Module 1 CCA4
Module 1 CCA4
Lesson Module
Procedures:
A. Motivation
B. Lesson Presentation
Overview of MAS practice by CPA
DEFINITION
Management advisory services
Refers to that area of accounting work concerned with providing advice and
technical assistance to help clients improve the use of their resources to achieve
their goals.
Management consultant
A person who is qualified by education, experience, technical ability and
temperament to advise or assist businessmen on a professional basis in
identifying, defining and solving specific management problems involving the
organization, planning, direction, control and operation of the firm.
MAS by CPA’s
CPA’s performing management consulting and other advisory services are
concerned in the practice of professional accounting and are bound by the Code
of Ethics for Professional Accountants.
.
Characteristics of MAS
1. Services are rendered for the management rather than for third parties
2. Involves problem solving
3. Relates to the future
4. Broad in scope
5. Involves varied assignments
6. Engagements are usually non-recurring
7. Engagements require highly qualified staff
8. Human relations play a vital role in each engagement
Scope of MAS
MAS are usually related to the services rendered by CPA’s in the areas of
auditing, tax and accounting and may involve activities such as:
Counseling management in its analysis, planning, organizing, operating,
and controlling functions
Reviewing and suggesting improvement in policies, procedures, systems,
methods, and organizational relationships
Introducing new ideas, concepts, and methods to management and;
Conducting special studies, proposing plans and programs and providing
guidance and technical assistance in their implementations.
Broad areas of MASS
A. Areas normally related to the accounting and finance functions:
1. Financial accounting systems design and development
2. Management accounting systems design and development
3. Development ang establishment of Budgetary Controls
The field covers the following:
1. Cost accounting
a. Development of standard cost system
b. Cost analysis and control
c. Variance analysis
2. Financial Management
a. Establishment of capital budgeting procedures
b. Study of the cost of capital and cost of debt
c. Financial analysis for project studies
d. Establishment of operating and cash budgets
e. Valuation of common stocks for purposes mergers and sale
B. Areas not normally related to the accounting and finance functions
1. General management consultation
a. Management or operating audit
b. Measurement of operating performance
c. Mergers and acquisition studies
d. Development of compensation programs
e. Pension plan review
f. Special studies on industry potential
g. Long range planning
2. Project feasibility studies
Involves financial, technical, and marketing evaluation of proposed
projects
3. Organization and personnel
a. Review of existing organizational structure
b. Organization and administrative manual preparation
c. Job evaluation and salary administration
d. Development of personnel rating programs
e. Retirement plan studies
f. Studies of office cost reduction systems
g. Determining cost of alternatives in collective bargaining agreements
4. Industrial engineering
a. Production, planning, scheduling and control
b. Plant layout studies
c. Inventory management studies
d. Materials control system design and development
e. Preventive maintenance system designs and development
f. Development of work standards
g. Purchasing management, including value analysis
5. Marketing
a. Product profitability analysis
b. Pricing policy determination
c. Market forecasting
d. Distribution cost analysis
e. Salesmen’s incentive compensation evaluation
6. Operation research
Involves the use of mathematical techniques such as linear programming,
PERT/CPM, queueing theory, simulation, etc. to solve operational
problems
In informal advice
Its structure is informal and no presumption should exist that an extensive
study has been performed
1. Professional competence
The MAS practitioner shall undertake only those engagements which he or
his firm can reasonably expect to complete
5. Forecasts
The MAS practitioner shall not permit his name to be used in connections
with any forecast of future transactions in a manner that may lead to the
belief that the practitioner vouches for the achievability of the forecasts.
Technical standards
1. Role of MAS practitioner
The practitioner should not assume the role of management or take any
position which may impair the practitioner’s objectivity in performing an
engagement. The practitioner should maintain his independence to enable
him to render his professional judgment and opinion with objectivity. His main
role is that of an adviser.
3. Client benefit
The MAS practitioner should obtain an understanding of the possible benefits
the client wishes to achieve from the engagement before beginning the work.
The practitioner should notify his client of any reservations he may have
concerning the realization of the anticipated benefits.
4. Communication of results
The MAS practitioner should communicate to the client his principal findings,
conclusions, recommendations, or other results of the engagement including
major facts and assumptions used, limitations, reservations or other
qualifications.
These stages constitute the specific activities involved in the MAS engagement
cycle which, in general terms are the following
1. pre-engagement considerations
2. engagement planning
3. engagement management and execution
4. engagement conclusion