Assessment 1: Basic Considerations in MAS

Which of the following is the least characteristic of MAS?

• It relates to both the future and the past.

• It involves a wide range of assignments.

• It requires highly qualified staff.

• It involves usually non-recurring engagements.

• Answer not given.

An offer of service which, when accepted, becomes a contractual agreement.

• Proposal Letter.

• Confirmation.

• Contract.

• Engagement Letter.

• Answer not given.

Management Advisory Services may be defined as:

• A service being rendered by practitioners primarily to implement a decision for the benefit of the management.

• A branch of accounting concerned with the preparation of budgets, financial statement analyses and other management reports to maximize the client's profits.

• A service that covers everything including financial accounting, taxation and audit.

• An area of accounting that provides technical assistance to management to increase the efficiency and effectiveness of the use of resources in achieving the company's goals.

• Answer not given.

Which action of a CPA is not acceptable?

• A CPA represents three major players in the industry in rationalizing the industry's incentives before government public hearings.

• A CPA provides consulting services to two major competing clients.

• A CPA provides consulting services to an existing audit client.

• A CPA shares with a new and substantial client information about another client belonging to the same industry.

• All of the above.

Before entering a consulting practice, the prospective consultant should conduct market research to identify opportunities in the marketplace. This involves the following, except:

• A study of the listing of actively practicing consultants.

• A survey of local firms to determine which are offering consulting services.

• A news release in a newspaper or on television about the opening of a consultancy firm.

• The identification of new services that may provide a competitive edge.

• All of the above.

Project management skills require the following, except:

• The ability to define objectives and outcomes.

• The ability to develop formal plans.

• The ability to sequence and prioritize tasks.

• The ability to accept numerous clients which limits his time per client.

• None of the above.

The most important factor in selecting an engagement team is to assign consultants:

• Who have high imaginative thinking or unusual skills in the interpretation and use of financial and statistical data.

• With the appropriate skills, experience and types of thinking to deal with the client's problems.

• With prior experience in the client's industry.

• With a combination of skills and experience in various business functional areas, as well as in different industries.

Statement 1: An increase in complexity in managing and conducting business can contribute to the growth of management consultancy.

Statement 2: The lack of competent staff by businesses can also contribute to the growth of management consultancy.

• Only Statement 1 is true.

• Only Statement 2 is true.

• Both statements are true.

• Both statements are false.

• Cannot be determined.

Randy Manzano is the external auditor of UC, Inc. He was asked to perform MAS for UC in the area of inventory management, believed to be an area of inefficiency of the company’s operations. Which action would impair Mr. Manzano’s independence?

• Identify the inventory management problem as caused by the present operative procedures in the purchasing, receiving and issuance operations.

• Study and evaluate the inventory management problem and suggest solutions.

• Develop a time schedule for the implementation of a solution to be adapted by UC, Inc.

• Supervise management of purchasing, receiving and issuance operations.

• None of the above.

Mr. Armand Bolislis is a distinguished CPA providing auditing services to different clients. UC, Inc. asked him to study the company's executive compensation package. He has no prior experience in this area. What will be the most appropriate action of Mr. Bolislis?

• Decline the engagement since he cannot expect to complete it without undertaking research in the area.

• Accept the engagement and issue a report which may guarantee the achievement of results indicated by his recommended actions.

• Accept the engagement and study, research and/or consult with knowledgeable experts in order to increase his competence.

• Accept the engagement and perform it in accordance with GAAS.

• Answer not given.