1.

Management services of certified public accountant cover all of the following except:

a. Project feasibility studies.

b. Systems design, development and implementation.

C. Organizational development and planning.

d. Audit, tax and legal services.

2. The following characterize management advisory services except:

a. Involve decision for the futexcep

b. Broader In scope and varied in nature.

c. Utilize more junior staff than senior members of the firm.

d. Relate to specific problems where expert help is required. — (rpcpa)

3. 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. (rpcpa)

4. 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. (rpcpa)

5. Which of the following is not a characteristic of management services?

a. A wider variety of assignments are encountered in MAS that in service.

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. (rpcpa)

6. 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 judgments in MAS engagements.

d. Conduct his engagement as if he is a member of the client's organization.

7. A certified public accountant's scope of management services is broad and covers all of the following, except:

a. Change in management engagements.

b. Computerization engagement

c. Audit engagements.
d. Re-engineering engagements.

8. 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. (rpcpa)

9. Indicate whether the following statements are true or false.

Statement I - A CPA firm's primary purpose for performing MAS services is to 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 a CPA in which
an analytical process is applied.

Statement I Statement 2

a. True False
b. False True
c. False False
d. True True

10. A management advisory services engagement generally involves the following activities in what order?

I. Post engagement follow-up

Il. Implementing the recommendation.

JII. 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, 1

b. III,IV,V,VI,VII,I,II
c. IV,III,V,VI,II,VII,I
d. IV,V,III,VII,II,VI,I

11.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 an area related to the performance of management services by independent
accounting firms?

a. Introducing new ideas. concepts and methods to management.

b. Improving existing policies, methods and procedures.

c. Performing special studies, preparing recommendations, and formulating plans and programs.

d. Performing management functions and making decisions.

13. Which of the following is true or false?

Statement I - Because the CPA must be independent, 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.

Statement -l Statement 2 Statement 3

a. FalseTrue True

b. True False False

c. True False False

d. none of the given.

MAS Practice Standards

14. 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.

15. The following statements refer to competence of CPA’s 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 as signed 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 assists in implementation.

d. it must be retained an 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.

16. 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.

17. These statement relate to MAS practice standards.

a. A practitioner is to notify the client of any reservation he has regarding anticipated benefits.

b. 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.

c. During the engagement, should there be significant changes between cost and anticipated benefits, the client
should be informed.

d. Before the engagement, the practitioner must make arrangements with, and inform the client on significant
matters related to engagement, in writing. .

18. Of these statements, which pertains to the practice standard on the client benefit?

a. Statements I and 3 only.

b. All statements.

c. Statement I only.

d. Statements l, 3, and 4 only.

19. An independent accounting rim was requested by a client to undertake an engagement involving
implementation of the firm's recommendations. The client indicates it expects to be involved only to a limited
extent, if at all in the project. Which of the following statements best expresses the firm's appropriate role under
the circumstances?

a. It should fully inform the client of the limitations and risks resulting from the client's limited participation and
should endeavor to establish a balanced client consultant relationship. Failing in this, the firm may deem it
appropriate to decline the engagement.

b. It should decline the engagement because it cannot be responsible for the design and installation of changes with
which it subsequently has no further involvement.

c. It should accept the engagement provided that the client gives the firm sufficient authority to carry out the project
to its successful conclusions.

d. It should assess the situation and determine whether it has the necessary staff and competence to carry out the
assignment with limited client participation.

20. A certified public accountant's scope of management services is broad and covers all. 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.

21. 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.

22. Which of the following statements is true?

a. Adequate training and experience in both the analytical approach and process 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 rendetion of management services by a CPA may be equalled to having excellent
scholarly preparation to include the usual baccalaureate degree an MBA and other post-graduate 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.

23. 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.

24 Indicate whether the following statements are true or false.

Statement 1 - Management consultancy is an exclusive field of practice for CPAS and is regulated by law.

Statement 2 -An area of MAS which directly related to the accounting and finance functions is project feasibility
study.

Statement 1 Statement 2

a. False False

b. True True

c. True False

d. False True

25. 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 an audit client of the firm. Related to this issue of Independence all of the 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 and 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.

26. After preliminary audit arrangements have 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 auditor's 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 client's attention.

27. Identify the following statement:

Statement 1 – MAS principally involves consultative services to management in decision making.

Statement 2 – Management letter is a report by the CPA to the management after the review of the management
controls, stating 5he coverage of the review and the deficiencies noted during the review.

Statement 1 Statement 2

a. True True

b. True False

c. False True

d. False False

28. Under this arrangement, the practitioner quoes 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. retatner;

c. lump sum or fixed amount;

d. per diem;

29. 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

30. 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

Code of Professional Ethics

31. Indicate whether the following are true or false.

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 accounting, audit and tax services.
Statement 1 Statement 2

a. False False

b. True True

c. True False

d. False True

32. The Accountancy Act of 2004 (or RA 9298) incorporates the Code of Professional Ethics for CPAs. The
provision of management advisory services is among the areas for public accounting. It is, however, not exclusive to
CPAs, considering these premises, which of the following statements is applicable?

a. Management advisory services as field of professional practice is considered as an integral part of public
accounting, thus the Code of Professional Ethics for CPAs covers management advisory services.

b. CPAs in the practice of audit and management consulting services may advertise and charge contingent fees

c. The practice of management advisory should not be extended to existing audit clients since this will adversely
affect the CPAs independence.

d. CPAs in the practice of management advisory services are not bound by the Board of Accountancy Law but are
bound by the said law in the practice of audit.

33. The following statements in relation to management advisory services are incorrect, except:

a. MAS serves the information needs of management which in turn renders its services both to internal and external
parties of business. As such, the practice of MAS is also governed by the external reporting standards in accounting
profession

b. MAS is premised on business practices and values, and therefore, the MAS practitioner should always adhere to
the standards that will serve best the interest of business owners and Interested parties.

c. MAS IS not an exclusive professional practice for CPAs, and as such, the practitioner should compete with
other professionals and should project his services with the end-in-view of satisfying client needs over and above the
interest of the general public.

d. MAS practice is not governed by the overriding accounting equation and still tire CPA practitioner is expected to
adhere to the general and technical standards of the accounting practice.

34. 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 identify of the client is
concealed.

d. CPAs performing management services may be considered to be in the practice of management consulting.

35. The field of accountancy has diversified into new and emerging services save from its traditional practices in
the areas of Auditing, tax, and legal services. These new demands for the practice of new accounting services have
been lumped into what is called as business advisory services. This accounting practice is governed by the following
standards:

a. Family values, spiritual values, societal values, work ethics, and environmental concerns.

b. Good customs and practices, legal standards. code of professional ethics, and technical standards

c. Cost-benefit. materiality, prudence, and objectivity.

d. RA 929S and Code of Professional Ethics for Certified Public Accountants.

36. 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