following: No. Memo 1 Data gathering and analysie 2. Data interpretations and presentations ede 3, __Committee/Group meetings and discussions Rieforee 4. Policy formulations and writing Sone Bd Se ere oat yen a in mc 7. ~ Monitoring and improvernenis “8 Finalization of processes 9, Standardization and maruaization of systems and processes 10, Systems tumover1 MS CONCEPTS, PRACTICES AND STANDARDS CHAPTER 1 Reporting schedule Reports analyses, nd elated schedules woul be submited a Execsve Bond Tetemination of theengagenans chloe stein een team ander wt th Cee of he Execave Sour of sn nese ‘continuation ofthis service shal be reviewed by the parties after six (6) morths from i a 15, 2014 and if ever found to be wanting for continuation, shall be percae er coe) ‘every six months thereafter : biel caaetee Professional Fees My professionel ee for these special advisory and consulting services shal be as follows Intstazation, acceptance, conceptuaizstion, and levelling, Onetime: Monthly professional fee, Periocie Pus other out of pocket expenses directly related tothe engagement 40,000.00 20,000.00 ‘Adétiogal sevices costs ‘Adtonal personnel that may be engaged inthe conduct and compl ‘shall be billed separately of which costs shal lise jurors eee Sale bed spate shall be discussed with you on per need ecg avi the cot of developing new, addtional bridge and complementay prog software used to run the financial, administrative and accountng syste hee reeans ‘be consequently developed shall be billed separately. Coordination and Communication | halle coardnatng with the Executive Board fortis epecalectvty who sal me the needed input in terms of operational knowled, 1s: tions, alate eben Be ge mbus operations, documents, an tert yom yr tot a st rot ene Truly, CARUTO M. BANAAG, CPA ‘CONFORME: MR. ROBERTO SANCHEZ. zs CHAPTER 1 MS CONCEPTS, PRACTICES, AND STANDARDS 2 ‘Table 1.4. MS Engagement Proposal for Information Technology Services CoPAletterhead dune 8,2011 MR. JOEY LUNA General Manager, Globel Trading ‘uezon city bear Mr Luna Fee proposal for the design, development, acceptance, anc implementation of the Orion software | present herewith my propose forthe possible digitized development of warehouse system, "workshop system and material issuance aystem of Raymond Transportation. ‘This-proposal describes what | prepared to offer in terms of professional services to ‘eet your requirements and was prepared upon your request. | would like to affirm my ‘commitment to provide specific professional earvces requirements within the bounds of Objective ofthe engagement ‘The software aims to provide an electronic processing of data in accordance with the warehouse and workshop polices and procedures of Raymond Transportation which wil ‘met the management's information needs Proposed scope of software development and methodology “The engagement willbe conducted in tree phases as follows: Phase : Information and Date Gathering This phase will be conducted through personal interviews with company’s Key personnel _and evaluation of the present needs system by doing the folloing 1. Conducta review ofthe existing flow of transactions of the Company by interviewing your finance consultant and key personnel, 2 Identify the tasks being performed in each process, understand how the tasks are being performed, who are performing them, the outputs in the process, the recipients ofthe outputs, and the timeframe in the performance ofthe process in order to identity ‘the area tobe improved and changed. 8, Gather data, forms and source documents and review ifthe information is sufficient 10 provide bass for electronic system.2 MS CONCEPTS, PRACTICES AND STANDARDS CHAPTER 1 hacell System Design and Documentation Design an automated warehouse and leet management systam and software fr the companys (please ste exhibit A) wit step-bytep ilustation, methodol feporings ‘accordance with the intemal warehouse and workshop eontras Software development wil algo Include the crentaton and trsining te the assigned Saft. Phase i Aoseptance and Implementation ‘expect to fnish Phase | andi ofthe engagerentin a period of one month and Phase li, three months after the start of the implementatian phase, Responsibility and work limitations {tie the fll responstilty of the management to implement the polities ard procedures ‘concerning warehouse and workshop systems. My work will depend on the specif nena ofthe management The scope of our work is determined based on the assurance that | will get maximum cooperation from your staf, especialy in areas normally handled by them and which ‘complement my professional work Fer this engagement | will adopt the participative approach wherein | work closely with your personnel in the gathering/analysis of deta and development/implementation of ‘ecommendatons. | willet you know should we encounter difficulties in the area thet might ‘affect the quality and timely completion of the engagement (Other matters ‘Any edctonal services that you may request and we agree to provide will be subject of separate written agreements Fees and terms of payment For the engagement outlined above, my proposed fee willbe P 350,000.00 exctisive of vat, withholding tax and actual out-of pocket expenses for plane fare, transportation, hotel and ‘supplies, end other incidental expenses My proposed fes and billings are broken down as follows: Module Phase | andi! Phaseill 1. Warehouse system P 65000.00 P 65000.00 2. Job Costing/Fleet Management System 5000.00 65200.00 3. Stock ssuance/Vehicle Material Costing 45,000.00, 4500.00 175,000.00 P175900.00 CHAPTER 1 MS. CONCEPTS, PRACTICES, ANO STANDARDS 2 Bilings 4, Date of contract 50% na 5. Startof activty na, 50% <6. Date of delivery 50% 50% (na. =not applicable) ary pero thst na incontct wthyouruncrtndingeprdng ne above ropes fsb nly me nmadatay 20 we can etalon proper ond necessary eaorecn Fria understanding 1 appreciate this opportunity to serve your company. ‘Very truly yours, ‘Alin L Navarro, MICB, RCA Programmer ‘The services and terms as set forth inthis proposaHeter are agreed upon. For Global Trading: By, Mr. JOEY, LUNA President Datea MS CONCEPTS, PRACTICES aNO STANDARDS MUCTPLE CHOC AER Basic concepts CHAPTER Y 1. Management services of ceried public accountant cover al ef the fo a. Project feastbilty studies. 1b. systems design, development and implementat € Organzationsl development and planning & Aust ex and legal services, (neta 2. The following chatacterize management advisory services except a. valve decision forthe future 1. Broaderin scope and varied in nature © Uniize more junior staff than senior members ofthe frm 4 Relate to specific problems where expert help 's tequred 7epa) 3. Which of the folowing does vot relate to management services by CPks? a. Design andior installation of accounting system Financial analysis for project feasibility studies Costs analysis of major investment decisions, None of the above. (pep) 4. Which ofthe following is nota characteristic of Management Advisory Sevvices? 3. MASis broad in concent. '. MAS involves problem-solving affecting the future ofthe client. © Beneficiary of service is management, &MASis petitive as far as the same client is concerned. (pepe) 5. Which of the following isnot a characteristic of management services? 4. vider varity of assignments are encountered in MAS that in aud, MAS engagements are recurring © MAS pinpoint actions to be taken, the benefits of which will be received in the future 4. InMAS engagement, the nature of work involvad requires a lesser need for junior sistance, (pea) 5 As@consultant, the CPA practitioner should ‘tio admin state conrl over te cent’ staff to avis unnecsseary days implementation. >. Encourage dependence of client on the consultant's statt so as to pin point clear fesponsiblty in implementing systems. & alto responsibly for making decisions and polity judgments in MAS ements ‘4. Conduct his engagement as ithe is a member af the clients atpshizition. ‘oon -—— CHAPTER 1 MS CONCEPTS, PRACTICES, AND STANDARDS 26 7. Acertfied publ accountants scope of management services is broad and covers all of the fllowing, except: ‘Change in management engagements, b. Computerization engagements 8, Aut engagements 4. Reengineering engagements. pera) 8. Which of the following is nat a qualifiation ofa CPA in MAS practice? ‘2. Faraliarty with the cients financial accounting and internal control systems, Analytical experience in problem-sohing. Professional independence, objectivity and integrty 4. Aucltorofthe client. (pee) 8, Indicate whether the fllowing statements are tre o false. ‘Statement 1 - A CPA firm's primary purpose for performing MAS services sto enabethe ‘aff membersto acqute the necessary continuing education inalareas business. ‘Statement 2 = MAS consultation, unlike MAS engagement, generally imvcves advise or Information by @ CPA In which an analytical process is applied. Statement 1 Statement 2 a Twe False : b Falge True False False 4 Twe Te (oe0e) 10. Amanagement advisory services engagement generally involves the following activities In what order? Lost engagement fliow-vp. Implementing the recommendation, nominee a Soe ee atone [ere ee (ema) apse2 MS CONCEPTS, PRACTICES AND STANDARDS CHAPTER 1 eet dla ee eae tn ees STE sts G0) eg ted evan mba wh ar aecan ‘ns nonaccentents wil vie 8 desible continent esse ta will offer 2 cross fertilization of ideas from different business eld ‘Statement 1 Statement 2 Statement 2 (Pepa) he must not allow the cent a False True b. Tue False © Tne True none ofthe given, (pene) MAS Practice Standards 14, ACPA shold ject management advisory services engagement f {a Hneud requre him to make management decisions for on sutclen 8 The proposed engagement is not accountng rele His tecommendotions ae tobe eubjcted toa review bythe cent. 4 He ut the nancial stetements of» subsidy ofthe prospec cent (rs) 15. The foloning statements refer to competence of CPAs in management advisor ‘services except: z . Hae 1 Iorept eters tothe techricalquaiiation fhe practioner nd his abit super an erat th qual work ot stata egnedto the engage so aetobe reponable forthe successu competn of te pect 5 Mis sequred by education, sl study, stendance to proexsionsldevlopent courses actual experiance in Morand esate, © isthe ably fo deny cents needs, vee aralytel approach and process, apply technical knowledge, communicate recommendations and assist in imolamentavon 4 must reainedin he rendition of MAS work and it can be imped te CPA Perfoms decisionmaking forthe clento act as employee of te cen (rpepa) CHAPTER 1 MS CONCEPTS, PRACTICES, AND STANDARDS 2% 16 Competence in management advisory services i accited by 8 Audting and there tual performance of management séisry sonics d, Allof these. 2 (rpepa) 17, These statement relate to MAS practic standards ' pacttioner isto not the clent of any reservation he has regarding anticipated benefits b, Throughout the engagement, there ought tobe a systematic critical review of ‘accomplishments and work should be done within the framework of the code of ‘ethics and other professional standa ‘During the engagement, should there be significant changes between cost and anticipated benef, the client should be informed. 4. Before the engagement the prectitoner must make arrangements with andinform the client on significant mater related to engagement, in wing. 18, Ofthese statements, which pertains tothe practice standard onthe client benefit? 1, Statements 1 and 3 only. b. Allstatements @. Statement 1 onl. Statements 1,3, and 4 only ((P°pa) _ 18: Anindependen accounting im was requested by acento underske an engageret eet tei tasters Sot neal a ever pecan te Sa err ae cas Siete ie aie par a bac See ly rn a iat aa eee rae te ee Oca Sao SERIE arch cesinsred Seaton haaesd clo erat era rae cat «_ Hiatiaenattemrmepenatsntnes per Schr os er ee ee arn ahd meebo ee er nrc 20. Acetifed public accountants scope of management services is broad and cavers all ‘Which of the folowing statements isnot true? rae 2 Inte rendon of MAS, dependence mut be obeeved so. to mata essential requisites of impartiality and object 'b. Allprovisions ofthe Code of Professional Ethics are applicable to the practice OF MAS except thage rules related tothe expression of an opinion on financial statement ‘c. MAS serves only inthe areas of accounting and fiance. 4 Before accepting an engagement practioner should nt he cent fay Teeeration he has regarding anticipated benefits.~ MS CONCEPTS, PRACTICES AND STANDARDS CHAPTER} 21, Which of he folowing statement ic not acceptable? 1 ACPArepresents 3 major players in the ndusty inretionaizingtheindustry‘ before te government pubic hearings Y tenelainateindusty incentive b. ACPA shares with new and substantial cent information regrdin belonging tothe same industry ' eect obese ©. ACPA provides consulting services to an existing avelt client 1. ACPAoIfers and provides consulting seruices fo wo majo competing chant 22. Which ofthe following statements is true? (pepay dessins tea ga teh npn AERA wis MEA be equated fo having excelent schol preperouonteeteee ae cee roees alan oly orezaaton an ecient arin eared th 23, Which of the following does not impair independence of a CPA inthe rendition of management services? 8. The CPA performs decision-making services for his client. ‘The CPA performs services wherein he is in effect acting as an employee ofthe lent ©The CPA eases its objectivity and acts in a manner aa fhe Is advocating for the Interest of his cient. 6. The CPA does not extend his service beyond the presentation of recommendations or giving of advice, \tpepa) 124. Indicate whether the following statements are true or false. ‘Ststement I- Management consultancy is an exclusive field of practice for CPAs and 's tegulated by law. Statement 2 -An ares of MAS which is directly related to the accounting and finance {functions is project feasibility study ‘ Statement! statement 2 a False False >b Tne True © Tne False 4 False Te (rpcpe) 2S. Me Bey Carlos,» CPA fms partner in-charge of qualty assurance and reviews arguing with Mi. Ruben Fortuna, the consulting partner regarding the question on independence uit Fortuna is presently rendering consulting services to Tam Co. an eudit client of {he firm Related to this issue of independence, all ofthe following statements are not sald except Ma TT CHAPTER 1 MS CONCEPTS, PRACTICES, AND STANDARDS » Independence is never sacrificed for as long as the auctor/coneultant is correct imhia decision forthe chent i : ', ACPA wha renders both audit and consuting services to a chet by vtue of his competence/expetse and exten nwldge cl the cents business ise best poston to render decision fer the cen and shoul oso &_Theclietis theultimate decision maker and tne auditor’ endo consultant shou not make decisions forthe chert. 4, Itis upto professional judgment and discretion of te aucitor/conautent to render . public b. CPAsinthe practice of audit and management consulting services may advertise glee f ‘govern tnd charge contingent fees. Thepractice of management advisory services should not be extended to existing ucit clients since this will adversely affect the CPA's independence. 4. CAS inthe practice of management advisory services are not toundby the Bord of Accountancy Law but are bound by the said law in the practice of audit. (rpp) 52, Te flloning statements in elation to management advisory serces ae incorrect, wort 2 MAS servesthe information needs of management whichin un andes ts serces both titel and exteral partes of business. As such, the practice of MASIS siso governed by the extemal reporting standord n accounting profession. Masi premised on business precices and values, and therefore, the MAS actiioner should always adhere tothe standards that wlll ervebest the ntrest Sfusnes onmers and oterested partes, © MAS isnot an exclusive professional prectie for CPAs, and as such the , Paco ahold compete wih ter professionals and shoul projet Mi Eerves hth endive of satisfying cent needs over end above the ne ‘ofthe general publi. viel END OF CHAPTER 1 4. MAS practice is not govemed by the overriding-accounting equation and still the CPA practitioners expected to adhere tothe general wad technical standerds of the sceounting practice i ia