CHAPTER ONE

Overview of Management Consultancy Services By

CPAs
Consultant

Someone who has expertise in a specific

area/s and offers unbiased opinion and
advice for a fee
Independent contractor usually selfemployed, contracted to perform a task

Reasons for Becoming Consultants

1. Sharing their knowledge to help their clients
2. Building business network and take a step up in ones
corporate career
3. Having no boss, being independent and making their own
decisions
4. No fear of being laid off
5. Having a flexible source of income
6. A means of giving back to the community by providing
expertise and assistance in community-based projects
Independent Accounting Firms Role in MAS
to provide advice and technical assistance which should
provide for client participation in the analytical approach
and process. Specifying this as the proper role recognizes
both the appropriate place of MAS and the realities of
practice. This is the only basis on which the work should
permit it to be done.
CPAs Objective in Engaging in MAS
to utilize the essential qualifications it has available to
provide advice and technical assistance which will enable
client management to conduct its affairs more
effectively.
Nature of MAS by Independent Accounting Firms
Management
The function of providing professional
Advisory Services advisory (consulting) services, the
primary purpose of which is to
improve the clients use of its
capabilities and resources to achieve
the objectives of the organization
Management
Independent and objective advisory
consulting
service provided by qualified persons
to clients in order to help them
identify and analyze management
problems or opportunities
Activities of Management Consultants
Consultation
Consists of providing advice and
information during a short time frame
Engagement
Consists of form of management
advisory or consulting service in which
an analytical approach and process is
applied in a study or project
Rationale for Using Management Consultants
1. Independent viewpoint enable the consultant to see
the true nature of the problem and distinguish between
feasible and infeasible solution
2. Professional advisor and counselor because of
persuasive nature of accounting the academic training
and examination requirement for the CPA certificate, A
CPA has a broad base on which to build a management
practice
3. Temporary professional service Sometimes,
organizations find themselves short of critical
professional resources and management consultants
can in such cases, fill in as temporary professional help,

4. Agent of change In providing solutions to the clients

problems, changes may have to be made to the
organizational structures, to procedures and to job
responsibilities.
Types of Consultancy Firms
1. IT firms
2. Accounting Firms offering Consultancy
3. Major consulting only firms
4. Independents
Roles of Consultants
1. Analysts responsible for gathering information and
processing it for the consulting team.
2. Consultants undertake the evaluation of the client
business and make recommendations on its behalf
3. Senior consultants/Managers more experienced
consultants who would be more involved in dealing with
members of the client team
4. Business development Managers responsible for
developing the firms products and building its
relationship with clients
5. Directors/Partners responsible for the development of
the organization as a whole and who lead strategic
development
CHAPTER TWO
Areas of Management Advisory Services Part 1
a.

Nature of the Problem

Classification
Corrective
- Involves a situation in which
conditions have worsened
- Usually arises suddenly and
demands urgent action
Progressive
- Involves an existing situation that
can be improved
Opportunistic
- involves a situation in which a
future opportunity exists

b.

Service Delivery Areas

The functions or activities in which the problem
situation exists may be classified in a number of
ways e.g. per department then subdepartment

c.

Application of the Analytic Process

a. Identifying the objectives
b. Defining the problem
c. Finding out the facts
d. Developing the solution
e. Implementing the solution
Techniques and Methodologies Applied
Most engagements can be aided by technical
models or methodologies.

d.

e.

Industry or Nature of Organization

A client who is the subject of an engagement may
be a privately owned business firm, a government
agency, or a not-for-profit nongovernmental
organization, a professional association or some
other type of organization

f.

Geographical Areas
A consulting engagement may be restricted to a
single location. It may also involve multiple
locations and may even involve locations in
foreign countries

Areas of MAS Practice

1. Business Planning and Development (Project
Feasibility Study) a phase often encountered in

business that have ambitions to grow and develop. The

effective consultant can use the project proposal to
establish exactly what the client wants and to manage
his/her expectations about what can realistically be
achieved

2. Design and appraisal of accounting system involve

development of an accounting system for a newlyorganized firm, etc
3. Financial Management-related services
4. Project Feasibility Studies

2. Information Systems Consulting aim to collect and

organize information and present it to managers in a
usable form.

Emerging Consultancy Services

5. Global Risk Management Solution involves managing
the totality of risks financial. Operational, and systems,
and strategic to improve financial and business
performance
6. Transaction Services involve services related to
mergers, acquisition, divestitures, joint ventures, spinoff and strategic alliance
7. Financial Advisory Services
8. Project Finance and Privatization onvolves
management advisory services related to partnership
between the public and private sectors in delivering
infrastructure and services or privatization and project
finance
9. Valuation services these include service that guide
clients through complex business transactions such as
acquisition or divestiture of investment, debt structuring
and finance-raising entry to major stock exchange,
mergers
10. Business Recovery Services
11. Dispute Analysis and Investigations
12. Computer Risk Management
13. Application Software Selection and
Implementation

3. Internal Audit Services Internal auditing is an

independent, objective assurance and consulting activity
designed to add value and improve an organizations
operations. It helps an organization accomplish its
objectives by bringing a systematic, disciplined approach
to evaluate and improve the effectiveness or risk
management, control and governance processes
4. Management/Operations Audit conducted to
evaluate the effectiveness and/or efficiency of operations.
5. Business Process Improvement/Reengineering a
business process is diagrammed in detail, questioned and
then completely redesigned:
a. to eliminate unnecessary steps
b. to evaluate opportunities for errors; and
c. to reduce costs
Reengineering is the complete redesign of a process with
an emphasis on finding creative new ways to accomplish
an objective
5. Other types of Consultancy Work
a. Marketing Research process through which
managers discover the nature of the competitive
environment in which they are operating
Two Types:
1. Primary Research collected for the specific
project
a. Quantitative
b, Qualitative
2. Secondary Research based on info that has
been collated earlier for reasons other than the
project at hand
b.

Marketing Strategy Development defines

the approach the business will take in order to get
the customers attention and get them to spend
their money on the businesss products or
services

c.

Developing Promotional Campaigns any

program of activities dedicated to informing
customers about a product, stimulating their
interest and encouraging purchase
Planning Sales Force Activity An area in
which the consultant can offer valuable support
New Product Development represents a
complex project that draws in most, if not all, of
the firms functions.
Developing Proposals for Financial Support
Staff Recruitment
Exporting and International Marketing

d.
e.
f.
g.
h.

CHAPTER THREE
Areas of Management Advisory Services - Part 2
Traditional Services
1. Managerial Accounting involves providing assistance
to management related to planning and controlling
business operations as well as decision making

Determining Scope of Service

1. Responsibility to establish scope of services
2. Independence
3. Competence
4. Requirements for specialization
5. Identification and resolution of clients basic problems
6. Referrals
7. Code of professional ethics
Types of Clients Served
1. Contact clients person who first approachers the
consultant and proposes that the consultant addresses a
problem or issue on behalf of the organization
2. Intermediate clients members of the organization who
become involved in the consulting projects. They will
work with the consultant and provide information
3. Primary clients person/s who have identified the
problem or issue the consultant has been called in to
address and who are most immediately affected by it
4. Unwitting clients members of the organization who will
be affected by intervention of the consultant. They are
not aware that they will be affected by the project
5. Indirect clients members of the organization who will
be affected by the intervention of the consultant and
who are aware that they will be affected.
6. Ultimate clients total community that will be affected
by the consultants intervention.
Groups of clients that CPAs can provide MAS
1. Privately-owned business firms
2. Governmental agencies and organizations
3. Not-for-profit nongovernmental organizations
4. Professional associations
5. Others
How consulting adds value
A.Provision for Information a consultant can offer a
business manager a service in providing him/her with
information which can help the business

B.Provision for specialist expertise certain projects

require the application of technical knowledge and an
ability to use specialist analysis technique
C. Provision of a New Perspective the consultant can
offer a fresh mind to an issue and can contribute some
conceptual frameworks that open up thinking and aid the
development of the managers cognitive schema
D. Provision of Support for Internal Arguments
E. Provision of Support in Gaining a Critical
Resource the consultant can offer a valuable support in
gaining resources that are important to the survival of the
organization.
F. Facilitating Organizational Change Change
management is required as a subsidiary area in order to
effect the implementation of more specific organizational
projects, such as business expansion or structural
reorganization.
CHAPTER FOUR
Professional Attributes of Management Consultants
A manager must possess the ff. broad areas of
skills:
I.
Technical skills these include both
understanding and experience in a technical
discipline
*The education required to obtain necessary technical
skills for management consulting depends on the area
of specialization
A. Technical Training
a.) Length of Education A bachelors degree is a
prerequisite and many people who are going into
management consultancy have one or two graduate
degrees. Graduate programs help develop tolerance
for the uncertainty and ambiguity inherent in business
problems.
b.) Type of education Educational programs
usually include a technical degree and a general
degree.
B. Common Core Requirement
The ff. courses should be included in the educational
program:
a.) Communications
b.) Mathematics and statistics
c.) Computer data processing
II.

Interpersonal skills these include personal

attributes that make an individual amiable among
people and effective in accomplishing desirable
objectives through people
Attributes that are critical for the success of
management consultant:

1.

2.

3.

Intelligence or capacity for logical thinking

and reasoning consultants degree of mental
organization and development that enables
him/her to absorb and relate facts in a logical and
orderly fashion and to reason inductively and
deductively
Integrity number of attributes, such as moral
and ethical soundness; fairness; equity; ability to
distinguish between right and wrong; honesty;
dependability; freedom from corrupting influence
or practice; and strictness in the fulfillment of both
the letter and the spirit of agreements made
regardless of personal considerations
Objectivity grasp and represent facts, unbiased
prejudice

4.
5.
6.
7.
8.

9.

10.
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)

Understanding of people Human relations,

Empathy
Judgment ability and reasoning power to arrive
at a wise decision
Courage strength of mind and character that
enables him/her to encounter obstructions with
firmness of spirit and determination
Ambition desire and motivation to earn and
obtain full recognition for the attainment of
professional status
Psychological maturity view situations in
perspective and to take action needed on a calm
and controlled basis without being
distracted/pressured
Physiological equilibrium a consultant needs a
high level of energy to support his/her intellectual
and emotional activities, enable him/her to
withstand pressure and frustration and avoid
physical illness
Relationship building skills
An ability to build rapport and trust with the client
An ability to question effectively
An ability to communicate ideas succinctly and
precisely
An ability to negotiate objectives and outcomes
An ability to convince through verbal, written and
visual mediums
An ability to use information to make a case for a
particular course of action
An ability to develop selling strategies
An ability to work effectively as a member of a
team
An ability to listen effectively
An ability to demonstrate leadership

Common Barriers to Effective Communication

Between the Client and the Consultant
a. Know-it-all Attitude and/or prejudice of some
personnel of the client
b. Inability of non-expert clients to understand
technical language
c. Inadequate background or knowledge
d. Resistance to change
e. Information overload
k) Project Management Skills
i.
An ability to define objectives and
outcomes
ii.
An ability to develop formal plans
iii.
An ability to sequence and prioritize tasks
iv.
An ability to manage financial resources
that are to be invested in the consulting
project
v.
An ability to recognize the human
expertise necessary to deliver the project
vi.
An ability to manage personal time
l) Analysis Skills
i.
An ability to identify what information is
available in a particular situation
ii.
An ability to identify what information is
needed in a particular situation
iii.
An ability to process that information to
identify the important relationships within
it
iv.
An ability to draw meaning from that
information and use it to support
decision-making
v.
An ability to recognize the businesss
profile of strengths, weaknesses and
capabilities

vi.

III.

An ability to recognize the opportunities

and challenges the environment offers
the business
vii.
An ability to assess the businesss
financial situation
viii.
An ability to evaluate the businesss
markets and how they are developing
ix.
An ability to assess the businesss
internal conditions
x.
An ability to analyze the way in which
decision-making occurs within the
business
Consulting process skills these involve the
ability to understand and use the following
approach in solving business problems:
a. Problem definition phase purpose of sully
describing the underlying problem. It begins with
the initial recognition of a symptom pointing to
the problem and ends with the complete
description of the problem

Standard No. 2. Engagements are to be

performed by a practitioner having competence in
the analyzed approach and process
Competence ability to identify and define client needs,
to utilize the analytical approach and process, to apply
knowledge of the technical subject matter under
consideration, to communicate recommendations
effectively, and to assist in implementing the
recommendations
- combination of education and experience and
may be augmented by research and by consultation with
others
III.

Due Care
Standard No. 3. Due care is to be exercised in
the performance of a management advisory
services engagement

Due Care in involves diligence and appropriate

attention in carrying out the assignment

b. Identification of alternative solutions

fact-finding and analysis phase which involves the
gathering of facts needed to solve the problems
and analyzing these facts in order to clarify the
requirements of the best solution

IV.

Client Benefit
Standard No. 4. Before accepting an
engagement, a practitioner is to notify the client
of any reservation he has regarding anticipated
benefits

c. Selection of the most desirable

alternative also known as the solution
development phase, this involves the selection of
the optimal solution to the problem and
developing a detailed plan of action

V.

Understanding with Client

Standard No. 5. Before undertaking an
engagement, a practitioner is to inform his client
of all significant matters related to the
engagement

d. Presentation

The significant matters related to an engagement

generally include:
a. The engagements objectives
b. Its scope
c. The approach
d. The role of all personnel
e. The manner in which results are to be
communicated
f.
The timbetable
g. The fee

e. Implementation phase purpose of putting

the detailed plan into operation and should be the
least difficult to do if the previous phases have
been performed well

VI.

Planning, Supervision and Control

Standard No, 6. Engagements are to be
adequately planned, supervised and controlled

Planning the translation of engagement objectives intro

a structured set of activities and events within a targeted
time schedule
Supervision engagement must be performed and
supervised by competent personnel
CHAPTER FIVE
MAS Practice Standards and Ethical Considerations
I.

MAS Practice Standards

Personal Characteristics
Standard No. 1. In performing Management
Advisory Services, a practitioner must act with
integrity and objectivity and be independent in
mental attitude.

Control requires measurement of progress in meeting

the engagement plan and objectives
VII.

VIII.
Integrity ensures that practitioners statements of
findings and recommendations are free of intentional
distortions of misstatements
Objectivity ability to avoid bias and to maintain an
impartial attitude
II.

Competence

Sufficient Relevant Data

Standard No. 7. Sufficient relevant data is to be
obtained, documented and evaluated in
developing conclusions and recommendations
Communications of Results
Standard No. 8. All significant matters relating
to the results of the engagement are to be
communicated to the client

Interim Communications encourages the involvement

of management, helps preserve managements role as
decision-maker, and keeps management informed of

progress toward the final conclusions, recommendation,

and accomplishments
Final Report this should be made to the client upon
completion of an engagement to ensure that results and
recommendations are communicated.

e)

Code of Ethics for Professional Accountants in the

Philippines Relevant to Management Consultancy
Services
A professional accountant is required to comply with the
following fundamental principles:
a) Integrity imposes an obligation on all
professional accountants to be straightforward
and honest in professional and business
relationships
b) Objectivity a professional accountant should
not allow bias, conflict of interest or undue
influence of others to override professional or
business judgments
c) Professional Competence and Due Care
d) Confidentiality a professional accountant
should respect confidentiality if information
acquired as a result of professional and business
relationships and should not disclose any such

information to third parties without proper and

specific authority unless there is a legal or
professional right or duty to disclose
Professional Behavior a professional
accountant should comply with relevant laws and
regulations and should avoid any action that
discredits the profession
Ethical Conflict Resolution
Where a matter involves a conflict with or within
an organization, a professional accountant should
also consider consulting with those charged with
governance of the organization
If a significant conflict cannot be resolved, a
professional accountant may wish to obtain
professional advice from the relevant professional
body or legal advisors, and thereby obtain
guidance on ethical issues without breaching
confidentiality
If, after exhausting all relevant possibilities, the
ethical conflict remains unresolved, a professional
accountant should, where possible, refuse to
remain associated with the matter creating the
conflict.