246719600 Introduction to MAS PDF

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MANAGEMENT ADVISORY SERVICES HO 001 Introduction to Management Advisory Services MANAGEMENTADVISORYSERVICESMANAGEMENTADVISORYSERVICESMANAGEMENTADVISORYSERVICESMANAGEMENTADVISORYSERVICESMANAGEMENTADVISORYSERVICESMANAGEMENTADVISORYSERVICESMANAGEMENTADV Management Advisory Services may be defined as a....

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MANAGEMENT ADVISORY SERVICES HO 001

Introduction to Management Advisory Services

MANAGEMENTADVISORYSERVICESMANAGEMENTADVISORYSERVICESMANAGEMENTADVISORYSERVICESMANAGEMENTADVISORYSERVICESMANAGEMENTADVISORYSERVICESMANAGEMENTADVISORYSERVICESMANAGEMENTADV

1. Management Advisory Services may be defined as a. A branch of accounting concerned with the preparation of budgets, financial statements analyses and other management reports to maximize the client’s profits. b. An area of accounting that provides technical assistance to management to increase the efficiency and effectiveness of use of resources in achieving company’s goals. c. A service that covers everything including financial accounting, taxation and audit. d. A service being rendered by practitioners primarily to implement a decision for the benefit of the management. e. Answer not given. 2. S1: Although financial and managerial accounting differ in many ways, they are similar in that both rely on the same underlying financial data. S2: Managerial accounting is a branch of financial accounting and serves essentially the same purposes as financial accounting. a. Only S1 is true d. Both are false b. Only S2 is true e. Cannot be determined. c. Both are true 3. The primary purpose of MAS is to help the client a. identify its problems and maximize its resources b. improve the use of its resources and capabilities to achieve its objectives c. obtain benefits that are guaranteed implicitly by the practitioner d. become more profitable by relying upon the practitioner’s existing personal knowledge about the client’s business e. document and quantify its future plans without impairing the practitioner’s objectivity or allowing the practitioner to assume the role of management. 4. S1: Increase in complexity in managing and conducting business can contribute to the growth of management consultancy. S2: Lack of competent staff by businesses can also contribute to the growth of management consultancy. a. Only S1 is true d. Both are false b. Only S2 is true e. Cannot be determined. c. Both are true 5. Which of the following is not an advantage of a CPA over other professionals in the practice of MAS? a. They are equipped with technical knowledge about accounting and taxation which are crucial areas in the practice of MAS. b. They are members of a professional organization duly recognized by the government and holds to the code of ethics being implemented by this organization. c. They are familiar with the client’s business due to their wide knowledge about different business industries acquired through their practice of accounting. d. They are more credible and possess the highest qualifications among the professionals. e. Answer not given. 6. MAS consultation as opposed to MAS engagement generally involves advice or information given by a CPA or practitioner based upon a. Existing personal knowledge about the client b. An analytical approach and process c. Information obtained during an examination of the client’s financial statements d. The results of an operational audit e. Answer not given 7. Which of the following is the least characteristic of MAS? a. It relates both to the future and past. b. It involves a wide range of assignments. c. It requires highly qualified staff. d. It involves usually nonrecurring engagements. e. Answer not given. 8. Management advisory services is basically the same as management consultancy, except that a. Management consultancy is broader than management advisory services. b. Management advisory is exclusive to professionals like CPAs and engineers c. CPAs are not allowed by law to call themselves management consultants. d. Management advisory aims to give advice while management consultancy is simply for diagnosis purposes. e. Answer not given.

9. MAS can relate to the following areas except:

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a. b. c. d. e.

the basic management functions the introduction of new ideas, concepts and methods to management the improvement of policies, procedures, systems, methods and personal relationships the application and use of management accounting, control systems and mathematical techniques answer not given

10. S1: The consultant has the responsibility to determine the scope of services he is competent to offer, subject to the pronouncements of his profession. S2: The consultant is expected to maintain independence to enable him to render professional judgment. a. Only S1 is true d. Both are false b. Only S2 is true e. Cannot be determined c. Both are true 11. A CPA’s scope of MAS is broad and covers the following except a. Change management engagement c. audit engagement e. answer not given b. Computerization engagement d. Re-engineering job 12. S1: MAS may be rendered by any person, provided that he is competent enough for such engagement. S2: Audit may be rendered by any person provided that he is competent enough for such engagement. a. Only S1 is true d. Both are false b. Only S2 is true e. Cannot be determined c. Both are true 13. MAS areas which are not normally related to accounting and finance function may include a. preparation of accounting systems and procedure manuals b. development of management oriented accounting and reporting system c. cost reduction studies d. establishment of budgetary controls e. answer not given 14. The following relates to MAS by CPA’s except: a. Financial analysis for a project feasibility study b. Design and installation of accounting systems c. Cost analysis of major investment decisions d. None of the above e. Answer not given 15. Which is not classifiable as MAS by CPAs? a. Lease or buy analysis b. Information systems c. Financial planning

d. public relations work e. assistance in budget preparation

16. MAS services of CPAs cover the following except: a. Audit, tax and legal services b. Organizational development & planning c. system design, development & implementation d. Project feasibility study e. Answer not given 17. The MAS engagement that involves providing assistance to management in relation to planning, controlling and decision making. a. Financial management d. taxation b. Management accounting e. auditing c. financial accounting 18. Management advisory services may also be called as ____ , except a. Business Support Services b. Business and Financial Advisory Services c. Non-assurance Services d. Corporate Finance Services e. Answer not given. 19. A management science which uses mathematical techniques like linear programming, queuing theory and simulation to solve complex operational problems. a. PERT-CPM c. operations research b. Industrial engineering d. sensitivity analysis

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20. Services rendered to troubled businesses by emphasizing the implementation, rationalization and recovery programs designed to rebuild value a. Business recovery services d. valuation services b. Risk management services d. dispute analysis and investigation 21. Cost accounting is an area of MAS. Which of the following is least likely a useful knowledge about cost accounting for MAS practitioners? a. Development of standard cost system. b. Cost analysis and control c. Variance analysis d. Investigation of variances e. Cannot be determined 22. MAS classified as usual services include the following except: a. design and installation of accounting systems b. assisting in bankruptcy and receivership proceedings c. suggestions for improvements in internal control system d. assistance in preparation of forecasts and budgets e. answer not given 23. MAS classified as somewhat specialized services include the following except: a. calculations of government contracts and allocating costs in compliance with reporting requirement b. advising on accounting and tax matters relative to estate planning in cooperation with legal and insurance counsel c. giving advice on dividend policy and plans for expansion d. analysis of financial and operating statements for management, shareholders and creditors. e. Answer not given 24. MAS classified as highly specialized services include the following except: a. research and evaluation of alternative methods of handling a transaction for its effect on finance and tax consequence b. auditing management policies for their effectiveness c. conducting motion studies for standard cost system d. evaluating the desirability of a particular area of plant location e. Answer not given 25. Which statement is incorrect? a. Consultant is considered a catalyst for change that can assist management in the administration o f the business entity. b. A consultant is hired because generally he is considered independent, objective and detached to the problems faced by the client. c. An experienced management consultant possesses special knowledge, skills and a variety of personal attributes that make him the most desirable candidate to undertake MAS engagement involving his area of expertise d. The use of consultants is generally less expensive to the company than hiring full time new managers and employees to provide professional advisory services. e. None of the above 26. S1: Management consultancy is an exclusive filed of practice for CPA’s and is regulated by law. S2: As an advisory expert, the CPA should take responsibility for making policy and management decisions in the MAS engagements he has performed. a. Both statements are true c. S1 is true b. Both statements are false d. S2 is true 27. CPA’s are in a more advantageous position than members of other professions to render MAS because a. most CPAs are highly educated b. a CPA is a person with recognized standing c. the CPA is already familiar with the client’ business and enjoy the client’s confidence d. only CPAs are capable of rendering MAS. 28. The following are characteristics of MAS except: a. MAS engagements are nonrecurring b. Actions to be taken are identified, the benefits of which will be received in the future. c. In MAS engagements, the nature of work involved requires a lesser need for junior assistance. d. A wider variety of assignments are encountered in MAS than in audit engagement. e. None of the above.

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29. In providing MAS, the consultant applies an analytical approach and process which typically involves the following, except: a. ascertaining the pertinent facts and circumstances b. seeking and identifying objectives c. defining the problem or opportunity for improvement d. evaluating and implementing possible solutions e. answer not given 30. The analytic approach and process in MAS engagements involves the following except a. Problem definition b. Identification and analysis of alternative solution c. Selection of the most desirable alternative d. Implementation of the chosen solution e. answer not given 31. Which statement is incorrect? a. full scope engagements require client representations from both the working and decision making levels b. In carrying out full scope engagements, the consultant should participate up to implementation stage and should see to it the client management accepts overall responsibility for implementation of the chosen course of action c. the consultant’s role in full scope engagement should be limited to that of an objective adviser; and in the implementation stage, his job is merely to provide technical assistance, degrees of which depend on the knowledge and experience available in the client’s organization d. once the implementation stage is concluded, the consultant’s participation is also concluded and only the consultant’s personnel remain to carry on the solution 32. The problem definition phase of the problem solving process begins with the initial recognition of a symptom pointing to the problem and ends with the complete problem description. Among the key facts of the problem description are the following except: a. Human elements involved in the problem d. Tracking system related to the problem b. Support system surrounding the problem e. answer not given c. specific person in charge of managing the problem 33. The following pitfalls should be avoided by the consultant in identifying the problem in a consultancy engagement, except: a. Mistaking symptoms for the underlying problem b. Unqualified acceptance of the opinion of others c. Overlooking the various causes of the problem d. All of the above e. None of the above 34. Solution development phase of the problem solving process involves the following steps: 1. Detailed development of selected solution 3. Evaluation of alternative solution 2. Choice of preferred alternative solution 4. Generation of alternative solution In what order should the above listed activities be performed? a. 1, 2, 3, 4 d. 4, 3, 1, 2 b. 2, 1, 3, 4 e. answer not given c. 4, 3, 2, 1 35. Among the sources of information that the consultant could avail of are external sources. Information about the market conditions could best be provided by: a. Industry reports d. customers b. Database retrieval systems e. answer not given c. distributors 36. Which is not a MAS practice standard? a. In performing MAS, a practitioner must act with integrity and objectivity and be independent in mental attitude b. MAS engagement is to be performed by a person having adequate technical training as management consultant c. MAS engagement is to be performed by practitioners having competence in the analytical approach and process and in the technical subject matter under consideration d. Before undertaking a MAS engagement, a practitioner is to notify the client of any reservations he has regarding anticipated benefits

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37. S1: Before accepting an engagement, a practitioner is to inform his client of all significant matters related to the engagement. S2: MAS practice standards are applicable only to organized MAS engagements and therefore not practical to “informal advice” engagement. a. Both statements are true c. S1 is true b. Both statements are false d. S2 is true 38. The following are factors considered in determining the scope of MAS that a CPA may render except: a. Independence d. requirements for specialization b. Competence e. answer not given c. Professional fee 39. The following are major factors to be considered when defining the target level of competence of MAS practitioner, except: a. scope of practice area d. service variety b. client requirements e. service delivery capability c. investment required 40. To attain the highest standards of professionalism, highest level of performance and meet public interest requirement, a CPA who provides MAS should meet the following basic requirement except: a. Credibility d. confidence b. Professionalism e. answer not given c. world class facilities 41. To achieve the objectives of the accountancy profession, CPA’s, including those who render MAS should observe the following principles except: a. Integrity b. Confidentiality c. Careful selection of clients to include only big and financially capable business entities d. knowledge of up to date technical and professional standards 42. A personal attribute of a consultant which ensures that his findings and recommendations are free of intentional distortions or misstatements. a. Independence in mental attitude d. objectivity b. Integrity e. answer not given c. maturity 43. Which action of a CPA is not acceptable? a. A CPA represents 3 major players in the industry in rationalizing the industry’s incentives before government public hearings b. A CPA provides consulting services to 2 major competing clients. c. A CPA provides consulting services to an existing audit client d. A CPA share with a new and substantial client information about another client belonging in the same industry e. All of the above 44. The ability of a consultant to maintain his role as an objective adviser without making any attempt to make decisions for the client. a. Independence in mental attitude c. objectivity b. Integrity d. maturity 45. In which situation is the independence of a CPA rendering MAS not impaired? a. The CPA performs services wherein he is in effect, acting as employee of the client b. The CPA loses objectivity and acts in a manner advocating for the interest of the client c. The CPA performs decision making for the client d. The CPA limits his services to presenting recommendations or giving of advice e. Answer not given 46. Randy Manzano is the external auditor of UC Inc. He was asked to perform MAS for UC Inc. in the area of inventory management, which is believed to be one area of inefficiency of the company’s operations. Which action would impair Mr. Manzano’s independence? a. Identify the inventory management problem as caused by the presently operative procedures in the purchasing, receiving and issuance operations. b. Study and evaluate the inventory management problem and suggest solutions. c. Develop a time schedule for implementation of the solution to be adapted by UC Inc. d. Supervise management of purchasing, receiving and issuance operations e. None of the above

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