MANAGEMENT CONSULTANCYJACFQUIZ 2 Chapters 5 - 13

Instructions: Choose the letter of the best answer and shade the box corresponding to your choice on the answer sheet.

1. A management advisory services engagement generally involves the following activities in what order? I. Post engagement follow-up.II. Implementing the recommendation.III. Conducting the engagement.IV. Negotiating the engagement.V. Preparing for and starting the engagement.VI. Evaluating the engagement.VII. Preparing and representing the report and recommendations.a. VII, VI, V, IV, III, II and Ic. IV, III, V, VI, II, VII and Ib. III, IV, V, VI, VII, I and IId. IV, V, III, VII, II, VI and I

2. The activities in a management systems control process can be grouped into four:I. Measurement of actual performance.II. Deciding and implementing corrective action.III. Determining standards of performance.IV. Comparing actual performance versus standards and analyzing results.

The above activities must be done in this sequence: a. IV, III, II, Ic. I, III, IV, IIb. III, I, IV, IId. III, IV, I, II

3. As a consultant, the CPA practitioner should a. Exercise administrative control over the clients staff to avoid unnecessary delays in implementation.b. Encourage dependence of the client on the consultants staff so as to pinpoint clear responsibility in implementing the system.c. Not take responsibility for making decisions and policy judgments in MAS engagements.d. Conduct his engagement as if he is a member of the clients organization.

4. 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 in the practice of MAS except those rules related to the expression of an opinion on financial statements.c. MAS serve 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.

5. Identify the following statements as true or false. Statement 1: MAS principally involves the consultative services to management in his decision making.Statement 2: MAS consultation, unlike MAS engagement, generally involves advise of information by a CPA in which an analytical process is applied.Statement 3: Because the CPA must be independent, he must not allow the client to participate in any phase of his engagement.

Statement 1Statement 2Statement 3a. True True Falseb. False True Falsec. False False Falsed. True False False

6. Indicate whether the following statements are true or false. Statement 1: A CPA firms primary purpose of performing MAS is to enable the staff members to acquire the necessary continuing education in all areas of business.Statement 2: In management audit, a team with a mix of member s who are accountants and non-accountants will produce a desirable combination of specialists and will offer a cross fertilization of ideas from different business fields.Statement 3: An area of MAS which is directly related to accounting and finance functions is project feasibility study.TrueFalsea. S1S2b. S2S1c. S3S2d. S1S3

7. The following statements refer to competence of CPAs in management advisory services, except: a. In concept, it refers to the technical qualification of the practitioner and his ability to supervise and evaluate the quality of work of his staff assigned to the engagement 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 MAS, and research.c. It is the ability to identify clients 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 CPA performs decision making for the client or acts as employee of the client.

8. Which of the following will not impair the 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 losses his objectivity and acts in a manner as if he is advocating for the interest of his client.d. The CPA does not extend his services beyond the presentation of recommendations of giving of advice.

9. These statements relate to MAS standards.I. A practitioner is to notify the client of any reservation he has regarding anticipated benefits.II. 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.III. During the engagement, should there be significant changes between cost and anticipated benefits, the client should be informed.IV. Before the engagement, the practitioner must make arrangement with, and inform the client on significant matters related to the engagement in writing.

Of these statements, which pertains to the practice standard on client benefit?a. Statements I and II only.b. All statements.c. Statement I only.d. Statements I, III and IV only.

10. Kris Teen, a CPA firms partner in charge of quality assurance and review is arguing with Jim Menez, the consulting partner regarding the question on independence Jim Menez is presently rendering consulting services to Keem Poleen and Alba Reeze, an 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 advice 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 clients 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.

11. After preliminary audit arrangement has been made, an engagement confirmation letter should be sent to the client. The letter usually would not include:a. An estimate of the time to be spent on the audit work by audit staff and management.b. A reference to the auditors responsibility for the detection of errors or irregularities.c. A statement that management advisory services would be made available upon request.d. A statement that management letter will be issued outlining comments and suggestions as to any procedures requiring the clients attention.

12. Which of the following statements is false? a. CPAs 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 is concealed.d. CPAs performing management services may be considered to be in the practice of management consulting.

13. Which of the following statements is not acceptable? a. A CPA represents three major players in the industry in rationalizing the industrys incentive before the government public hearings.b. A CPA shares with a new and substantial client information regarding another client belonging to the same industry.c. A CPA provides consulting services to an audit client.d. A CPA offers and provides consulting services to two major competing clients.

14. In which way should an accounting firm apply the concept of competence in serving its clients? a. The firm should ask its staff to equip themselves for the engagement at hand by studying, consulting with other professional and other means.b. The firm should occasionally accept engagements outside the scope of its regular services and then collaborate with outside specialists on such engagement.c. The firm should accept engagement in which it has personnel qualified to undertake and help solve the particular problem involved.d. The firm should employ a specialist temporarily when it is not reasonably competent to undertake a particular engagement.

15. Which of the following cannot maximize the usefulness of observation? a. Make a record of what is observed as specific as possible, avoiding generalities and vague descriptions.b. Expressing value judgments when interacting with the persons being observed.c. If persons are to be aware of the observations, explain to them what will be done and why.d. Identify and define what it is that the consultant will observe and the estimated length that the observation will entail.

16. Which of the following areas will not be covered in conducting a post engagement follow up? a. Fee earned on each important part of the engagement.b. Engagement program.c. Proposal.d. Source data.

17. The key issues to be addressed in the formulation of documentation policies and guidelines include all of the following except a. Documentation policies and guidelines to be established for internal useb. Preparation and review of documentation to ensure quality control and responsibility.c. Client work papers retention policy.d. Breakdown of tasks.

18. Which is not a pointer to enhance the readability of report? a. Write short reports if possible.b. Avoid long complex paragraphs and sentences.c. Use pictures, graphs, and charts whenever appropriate.d. Use the active voice and direct, descriptive words and euphemisms.

19. Independent quality assurance reviews is a means of control over projects, which is not one of its objectives? a. The system is being developed within the time frame and cost estimates originally agreed upon.b. The system employs satisfactory methods and techniques that are within the sphere of competence of the majority of client personnel.c. The presentation and format of all procedures, documentations and coding are neat , well organized and in conformance with established standards.d. The system satisfice all user requirements and is operable on a day to day basis without resistance.

20. Which is not a way through which the consultant can establish an attitude of helpfulness towards the client staff?a. Welcoming questions and communication within anyone at any time.b. Arrange meetings for discussion of the problem and provide written summaries of the meetings.c. Require employees to submit to him a written memo on matters they want to be clarified about.d. Maintain an open door policy.

END.

The person without a purpose is like a ship without a rudder.Thomas Carlyle

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