Ms Consultancy

NAME:_________________________________________SCORE:_____RATING:_____ WRITE THE LETTER OF YOUR ANSWER BESIDE THE NUMBER. 1.

The a. b. c. d.

2.

Management services of certified public accountant cover all of the following except: a. Project feasibility studies b. Systems designs, development and implementation c. Organizational development and planning d. Audit, tax and legal services

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following characterize management advisory services except: Involve decision for the future Broader in scope and varied in nature Utilize more junior staff than senior members of the firm Relate to specific problems where expert help is required

Which of the following does not relate to management services by CPAs? a. Design and/or installation of accounting system b. Financial analysis for project feasibility studies c. Costs analysis of major investment decisions d. None of the above Which of the following statements is true? a. Adequate training and experience in both the analytical and process in the particular undertaking are requisites for the CPA to be involved in a management service engagement b. A CPA with MBA and Ph.D degrees is automatically qualified to render management services. c. Competence as a standard in the rendition of management services by a CPA may be equated to having excellent scholarly preparation to include the usual baccalaureate degree, an MBA and other post-graduates studies d. A certified public accountant by virtue of having the necessary academic preparation and by having the licensure examination required to have a CPA license can readily render management services to the public As a consultant, the CPA practitioner should a. Exercise administrative control over the client’s staff to avoid unnecessary delays in implementation b. Encourage dependence of client on the consultant’s staff so as to pin point clear responsibility in implementing systems c. Not take responsibility for making decisions and policy judgment in MAS engagements d. Conduct his engagement as if he is a member of the client’s organization

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Which of the following statements is false? a. CPA’s provide management services to go around the ethical constraints as mandated by the Accountancy Act. b. Businesses hire management consultants to help define specific problems and develop solutions c. Included in the practice of consulting is the provision of confidential service in which the identity of the client concealed d. CPA’s performing management services may be considered to be in the practice of management consulting

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Statement 1 – All of the provisions of the Code of Professional Ethics for CPAs in public accounting without exception, must be observed by those in MAS. Statement 2 – Management services are confined only to such areas as financial audit, and tax services a. False, false b. True, true c. True, false d. False, true

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A certified public accountant’s scope of management services is broad and covers all of the following except: a. Change in management engagements b. Computeration engagements c. Audit engagements d. Re-engineering engagements Statement 1 – A CPA firm’s primary purpose for performing MAS services is so enable the staff members to acquire the necessary continuing education in all areas of business.

Statement 2 – MAS consultation, unlike MAS engagement, generally involves advise or information by CPA in which an analytical process is applied. a. True, false b. False, true c. False, false d. True, true 10. Which of the following is not a characteristic of management advisory services? a. MAS is broad in concept b. MAS involves problem-solving affecting the future of the client c. Beneficiary of service is management d. MAS is repetitive as far as the same client is concerned 11. A CPA should reject management advisory services engagement if a. It would require him to make management decisions for an audit client b. The proposed engagement is not accounting related c. His recommendations are to be subjected to a review by the client d. He audits the financial statements of a subsidiary of the prospective client. 12. Which of the following is not a characteristic of management services? a. A wider variety of assignments are encountered in MAS that in audit b. MAS engagements are recurring c. MAS pinpoint actions to be taken, the benefits of which will be received in the future d. In MAS engagement, the nature of work involved requires a lesser need for junior assistance 13. Which of the following is not an area related to the performance of management services by independent accessing firms? a. Introducing new ideas, concepts and methods to management b. Improving existing policies, methods and procedures c. Performing special studies, preparing recommendation, and formulating plans and programs d. Performing management functions and making decisions 14. The following statements refer to competence of CPA’s in management advisory services except a. In concept, it refers to the technical qualifications of the practitioner and his ability to supervise and evaluate the quality of work of his staff assigned to the engagement so as to be responsible for the successful completion of the project b. It is acquired by education, self study, attendance to professional development courses, actual experience in MS work, and research c. It is the ability to identify client’s needs, use analytical approach and process , apply technical knowledge, communicate recommendations and assist in implementation d. It must be retained in the rendition of MAS work and it can be impaired if the CPAs performs decision-making for the client or acts as employee of the client 15. Competence in management advisory services is acquired by a. Education b. Auditing and other experience c. Actual performance of management advisory services d. All of these. 16. Which of the following is not a qualification of a CPA in MAS practice? a. Familiarity with the client’s financial accounting and internal control systems b. Analytical experience in problem-solving c. Professional independence, objectivity and integrity d. Auditor of the client

NAME:_________________________________________SCORE:_____RATING:_____ WRITE THE LETTER OF YOUR ANSWER BESIDE THE NUMBER. 1.

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These statement relate to MAS practice standards: 1. A practitioner is to notify the client of any reservation he has regarding anticipated benefits. 2. 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 3. During the engagement, should there be significant changes between cost and anticipated benefits, the client should be informed. 4. Before the engagement, the practitioner must make arrangement with, and inform the client on significant matters related to engagement, in writing. Of these statements, which of parties to the practice standard on the client benefit? a. Statements 1 and 3 only b. All statements c. Statement 1 only d. Statement 1,3 and 4 only Which of the following statements is not acceptable? a. A CPA represents 3 major players in the industry in rationalizing the industry’s incentive before the government public hearings b. A CPA shares with new and substantial client information regarding another client belonging to the same industry c. A CPA provides consulting services to an existing audit client d. A CPA offers and provides consulting services to two major competing client A CPA should reject management advisory services engagement if a. It would require him to make management decisions for an audit client b. The proposed engagement is not accounting related c. His recommendation are to be subjected to a review by the client d. He audits the financial statements of a subsidiary of the prospective client

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Which of the following does not impair independence of a CPA in the rendition of management services? a. The CPA performs decision-making services for his client b. The CPA performs services wherein he is in effect acting as an employee of the client c. The CPA eases its objectivity and acts in a manner as if he is advocating for the interest of his client d. The CPA does not extend his service beyond the presentation of recommendations or giving of advice

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Statement 1 – Management consultancy is an exclusive field of practice for CPAs and is regulated by law. Statement 2 – An area of MAS which is directly related to the accounting and finance functions is project feasibility study. a. False, false b. True, true c. True, false d. False, true

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Mr. Rey Carlos, a CPA firm’s partner-in-charge of quality assurance and review is arguing with Mr. Ruben Fortuna, the consulting partner regarding the question on independence as Mr. Fortuna is presently rendering consulting services to Tam Co., and audit client of the firm. Related to this issue of independence, all of the following statements are not valid except a. Independence is never sacrificed for as long as the auditor/consultant is correct in his decision for the client b. A CPA who renders both audit and consulting services to a client by virtue of his competence/expertise and extensive knowledge of the client’s business is in the best position to render decisions for the client and should do so c. The client is the ultimate decision maker and the auditor and or consultant should not make decisions for the client d. It is up to professional judgment and discretion of the auditor/consultant to render decisions for the client for as long as his professional fees are commensurate to the benefit that the client will derive from the engagement

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After preliminary audit arrangements have been made, an engagement confirmation letter should be sent to the client. The letter usually would not include

a. b. c. d.

An estimate of the time to be spent on the audit work by audit staff and management A reference to the auditor’s responsibility for the detection of errors or irregularities A statement that management advisory services would be made available upon request A statement that management letter will be issued outlining comments and suggestions as to any procedures requiring the client’s attention

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Statement 1 – MAS principally involves the consultative services to management in decision making. Statement 2 – Management letter is a report by the CPA to management after the review of the management controls, stating the coverage of the review and the deficiencies noted during the review a. True, true b. True, false c. False, true d. False, false

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Which of the following statements is not true? a. In the rendition of MAS, independence must be observed so as to maintain the essential requisites of impartiality and objectivity b. All provisions of the Code of Professional Ethics are applicable to the practice of MAS except those rules related to the expression of an opinion on financial statements c. MAS serves only in the areas of accounting and finance d. Before accepting an engagement, a practitioner should notify the client of any reservation he has regarding anticipated benefits.

10. Statement 1 – Because the CPA must be independence, he must not allow the client to participate in any phase of his engagement. Statement 2 – 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 Statement 3 – In management audit, a team with a mix of member who are accountants and non-accountants will provide a desirable combination of specialists and will offer a cross fertilization of ideas from different business fields a. False, true, true b. True, false, false c. True, true, false d. None of the given 11. Under this arrangement, the practitioner quotes a minimum and maximum fee, with the understanding that the work will be accomplished within this range, unless unexpected or unforeseen conditions are encountered or redefinition’s of the situation become necessary during the course of the engagement a. Bracket quotation b. Retainer c. Lump sum or fixed amount d. Per diem 12. It is an offer of service, when accepted or approved, it becomes a contractual agreement. a. Confirmation letter b. Contract c. Engagement letter d. Proposal letter 13. A CPA shall be guided by high ideals of personal honor in all his professional work, his obligation is paramount to the a. Employer b. Public c. Client d. Government 14. Evaluating the engagement and post engagement follow-up stages fall under a. Pre-engagement consideration b. Engagement planning c. Engagement management and execution d. Engagement conclusion 15. Which ethical standard is most clearly violated if a management accountant knows of a problem that could easily mislead users but does nothing about it? a. Competence c. Objectivity b. Legally d. Confidentially