Consultant

 Has expertise in a specific area, offers unbiased opinion and advice for a fee
 Not an employee, but an independent contractor

REASONS FOR BECOMING CONSULTANTS (FWDIFSWUR)

1. Frustration with current job
2. Want a stimulating, dynamic, growing career
3. Dissatisfied with lack of challenges, opportunity or creativity in existing job
4. In between jobs and seeking new opportunities & careers
5. Foresee getting laid off & wish to establish themselves in a business to earn livelihood
6. Supplementary income
7. Retired with expertise & wisdom
8. With working experience & industry knowledge who want to combine family life with work at home
9. Understand gov’t operations and the contract process or built up contacts in gov’t, politics & industry over years

Consulting challenge quiz - one way to find out if one possesses the qualities required of a consultant
Skills - developed or acquired abilities
Talents - natural endowment; unique gift or special attribute
Attributes - inherent characteristics

TRADITIONAL AREAS OF EXPERTISE FOR CPA FIRMS (AAI > AAIM)

1. Auditing
2. Accounting system design and installation
3. Income tax work

Management consultancy
 Rapidly growing area
 Natural area of development of a public accountant
 Extremely useful to business manager
 Independent and objective advisory service
 Recommend solutions to issues
 Effect constructive change

Management advisory service

 Function of providing professional advisory
 Improve client’s use of capabilities and resources

TYPES OF ENCOUNTER
1. Consultations
 Providing advice and information during a short time frame
 Information provided is orally
 Definitive: consultant is fully aware of the situation
 Qualified to limitations: lack of first-hand observations or familiarity
2. Engagements
 Analytical approach and process is applied in a study or project (FOPSFS)
o Ascertain facts and circumstances
o Identify objectives
o Define problem or opportunity for improvement
o Determine possible solutions
o Present findings and recommendations
o Implement solution

CPA’s purpose in engaging in MAS

 Provide advice and technical assistance (not management decisions or positions that might impair objectivity)

ESSENTIAL QUALIFICATIONS (PAFT)

1. Technical competence 3. Analytical ability & experience in problem solving
2. Familiarity with client’s finance, control system and 4. Professional independence, objectivity & integrity
business problems

DEVELOPING TRENDS (TICS)

1. Specialization in different areas 3. Change in the management culture
2. Improvement of business education 4. Technical development

FUTURE PROSPECTS (MOMDB)

1. Management consulting will become even more specialized
2. Orientation will be towards being insight provider, creator and sharer of information
3. Management consultancy firms will tend to remain small or quite large
 a. Small firm - narrow areas of specialization
b. Large firm - wide range of services to sustain high cost of operation
4. Dev’t of sophisticated marketing of services
5. Bright students’ career attraction will continue in management consulting

THE CONSULTING INDUSTRY (ICCOHO)

1. Information Technology (IT) 4. Operations management
2. Consulting and system integration 5. Human resources management
3. Corporate strategy 6. Outsourcing

MAIN TYPES OF CONSULTANT FIRMS (IAMI)

1. IT firms 3. Major consulting only firms
2. Accounting firms offering consultancy 4. Independents

CAREER STRUCTURE IN CONSULTING FIRMS (ACSBD)

1. Analysts
 Most graduates would start
 Gather information and processing it for the consulting team
 Offered by large firms only
2. Consultants
 Promoted analysts or those who have been in industry and have moved to consulting as a career change
 Evaluation of the client business and make recommendations on its behalf
3. Senior consultants/Managers
 Lead a consulting team and undertake a project on behalf of client
 3-5 years of consulting experience
 Ability to take responsibility of running small consulting projects
 Deal with members of client team
4. Business development managers
 Develop the firm’s products and build relationship with clients
 Involved in large, complex consulting projects at strategic level
 5-10 years of consulting experience
5. Directors/Partners (private)
 Development of the organization as a whole and lead its strategic development
 Overall responsibility for projects
 10+ years of consulting experience

RATIONALE FOR USING MANAGEMENT CONSULTANTS (PAIT)

1. Independent viewpoint
 See the true nature of the problems
 Distinguish feasible and infeasible
 Unbiased suggestion
2. Professional advisory
 Possesses special knowledge, skill and variety of personal attributes
 Introduce new ideas into the organization
 Provide in-house training to keep staff informed
3. Temporary professional service
 Less expensive (no tax deductions or fringe benefits)
 May be hired on a project, seasonal, or new funding basis
4. Agent of change
 Stimulate ideas in organization that might be resistant to change

TYPES OF MAS ENGAGEMENTS (NSPTIG)

1. Nature of the problem
a. Corrective
 Situation in which conditions have worsened
 Arises suddenly and demands urgent action
b. Progressive
 Existing situation that can be improved
c. Opportunistic
 Situation in which a future opportunity exists
 Likely to lead to more risky and rewarding courses of action
2. Service delivery area
 Functions or activities in which the problem exists
3. Phases of the analytic process
 Engagement could involve one, more, or all of the phases (cannot be totally isolated)
a. Identifying objectives
b. Defining the problem
c. Finding out the facts
 d. Developing the solution
e. Implementing the solution
4. Techniques and methodologies applied
 Information systems planning and design
5. Industry/Nature of organization
 Client, subject of an engagement
6. Geographical area
 Location (single or multiple)

AREAS OF MS PRACTICE (MIIAT)

1. Management functions of analysis, planning, organizing and controlling
2. Introduction of new ideas, concepts and methods to management
3. Improvement of policies, procedures, systems, methods, and organizational relationships
4. Application and use of managerial accounting, control systems, data processing, and mathematical techniques and
methods
5. The conduct of special studies, preparation of recommendation

TYPES OF CONSULTANCY WORK (BIIMBO)

1. Business planning and development/Project feasibility studies
 Project proposal: establish what the client wants and manage expectations about what can be achieved
 Business planning/development: ambitions to grow and develop; great opportunity
 Project feasibility study report: presents the process by the consultant and the outcome of investigation
2. Information systems consulting
 Information needed: business’s external situation (competitive environment) and internal state
 Management information system: collect and organize information and present to managers in usable form
3. Internal audit services
4. Management/Operations audit
 Operational audit (management/performance audits): evaluate the effectiveness and efficiency of operations;
degree of operational efficiency, effectiveness, and economy
5. Business process improvement/Reengineering
 Reengineering: complete redesign of a process on finding creative new ways to accomplish an objective
 Organizational culture: mindset of employees, shared beliefs, values, goals
 Change champion: recognizes the need for change and seeks to bring it about through own efforts
 Well-defined process for change: timetable, well-articulated goals, and follow-up
6. Others such as (MMDPNDES)
a. Marketing research
 Discover nature of competitive environment
 Powerful approach to identify business opportunities
 TYPES
o Primary Research - information collected for the specific project
 Quantitative Research - statistical or numerical form (how much, often, many)
 Qualitative Research - do not demand quantified answer (who, what, why)
o Secondary Research - information collected earlier (existing reports and articles)
b. Marketing strategy development
 Approach to get the customer’s attention and get them to spend their money on products or services
c. Developing promotional campaign
 Promotional campaign: inform customers about product, stimulate interest, and encourage purchase
d. Planning sales force activity
 Sales team: primary promotional tool
 One of the most important investment the firm will make (detailed and thoughtful offers real returns)
e. New product development
 Often undertaken by interdisciplinary teams
 Complex project that draws in most or all of the firm’s functions
f. Developing proposal for financial support
 Infusion of capital
g. Staff recruitment
 Human resource, identify skill and knowledge
h. Exporting and international market
 Based on sound preliminary research and a thorough understanding of what to expect

MANAGEMENT CONSULTANCY SERVICES BY CPAS

1. Traditional services
a. Managerial accounting - planning and controlling business and decision making
b. Design and appraisal of accounting system
c. Financial management-related service
d. Project feasibility studies
2. Emerging consultancy services
a. Global risk management solution - managing the totality of risks and determination of critical risks
 i. AREAS OF RISK MANAGEMENT SERVICES
1. Financial risk management
2. Strategic risk management
3. Operational and systems risk management
4. Compliance risk management
5. Internal audit services
b. Transaction services - mergers, acquisition, divestitures, joint ventures, spin-off and strategic alliance
c. Financial advisory services - financial, economic and strategic advice to companies with complex problems
d. Project finance and privatization - related to partnership between public and private sectors in delivering
infrastructure and services or privatization and project finance
e. Valuation services - guide clients through complex business transaction
f. Business recovery services - implementation, rationalization and recovery programs
g. Dispute analysis and investigation - environmental analysis, real estate damage, investigative services
h. Computer risk management - implementation and use of technology
i. Application software selection and implementation - assist clients in prioritizing their needs, identifying the
right software and tailoring it to meet their requirement

DETERMINING THE SCOPE OF THE SERVICE

1. Responsibility to establish scope of services
2. Independence - not make management decisions
3. Competence - professional quality; technical qualifications and ability to supervise and evaluate
4. Requirement for specialization
5. Identification and resolution of client’s basic problems
6. Referrals
7. Code of Professional Ethics

TYPES OF CLIENTS SERVED (CIPUIU)

1. Contact clients
 First approaches the consultant
2. Intermediate clients
 Members of the organization who become involved
 Work with the consultant and provide information (sit in meetings and influence the project)
 May be actual recipients of the final report
3. Primary clients
 Identified the problem and most immediately affected
 Willing to pay to have the issue resolved
4. Unwitting clients
 Members of the organization who will be affected but are unaware
 No direct or formal control
5. Indirect clients
 Members of the organization who will be affected and are aware
 Consultant is unaware they will be impacted
 Feel positive or negative about the consultant’s intervention
6. Ultimate clients
 Total community that will be affected
 Universe whose interests the consultant must take account

GROUPS OF CLIENTS THAT CPAS CAN PROVIDE MAS (PGNPO)

1. Privately-owned business firms - merchandising, manufacturing, banking, transportation, etc.
2. Governmental agencies and organization - BIR, SEC, Bureau of Customs, DOH, etc.
3. Not-for-profit nongovernment organization - hospitals, research institutions, charitable institutions, etc.
4. Professional association - lawyers, doctors, etc.
5. Others

OUTPUT OF A CONSULTING EXERCISE (FISING)

1. Provision of information
 Information = valuable = cost
2. Provision of specialist expertise
 Application of technical knowledge and ability to use specialist analysis techniques
3. Provision of a new perspective
 Managers are not decision making automata (use 'cognitive maps', 'mindsets', or 'dominant logics')
 Offer conceptual frameworks and support
4. Provision of support for internal arguments
 Disagreements arise; conflicts of opinion take a variety of form
5. Provision of support in gaining a critical resource
 Attract resources to survive
 Great value in structuring proposal and advising on how it might be delivered
6. Facilitating organizational change
  Change: natural response to internal dynamics of organizational growth
 Change usually meets resistance (possibilities and uncertainties)
 Call for change: primary goal of the consulting exercise (change management)

PROFESSIONAL ATTRIBUTES OF MANAGEMENT CONSULTANTS (Prof. J. Owen Cherrington) (TIC)

1. Technical skills
 Education requirement: depends on area of specialization
o Technical training
 Length of education - bachelor’s degree
 Type of education - technical and general degree
o Common core requirement
 Communications
 Mathematics and statistics
 Computer data processing
2. Interpersonal skills (IIOUJCAPPRPA)
 Personal attributes that make an individual amiable and effective
a. Intelligence/Capacity for logical thinking and reasoning
 Mental organization to relate facts in a logical fashion and reason inductively and deductively
b. Integrity
 Moral and ethical soundness, fairness, equity, honest, dependability
c. Objectivity
 Unbiased, independent
d. Understanding of people
 Anticipate human reactions, maintain friendly relations and mutual confidence, and respect rights
e. Judgment
 Ability and reasoning power to arrive at a wise decision
f. Courage
 Strength of mind and character to encounter disagreement with firmness of spirit and determination
g. Ambition
 Desire and motivation to earn full recognition
h. Psychological maturity
 View situations in perspective and take action on a controlled basis
i. Physiological equilibrium
 High-energy level
j. Relationship-building skills (analysis of the business and people)
 An ability to build rapport and trust with the client
o Rapport: people communicate with ease and work together effectively
o Trust and commitment to each other
 An ability to question effectively
o Questioning: one of the fundamental communication skills
o Way to get information, build rapport, and control direction of conversation
 An ability to communicate ideas succinctly and precisely
o Offer something the business cannot offer itself
o Use technical knowledge to create value for the business (no jargon)
o Consultant talks the same language as the client
 An ability to negotiate objectives and outcomes
o Outcomes must be defined and agreed by consultant and client
o Clear expectations of the result and both parties’ responsibilities in achieving them
 An ability to convince through verbal, written and visual mediums
o Use ideas to encourage people to follow them
o Communicated in a way that convinces people they are good and are worth implementing
o Conviction = manner is appropriate to the audience
 An ability to use information to make a case for a particular course of action
o Ideas must be backed up with information (facts and interpretation of facts)
o Know when and how to use a particular information
 An ability to develop selling strategies
o Formal selling approach: communicate what the consultant can offer and be used to build long-
term relationship
 An ability to work effectively as a member of a team
o Advocate individual interests and compromise individual concerns for the interest of the group
 An ability to listen effectively
o Active listening
 An ability to demonstrate leadership
o Leadership: focus and direct individuals that brings the organization benefits; most valuable
commodity
o Not an inherent and fixed property of an individual (situational)
k. Project management skills (deliver negotiated outcomes)
 An ability to define objectives and outcomes
 o Objective: state what the project is going to achieve (SMART)
 An ability to develop formal plans
o Plan: course of action to achieve objectives
o Defining tasks, identifying who will be responsible, and financial implications of activities
 An ability to sequence and prioritize tasks
o Coordinate tasks within the shape of overall project (timetabling)
o Prioritization: undertaken by individuals and between individuals
o Shorter time and lower cost
 An ability to manage the financial resources that are to be invested in the consulting project
o Keeping track of expenditure; managed budgets
 An ability to recognize the human expertise necessary to deliver the project
o Understand how members can specialize their roles
o Differentiation activities = specialize contribution
 An ability to manage personal time
o Productive use of time, avoid last-minute panics, less stress
l. Analysis skills
 An ability to identify what information is available in a particular situation
o Problem definition and questioning skills
 An ability to identify what information is needed in a particular situation
o Distinguish information from that which is a distraction
o Nature of the decisions, significance to project, and type of information available
 An ability to process that information to identify the important relationships within it
o Draw conclusions
 An ability to draw meaning from that information and use it to support decision-making
o Identify impact of conclusions
o Private aspect: detached and reflective consideration of what the information means and what is
the best option
o Public aspect: using information to make the case for a course of action, advocate options, convince
others of the correctness of course, and meet objections
o Intuitive side of analysis: supplemented by the use of formal techniques that help decision-making
 An ability to recognize the business's profile of strengths, weaknesses and capabilities
o Conceptual framework: guide
 An ability to recognize the opportunities and challenges the environment offers the business
o Business environment: shifting kaleidoscope of possibilities
 An ability to assess the business's financial situation
o Financial performance: fundamental measure of business’s success
o Understand performance in marketplace, risks, and resources
o Forma ratio method: easiest and most rewarding method of financial analysis
 An ability to evaluate the business's markets and how they are developing
o Market: total demand for a good or service
o Analysis of trends
 An ability to assess the business's internal conditions
o Flexible and responsive to new possibilities (capacity to grow)
o Resources to innovate: human skills and productive capacity
 An ability to analyze the way in which decision-making occurs within the business
o Know who is involved and the roles they play
3. Consulting process skills (PISPI)
 Ability to understand
a. Problem definition phase
 Begins with the recognition of symptom and ends with the complete description of the problem
b. Identification of alternative solutions
 Fact-finding and analysis phase
c. Selection of the most desirable alternative
 Solution development phase
 Developing a detailed plan of the action (rationale, schedule, resources)
d. Presentation
e. Implementation Phase
 Putting the detailed plan into operation
 Least difficult to do
 High degree of logistic complexity

COMMON BARRIERS TO EFFECTIVE COMMUNICATION (KIIRI)

 Diagnostic ability: understand the circumstances surrounding the communication situation and its pitfalls
1. Know-it-all-attitude and/or prejudice of some personnel of the client
2. Inability to understand technical language
3. Inadequate background or knowledge
4. Resistance to change
5. Information overload

MAS PRACTICE STANDARDS (PCDCUPSC)

1. Personal characteristics
 Integrity: ensures findings and recommendations are free of intentional distortions or misstatements
 Objectivity: avoid bias and maintain impartial attitude
 Independent in mental attitude: undertake engagements in which practitioner can maintain
 Avoid assuming the role of management
2. Competence
 Technical qualifications of practitioners (professional quality)
 Ability to supervise personnel, evaluate quality of work, and accept responsibility to client
 Competence: identify and define needs using analytical approach and process, and knowledge of technical
subject matter under consideration
 Education (required for admission of profession) and experience (acquired by personal participation)
3. Due care
 What the practitioner does and how he does it
 Diligence and appropriate attention in carrying out the assignment
 Systematic critical review
4. Client benefit
 Problem definition, identification of objectives, and benefits
 Inform client if there is a change in anticipated benefits and costs
5. Understanding with client
 Inform client of objectives, scope, approach, role of all personnel, manner in which results are to be
communicated, timetable, and fee
 Preliminary discussion: develop sufficient information for formulating objectives and scope
 Done in formal contract, letter of understanding, or file memorandum
 New arrangement if there is change in significant aspect of engagement
6. Planning, supervision, and control
 Planning: translation of objectives into activities and events within a targeted time schedule (engagement plan)
 Supervision: exercise judgment to the amount of supervision by competent personnel
 Control: measurement of progress in meeting plan and objectives, documentations
7. Sufficient relevant data
 Type and amount of data required, source and reliability of data
8. Communication of results
 Findings, recommendations, accomplishments, and major assumptions must be conveyed to client
 Limitations, reservations, or other qualifications
 Oral or written reports (no written report = file memorandum)

Interim communications
 Summarize findings, work accomplished in relation to plan and tentative recommendations

Final report
 Made upon completion of engagement
 Ensure results and recommendations are communicated
 Responsive to objectives and scope

ETHICAL CONSIDERATIONS (IOPCP)

1. Integrity - straightforward, honest, fair dealing
2. Objectivity - no bias, conflict of interest, or undue influence
3. Professional competence and due care - act diligently and in accordance with standards, sound judgment, make
clients aware of limitations
 Attainment of professional competence: requires high standard of general education followed by specific
education, training, and examination
 Maintenance of professional competence: requires continuing awareness and understanding of technical
developments
 Diligence: act in accordance with the requirements of an assignment
4. Confidentiality - not disclose information
5. Professional behavior - comply with laws and avoid actions that discredit profession

ETHICAL CONFLICTS (CCBPM)

1. Conflict of interest - personal interest improperly influence judgment
2. Confidentiality breaches - sensitive client information is disclosed without proper authorization
3. Bias - decisions influenced by personal preferences
4. Pressure from clients - act unethically
5. Misrepresentation - false or misleading information
REASONS FOR BECOMING CONSULTANT FWDIFSWUR
TRADITIONAL AREAS AAI > AAIM
TYPES OF ENCOUNTER CE
ESSENTIAL QUALIFICATION PAFT
DEVELOPING TRENDS TICS
FUTURE PROSPECTS MOMDB
CONSULTING INDUSTRY ICCOHO
MAIN TYPES OF CONSULTANT FIRMS IAMI
CAREER STRUCTURE IN CONSULTING FIRMS ACSBD
RATIONALE FOR USING MANAGEMENT CONSULTANTS PAIT
TYPES OF MAS ENGAGEMENT NSPTIG
NATURE OF THE PROBLEM CPO
AREAS OF MS PRACTICE MIIAT
TYPES OF CONSULTANCY WORK BIIMBO
OTHER CONSULTANCY WORK MMDPNDES
TYPES OF CLIENTS SERVED CIPUIU
GROUPS OF CLIENTS THAT CPAS CAN PROVIDE MAS PGNPO
OUTPUT OF A CONSULTING EXERCISE FISING
PROFESSIONAL ATTRIBUTES OF MANAGEMENT CONSULTANTS TIC
INTERPERSONAL SKILLS IIOUJCAPPRPA
CONSULTING PROCESS SKILLS PISPI
COMMON BARRIERS TO EFFECTIVE COMMUNICATION KIIRI
MAS PRACTICE STANDARDS IOPCP
ETHICAL CONFLICTS CCBPM