Management Advisory

Services (MAS)
The Basic Considerations
MAS means -
• Advice and technical assistance (not a decision)
• Utilization of resources
• Achieve organizational goals
• Management Consultant, CPA’s or non - CPAs (education, experience,
technical ability and temperament)
• CPA is preferred
• Different from auditing, tax and legal services
Analytical Approach and Process
• Systematic, objective, and rational method of solving organizational
problems
• Involves professional competence to:
• find facts based on client objectives
• define problems
• identify alternative solutions
• Adopt the most applicable solution then communicate
• Assist the client in the implementation (optional)
• Follow up
CPA management advisory services -
• Pioneering consultancy services
• Finance and Accounting (Financial accounting, management accounting,
financial management
• Non – finance and accounting (General management, Project feasibility
studies, Organization and personnel, Industrial engineering, Marketing,
Operation research)
• Emerging consultancy services
• Management consulting
• Transaction and restructuring
• Risk consulting
• Information technology
Characteristics of MAS
• Rendered for management
• Involves problem solving
• Relates to the future
• Broad in scope
• Involve varied assignments
• Non- recurring
• Highly qualified staff
• Human relations is vital
Code of Professional Ethics -
MAS Fundamental Principles (PICPO)
• Integrity
• Objectivity
• Professional Competence and Due Care
• Confidentiality
• Professional Behavior

• Independence in mental attitude (no decision making)

MAS Standards
• Controlling standards
• Professional competence (accept engagement within your competence)
• Due professional care (Be diligent)
• Planning and supervision (Adequate; monitoring)
• Sufficient relevant data (for appropriate recommendation)
Additional general standards
• Client interest (balance between client’s wants and integrity of the
consultant; anticipated benefits)
• Understanding with client (agreement; nature, scope and limitations)
• Communication with client (report significant matters)
• Application of professional judgement
MAS Engagement Process
• Engagement Negotiation (Accept or not?)
• Problem definition
• Nature, scope and limitations
• Professional fees
• Contract agreement
• Engagement Planning
• Work program
• Engagement Execution
• Data gathering and data analysis
• Working papers
MAS Engagement Process
• Presentation of engagement results
• Reports
• Implementation of recommendation
• Assist
• Engagement evaluation
• Check
• Post engagement follow up
• Connect
Management Accounting
(MA)
(Introduction – its environment)
MA means -
• A profession that involves partnering in management decision
making, devising planning and performance management systems,
and providing expertise in financial reporting and control to assist
management in the formulation and implementation of an
organization’s strategy (IMA).
• It applies the knowledge and skills of management accountants in the
preparation and presentation of financial and other decision-oriented
information in such a way as to assist management in the formulation
of policies and in the planning and control of the operations of the
undertaking (ICMA)
• It extends to three areas: (1) strategic management; (2) performance
management; (3) risk management (AICPA).
Fundamental Management Process

Vision/
Mission/ Strategies Structures Standards Systems Actions Reports Evaluation Learnings
Values

Make necessary adjustment from the

learnings in the past
Management Functions

Planning

Controlling
Decision Organizing
Making

Directing
and Staffing
Functions of Controllership
• Planning and Controlling
• Reporting
• Evaluation
• Government relations and reporting
• Protection of assets
• Economic appraisal
• Tax administration
Planning and Controlling Cycle
Goals

Objectives

Plans Budgets

Actions Revisions

Results Feedback Standards

Internal Controls
• Plans, methods, and measures
• Protect assets
• Check the reliability of the accounting data
• Promote operational efficiency
• Encourage adherence to policies
• General Control
• Transactional responsibilities (KERCA)
• Keep, execute, record, check, and authorize
• Application Control
• SOP
• Cost benefit relationships
Treasurership
• Provision for capital
• Investor relations
• Short-term borrowings
• Banking and custodianship
• Credit and Collection
• Investments
• Insurance
Organization of Financial Management Function

BOD

President (CEO)

EVP Operations EVP Finance (CFO) EVP Marketing

VP Treasurer VP Controller
Treasurer vs. Controller
Treasurer Controller
• Capital budgeting • Cost accounting
• Cash management • Cost management
• Commercial banking and investment banking • General ledger (payroll, AR,/ payable)
relationships
• Credit management • Data processing
• Dividend disbursements and share repurchases • Government reporting (SEC, BIR)
• Financial analysis and planning • Internal control
• Investor relations • Preparing budgets
• Tax planning and analysis • Preparing financial statements
• Insurance/ risk management • Preparing forecasts
• Mergers and acquisition analysis
• Pensions management
MA vs. FA
Accounting Financial &
oRecording, estimating, Operational Data
organizing, summarizing

Financial Management

• External Users • Internal user (planning and controlling)

• Historical • Future
• Objectivity and verifiability • Relevance
• Precision • Timeliness
• Companywide reports • Segment reports
• Adherence to standards • Non - adherence to standards
• Mandatory external reports • Not Mandatory
Standards for Ethical Conduct for MA & FM
Principles:
• Honesty, Fairness, Objectivity and Responsibility (HFOR)

Standards (CICO)
• Competence
• Confidentiality
• Integrity
• Avoid conflict of interest
• Objectivity (Credibility)
Hierarchy in case of conflict
• Company’s policies
• Immediate superior unless he’s involved
• Next higher managerial level unless he’s involved
• CEO unless he’s involved
• Audit Committee or top officers
• Legal counsel
• Resignation
MA as –
• Strategic Management (differentiation)
• Customer value propositions (Why customers should choose you?)
• Customer intimacy (closeness to customers)
• Operational Excellence (delivery)
• Product leadership (quality, price)
• Enterprise Risk Management (exposure to danger)
• Controls
• Preventive controls (Authorizations, Segregation, Physical safeguards, information
security)
• Detective controls (Reconciliations, Performance reviews, Maintaining records,
information security)
MA as –
• Corporate social responsibility (CSR)
• A care for stakeholders other than the shareholders
• Process Management Perspective
• Functional departments (“chain of command”)
• Business process
• Value chain
• Lean production (JIT)
• Leadership Perspective (unity of behaviors)
• Intrinsic motivation (comes from within)
• Extrinsic incentives (compensation systems)
• Cognitive bias (irrational thinking)
References
• Management Services 2014 Edition, Agamata
• Managerial Accounting Eight Edition, Brewer, Garrison, Noreen
• Reviewer in Management Services 2013 Edition, Roque
• Management Consultancy, 2015 Edition, Cabrera