MODULE 1: THE NEED FOR MANAGEMENT ADVISORY SERVICES

Management Advisory Services methods, and market to

(MAS) refers to that practice of make goods and services
accounting concerned with which serves as an incredible
providing advice and technical way of generating sales and,
assistance to help management expectedly profit which
improve the use of resources in would eventually end up with
achieving organizational goals. The more cash. These conversion
certified public accountant who processes once put into
practices MAS work is called an operations and realities
advisor or consultant. would mean complex
structures and
THE MANAGER OF THE MAS interconnections of activities
CLIENT towards the completion of
➢ MAS principally serves the the business cycle.
needs of the top
management. Management ➢ These conversion processes
is entrusted with expose in wealth of the
organizational resources to organizations into so many
make more wealth. risks attendant to the
uncertainties of business
➢ Technically, management is process, that the cash may
difference from governance. not be reverted back to
Governance, being the duty cash. Ergo, as organizations
of the Board of Directors, is strive to make money
engaged in setting the through the business cycle, it
strategic goals and policies also exposes itself into the
of the enterprise. inevitable risk of business
Management develop and where investments may not
executes operating be recovered in full. Add to it
standards and systems to the inherent and non-
deliver the goals of the controllable risks of market
business. and financial environment
and this would surely make
management a discipline of
➢ As a manager endeavors to tremendous intellectual
increase the wealth of the challenges.
organization by going
through the business cycle of
making money, cash is ➢ In all of these activities, the
converted into so many forms manager exercises his
to make it more productive. decision-making power, This is
Cash is converted to an authority bestowed to him
machines, materials, men, by those who have entrusted

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their wealth and given the accountant is contracted by

manager the power to do a manager to render his
whatever he wants to do professional and business
with their money within the expertise to help define
ambit of business problems and subsequently
expectations, ethics and recommend solutions, save in
good governance. At the the fields of auditing and
end of these business assurance services, tax
stakeholders would expect to services and legal services.
receive reports on what
happened to their money. ➢ The job of an advisor is to
provide advice and
➢ In all of these stages of technical assistance to
business events, conditions managers. An advisor is an
and developments problems independent and competent
arise. Still, the manager is professional accountant who
expected to get through it. enjoys the trust and
The manager therefore must confidence of the managers.
be certain on what he is
doing. He must be certain
that he can increase the ➢ The practice of advisory
wealth of the organization services is essentially
and be equally certain that consultancy in nature. The
the wealth of the money end point of the advisor’s job
providers would be is to identify the client’s
protected using his know- problem and recommend
how and experience in the solutions accordingly. The
fields of business, finance and pattern or format of the
accountancy. In many cases, practitioner’s business
the manager needs the advisory approach from one
assistance of another expert setting to another, one client
to help him in running the to another is not governed by
business affairs. He may specific standards and
either employ the expert or processes. This is because
outsource his services as an clients have their natural and
outside professional unique way of being different
contractor. from each other. Clients
have different organizational
THE CPA AS ADVISOR OR objectives, strategies, core
CONSULTANT competencies, and
➢ The practice of management structures leading to more
advisory services arises when differences in the details of
an independent public their standards and systems.

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ANALYTICAL APPROACH AND MAS STANDARDS

PROCESSES
➢ A CPA is guided by standards
It involves more than an incident in the performance of his
report devoted to combination of professional practice.
activities in determining client
objectives, fact-finding opportunity, ➢ Moral standards are
problem definition, evaluation of governed by CPA
alternatives, formulation and follow- practitioner’s spiritual laws,
up. Analytical approach and canons, societal beliefs, and
process also refers to the systematic, traditions that define
and rational method of solving acceptable relationship with
organizational problems. It involves his creator and his
at a professional level, the ability to environment.
find facts and define the basic
problems, identify alternative
solutions, and to adopt the most ➢ Ethical standards relate to
applicable solution under the the practitioner’s relationship
circumstances. with his client, his colleagues,
his fellowmen, and the
CPAs may also be involved in society in general. The
activities such as: dynamism of these
➢ Operational advice – relationships creates
counseling management in expectations, and standards
its analysis, planning, inherently aimed to protect
organizing, operating and and foster the interest of the
controlling functions. society in general, and that
➢ Special studies – conducting of the profession and the
social studies, proposing professional practitioners in
plans and programs and particular.
providing guidance and
technical assistance in their ➢ Legal standards are meant to
implementation promote compliance,
➢ Organizational analysis – fairness, and justice to all
reviewing and suggesting men. Professionals have the
improvement of policies, Constitution, or equivalent
procedures, systems, legal document of his
methods, and organizational country to serve as the
relationships primary guide in respecting
➢ Ideas/Innovation – legal standards.
introducing new
approaches, methods,
techniques, and concepts to
management

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MAS PRACTICE STANDARDS required skills to perform an

act.
Technical Standards set the
threshold for the personal quality of Professional competence means
the practitioner and serve as guide the ability to:
in his work.
❖ Identify and define client’s
1. Personal Characteristics- needs
integrity, objectivity, and ❖ Select and supervise
independence in mental appropriate staff
attitude ❖ Apply an analytical
❖ Integrity means that the approach and process
process applied in the appropriate to the
engagement and the engagement
corresponding results thereof ❖ Apply knowledge of the
are free from deliberate subject matter under
distortions of information and consideration
misstatements. ❖ Communicate
❖ Objectivity refers to the recommendations
fairness in approach in the effectively, when required,
conduct of the engagement assist in implementing
and in the presentation of recommendations.
results. It involves impartially
and freedom from bias. 3. Due Care- Due care reflects
❖ Independence in mental the ability of the practitioner
attitude is the practitioner’s to exercise competence and
ability to maintain impartiality utmost care from the date
and clarity in performing his the engagement is being
task to attain his professional negotiated with the client, to
objective. He should not be the definition of clients
unnecessarily influenced by performance and needs,
his personal and related formation of engagement
interests that may impair the teams, development of
integrity of his performance engagement programs,
but always uphold the supervision of personnel,
interests of his clients and the preparation of reports,
public in general. presentation of output to the
client and up to the post-
2. Competence – It refers to the evaluation stage.
practitioner’s technical
qualification to perform the 4. Client Benefit – Before
engagement. It measures accepting an engagement,
intelligence, expertise and a practitioner is to notify the
client of any reservations he

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has regarding anticipated engagement. Either an oral

benefits. or understanding with the
client is acceptable. The
following matters should be
❖ The practitioner should well understood with the
determine what the client client:
wants to achieve from the ❖ Engagement
engagement before initiating objectives
an engagement. He should ❖ Nature of the services
notify the client any to be performed
reservation he has ❖ Engagement scope,
concerning the realization of including areas of
anticipated benefits from the client operations to be
engagements. The addressed and
notification should be made limitations, if any
before accepting the ❖ Respective roles,
engagement. If during the responsibility, and
engagement the practitioner relationships of the
comes to know or has a practitioner, client and
belief of knowing that there other parties in the
would be significant change engagement
in the anticipated benefits to ❖ Anticipated
the client, he must engagement
communicate the same to approaches, major
the client. tasks and activities to
be performed and
5. Understanding with the methods to be used
Client. Before undertaking an ❖ Work schedule, timing
engagement, a practitioner of reports and fee
is to inform the client of all arrangements
significant matters relating to
the engagements. An 6. Planning, Supervision and
understanding with the client Control - Engagements are
should be forged to to be adequately planned,
determine the nature, scope supervised and controlled.
and limitations of the Adequate planning an
engagements to be supervision is required to
performed. After accepting provide reasonable
the engagement but before assurance that the work shall
undertaking it, the be conducted in
practitioner should inform the accordance with the
client on all significant objectives of the
matters relating to the engagement programs,

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professional standards and the engagement. Interim

rules of conduct. Planning reports are desirable in long
involves preparation of a or complex engagements.
work program. Proper Reports may be in oral,
supervision is need to be written or visual form. When
done. The extent of no written report is to be
supervision depends on the issued, the practitioner should
quality of the personnel and keep a memorandum file
the complexities of the documenting the results and
assignment. Effective control processes of the
is to be exercised during the engagement and all his
engagement. The quality, correspondence with the
quantity and pacing of work client.
is to be monitored with the
defined engagement Characteristics of a MAS
objectives. engagement
❖ Service is for Management
7. Sufficient Relevant Data- ❖ Scope is broad
Sufficient relevant data are ❖ Future orientation
needed to provide a ❖ Non-recurring
reasonable basis in making ❖ Highly qualified staff
conclusions and formulating ❖ Diversity
recommendations to client.
The gathering and analysis of MAS Engagement Process
data should be documented
1. Engagement negotiation
to serve as basis in verifying
2. Engagement planning
the degree of the evidence
3. Engagement execution
obtained and the manner on
how these evidences are
treated to generate the
conclusions being reported.

8. Communication of Results -
All significant matters relating
to the result of the
engagement are to be
communicated to the client.
All significant matters related
to the result of the
engagement are to be
communicated to the client.
Reports may be done at an
interim and or at the end of

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