UNIVERSITY OF THE CORDILLERAS

MANAGERIAL ACCOUNTING/ MANAGERIAL ADVISORY SERVICES

Siegfried M. Erorita, cpa, mba, phd

MANAGEMENT ADVISORY SERVICES DEFINED:
Management advisory services refer to the function of providing professional advisory
(consulting) services, the primary purpose of which is to improve the client’s use of its
capabilities and resources to achieve the objectives of the organization.

CHARACTERISTICS OF MANAGEMENT ADVISORY SERVICES:

1. Service is for management
2. Related to the future
3. Problem solving
4. Non-recurring
5. Broad in scope
6. Varied assignments
7. Greater job specifications
8. Require good human relations

MANAGERIAL ACCOUNTING vs. FINANCIAL ACCOUNTING

Bases of Comparison Managerial Financial
a. Users internal external
b. Nature of reports special general
c. Time frame future historical
d. Reporting standards flexible GAAP
e. Analysis of data subjective objective
& Objective

The Work of Management and the Planning and Control Cycle.

1. Planning
2. Directing and motivating
3. Control
4. Decision-making

Need for Information. (information vs data)

CHARACTERISTICS OF MANAGERIAL ACCOUNTING REPORT

1. Relevance
2. Timeliness
3. Accuracy
4. Clarity
5. Conciseness

AREAS OF MANAGEMENT ADVISORY SERVICES:

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 organization
relationship.
4. The application and use of managerial accounting, control systems, data processing and
mathematical techniques and methods.
5. The conduct of special studies, development of plans and programs, preparation of
recommendations and provision of advice and technical assistance in their implementation.

Organizational Structure. Organizational structure refers to the way in which responsibilities

and authority are distributed within an organization.

1. Centralization vs. decentralization.

2. Organization charts.
3. Line and staff relationships.
4. The Chief Financial Officer. The controller is the manager in charge of the accounting
department and he/she reports to the Chief Financial Officer (CFO). The CFO is usually a
member of the top-management team and should be an active participant in the planning,
control, and decision-making processes at the very highest levels in the organization.

TREASURERSHIP vs. CONTROLLERSHIP FUNCTIONS

1. Provision of Capital 1. Planning and control
2. Investor relation 2. Reporting and interpreting
3. Short-term financing 3. Evaluating and consulting

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 4. Banking and custody 4. Tax administration
5. Credits and collection 5. Government reporting
6. Investments 6. Protection of assets
7. Insurance 7. Economic appraisal

The Changing Business Environment.

-JIT
-TQM
-Benchmarking
-Process Reengineering.
-Theory of Constraints (TOC).
-Professional Ethics. ( ethics vs values)
MANAGEMENT ADVISORY SERVICES PRACTICE STANDARDS:
1. Personal Characteristics
a. Integrity c. Independence
b. Objectivity
2. Competence
a. Analytical proficiency
b. Knowledge and techniques
3. Due Care
4. Client Benefit
5. Understanding with the client
6. Planning, Supervision and Control
7. Sufficient relevant data
8. Communication of results

ETHICAL CONSIDERATIONS IN MANAGEMENT ADVISORY SERVICES:

Professional limitations or restrictions imposed by the ethical codes:
a. Solicitation of clients and encroachment.
b. Advertising
c. Use of the CPA's name
d. Division of profits and fees with the laity
e. Incompatible occupation/confidentiality (independence/integrity)
f. Contingent fees
g. Competitive fees
h. Forecasts

STAGES IN MAS ENGAGEMENT:

1. Negotiating the engagement
2. Preparing for and starting the engagement
3. Conducting the engagement
4. Preparing and presenting the report and recommendations.
5. Implementing the engagement
6. Evaluating the engagement
7. Post-engagement follow-up

CONFIRMATION OF THE UNDERSTANDING IN WRITING:

a. Letter of Proposal
A letter of proposal includes the following:
1. The objectives and benefits of the engagement
2. The scope of the work and the role of the CPA
3. The approach to the study
4. The project organization
5. Fees and billing arrangements
6. Firm qualifications where appropriate
b. Letter of Agreement

ENGAGEMENT PROGRAM - a detailed plan, usually in writing, for carrying out a

management services engagement.
a. Contents of an Engagement Program
1. The objectives and description of each task to be accomplished
2. A description of tangible output required at completion of each task
3. A list of the manpower required
4. A list of the personnel assigned
5. The starting and completion dates

b. Conducting the Engagement

In general, the conduct of an engagement may be divided in two phases:
1. Gathering of data, and

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 2. Evaluating or analyzing the data gathered

c. Standard Techniques Utilized by Consultants in Fact-Finding:

1. Personal interviews
2. Document reviews
3. Previous studies
4. Observations
5. Charting

PREPARING AND PRESENTING THE REPORT AND RECOMMENDATIONS:

a. Interim report
b. Final report
1. Long form report
2. Short-report Letter
End c”,)