Areas of Management Advisory

Services

PART I
Six Dimensions of MAS engagements
• Nature of the business
• Service Delivery Area
• Phase(s) of the Analytic Process
• Techniques and Methodologies Applied
• Industry
• Geographical Area(s)
 NATURE OF THE PROBLEM
a. Corrective Problem
b. Progressive Problem
c. Opportunistic Problem
 Corrective Problem
• Usually arises suddenly and demands urgent
action.
• A situation in which conditions have worsened
 Progressive Problem
• Involves an existing situation that can be
improved.
 Opportunistic Problem
• Involves a situation in which a future
opportunity exists.
• More risky as well as more potentially
rewarding courses of action.
 SERVICE DELIVERY AREAS
• Classification of the functions or activities in
which the problem situation exists.
APPLICATION OF THE ANALYTIC PROCESS
- use of data for analytic purposes to
support business decision-making, versus
operational processing, where data is used to
run the business
THE ANALYTIC PROCESS
1. Identifying the Objectives
2. Defining the Problem
3. Finding Out the Facts
4. Developing the Solution
5. Implementing the Solution
 TECHNIQUES & METHODOLOGIES
APPLIED
• a system of methods used in a particular area
of study or activity
 INDUSTRY OR NATURE OF
ORGANIZATION
Can be classified as:
1. Privately owned
2. Government agency
3. Not-for-profit
4. Professional association
 GEOGRAPHICAL AREAS
• Refers to the location of the engagement
 Areas of MAS Practice
1. The management functions of analysis, planning,
organizing and controlling.
2. The introduction of new ideas, concepts and methods
to management.
3. The improvement of policies, procedures, systems,
methods and organizational relationships.
4. The application and use of managerial accounting,
control systems, data processing, and mathematical
techniques and methods.
5. The conduct of special studies, preparation or
recommendation.
 Types of Consultancy Work
1. Business planning and development or
project feasibility studies
2. Information systems consulting
3.Internal Audit Services
4. Management/operations audit
5. Business process improvement/reengineering
6. Others, such as:
a. Marketing research
b. Marketing strategy development
c. Developing promotional campaign
d. Planning sales force activity
e. New product development
f. Developing proposal for financial support
g. Staff recruitment
h. Exporting and international market
Areas of Management Advisory
Services
PART II
Management Consultancy Services by
CPAs
A. Traditional Services
1. Managerial Accounting
2. Design and appraisal of accounting
system
3. Financial Management-related services
4. Project Feasibility Studies
B. Emerging Consultancy Services
1. Global Risk Management Solution
a. Financial risk management
b. Strategic risk management
c. Operational and systems risk
management
d. Compliance risk management
e. Internal audit services
2. Transaction Services
3. Financial Advisory Services
4. Project Finance and Privatization
5. Valuation Services
6. Business Recovery Services
7. Dispute Analysis and Investigation
8. Computer Risk Management
9. Application Software Selection and
Implementation
Criteria in Determining the Scope of
Service
1. Responsibility to establish scope of service
2. Independence
3. Competence
4. Requirements for specialization
5. Identification and resolution of client’s
basic problems
6. Referrals
7. Code of professional ethics
 Types of Clients
1. Contact Clients
2. Intermediate Clients
3. Primary Clients
4. Unwitting Clients
5. Indirect Clients
6. Ultimate Clients
Group of clients that CPA’S can provide
MAS
1. Privately-owned Business firms
2. Governmental Agencies and Organization
3. Not-for-Profit Nongovernment Organization
4. Professional Association
5. Others
 THE DECISION TO USE AN
ACCOUNTANCT
A. What can I offer the client business that will
enhance its performance and help achieve its
objectives?
B. Why will my contribution be more valuable
than that which existing managers and
potential recruits can contribute?
C. How can I communicate to the client
business than what I offer is valuable?
Provision of Information
• Information is valuable to a business
• It has a cost
• Information is a resource that must be
managed
Provision of Specialist Expertise
• Require the application of technical
knowledge and an ability to use specialist
analysis techniques
Provision of a New Perspective
• Managers are not decision making automata
• 'cognitive maps', 'mindsets', or 'dominant
logics' are used by managers to see their
managerial world
• Consultant can offer a fresh mind to an issue
PROVISIONS
Provision of Support for Internal Arguments
• Disagreements arise over a wide range of
issues
• Conflicts of opinion take a variety of form
Provision of Support in Gaining a Critical
Resource
• Organization must attract resources in order
to survive
• One of the manager's most critical function is
attracting resources on behalf of the firm
• Consultant can be of great value in structuring
a proposal and advising on how it might be
delivered
Facilitating Organizational Change
• Organizations change all the time
• Managers change their roles and
responsibilities
• Change usually meets resistance
• Sometimes organizations call for change as
the primary goal of the consulting exercise
Professional Attributes of
Management Consultants
I. Technical skills
II. Interpersonal skills
III. Consulting skills
 Technical Skills
A. Technical Training
a) Length of Education
b) Type of Education
B. Common Core Requirement
1. Communications
2. Mathematics and statistics
3. Computer data processing
 Interpersonal Skills
1. Intelligence or capacity for logical thinking
and reasoning
2. 2. Integrity
3. Objectivity
4. Understanding of people
5. Judgement
6. Courage
7. Ambition
8. Psychological Maturity
9. Psychological Equilibrium
10. Relationship-Building Skills
a. An ability to build rapport and trust with
the client
b. An ability to question effectively
c. An ability to communicate ideas succinctly
and precisely
d. An ability to negotiate objectives and
outcomes
e. An ability to convince through verbal,
written and visual mediums
f. An ability to use information to make a
case for a particular course of action
g. An ability to develop selling strategies
h. An ability to work effectively as a
member of a team
i. An ability to listen effectively
j. An ability to demonstrate leadership
 Common Barriers to Effective Communications
Between the Client and the Consultant
1. Know-it-all Attitude and/or Prejudice of some
personnel of client
2. Inability to understand technical language
3. Inadequate background or knowledge
4. Resistance to change
5. Information overload
11. Project Management skills
a. An ability to define objectives and
outcomes
b. An ability to develop formal plans
c. An ability to sequence and prioritize
tasks
d. An ability to manage the financial
resources that are to be invested in the
in the consulting project
e. An ability to recognize the human
expertise necessary to deliver the
project
f. An ability to manage personal time
12. Analysis skills
a. An ability to identify what information is
available in a particular situation
b. An ability to identify what information
needed in a particular situation
c. An ability to process that information to
identify the important relationships within it
d. An ability to draw meaning from that
information and use it to support decision-
making
e. An ability to recognize the business's
profile of strengths, weaknesses and
capabilities
f. An ability to recognize the opportunities
and challenges the environment offers
the business
g. An ability to asses the business's
Financial situation
h. An ability to evaluate the business's markets
and how they are developing
i. An ability to asses the business's internal
conditions
j. An ability to analyze the way in which
decision-making occurs within the business
 Consulting Process Skills
1. Problem Definition Phase
2. Identification of Alternative Solutions
3. Selection of the most desirable alternative
4. Presentation
5. Implementation phase
MAS Practice Standards and
Ethical Consideration
AICPA’s MAS Division Eight Standards
1. Personal Characteristics
2. Competence
3. Due Care
4. Client Benefit
5. Understanding with Client
6. Planning, Supervision and Control
7. Sufficient Relevant Data
8. Communication of Results
 Code of Ethics for Professional Accountants
Relevant to Management Consultancy
• Integrity
• Objectivity
• Professional Competence and Due Care
• Confidentiality
• Professional Behavior
 Code of Ethics for Management
Consultants
I. Basic Responsibilities
• Integrity and Objectivity
• Independence
• Confidential Information
II. Practice Standards
• Professional Competence
• Planning Supervision and Due Care
• Reporting Results
III. Fee Structure Standards
IV. Business Conduct Standards
 Some Ethical Issues and Possible
Actions
1. Should you change the highest fees you can
get away with?
2. Should you travel first class and bill the client?
3. Should you bill more than one client for the
same basic expense?
4. Should you accept an assignment from a
client’s competitor?
5. Should you use tickets supplied by your client
to bring your spouse along?