MAS Handouts No. 01
MAS Handouts No. 01
MAS Handouts No. 01
01
Basic Considerations in
Management Advisory Services
RHAD VIC F. ESTOQUE, CPA MBA, CAT, MICB, RCA, CMA
Exercises
1. The primary purpose of management advisory services is
a. To conduct special studies, preparation of recommendation, development of plans and programs, and
provisions of advice and assistance in their implementation
b. To provide service or to fulfill some social need
c. To improve the client's use of its capabilities and resources to achieve the objective of the organization
d. To earn the best rate or return on resources entrusted to its care with safety of investment being taken into
account and consistent with the firm's social and legal responsibilities
2. That kind of accounting concerned with providing information to management in making decisions about the
operations of the business
a. Responsibility accounting
b. Cost accounting
c. Management accounting
d. Financial accounting
5. Management accounting
a. Is governed by GAAP
b. Draws from disciplines other than accounting
c. Is geared primarily to the past rather than the future
d. Places more emphasis on precision of data compared with financial accounting that does not
6. In financial accounting, certain rules and regulations must be followed on how financial statements must be
presented to the reader. In managerial accounting, no such restrictions generally apply because it is:
a. An entirely different field that need not observe the broad guidelines in financial accounting
b. Designed to provide management with non-financial information for decision-making.
c. Designed to provide accounting and other financial data to assist management in making business
decisions.
d. A discipline that does not require preparation of financial statements
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9. To distinguish between management accounting and financial accounting, the following statements are correct
except
a. Management accounting, in view of its various integrated recipients should have a separate data recording
and retrieval system from financial accounting
b. Financial accounting is bound to GAAP, and management accounting need not be in conformity with GAAP
c. Financial accounting can be regarded as the process while management accounting can be regarded as
the
product of that process
d. Management accounting output must be released on time so as not to erode its usefulness financial
account
output can still be useful even when delayed
10. The basic accounting records that are used to provide data for external financial reporting are also employed in
management accounting. In combining and reporting these data to management, however, the accountant can relax
the verifiability constraint necessary in public financial reporting and instead prepare data, which, although not
adequately verifiable for external reporting, are more useful to management. This principle of management
accounting considers the following factors more important than others.
a. Verifiability, objectivity and accuracy
b. Conservatism
c. Relevance, flexibility and timeliness
d. Consistency and disclosure
11. The function of management that compares planned results against actual results is known as
a. Planning
b. Directing and motivating
c. Controlling
d. Decision making
12. The activities in a management system's control process can be grouped into four
(1) Measurement of actual performance
(2) Deciding and implementing corrective action
(3) Determining standards of performance
(4) Comparing actual performance versus standards and analyzing results
The above steps must be done in this sequence
a. 4, 3, 2, 1
b. 3, 1, 4, 2
c. 1, 3, 4, 2
d. 3, 4, 1, 2
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14. People who make information-based decisions go through a series of fundamental steps in their decision-making
process
1. Evaluate alternatives
2. Identify constraints
3. Set objectives
4. Gather appropriate information
5. Choose the most acceptable alternative
6. Identify alternatives
15. Which of the following types of management services is not directly related to accounting and finance functions?
a. Cost analysis of major investment decisions
b. Long-range planning
c. Design, installation or review of the budgetary system
d. Valuation of capital stock of companies for purposes of merger or sale.
16. Which of the following types of management services is normally related to accounting and finance?
a. Management audit
b. Marketing forecasts
c. Costs determination of alternatives in collective bargaining agreements.
d. Job evaluation and salary administration.
17. Management services of certified public accountants 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
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22. As businesses increase in complexity, the function of controllership has attained top-level recognition in the
corporate arena. Many areas related to finance and accounting has been identified with controllership. One area
that becomes controversial when included under the controller and viewed that such inclusion violates basic internal
control is
a. Credit and collection
b. Internal auditing
c. Long range financial planning
d. Taxation and reporting to government agencies
23. The chief management accountant called “controller" traditionally perform these functions except
a. The establishment and implementation of the financial planning process
b. Financial and management reporting and interpretation
c. Protection of company resources and economic evaluation
d. Preparation of proposals for product promotions
24. Controllership has attained special recognition in corporate management as business expands in complexity and
reach, and as the controller exerts influence for management to take organization’s goals. Controllership and
treasurership constitute corporate finance. These are among the controller’s traditional functions:
1. Tax management
2. Financial reporting and interpretation
3. Credit management
4. Sourcing and investing funds
5. Reporting to government regulatory agencies
6. Risk management
7. Economic appraisal
8. Planning for control
26. CPA’s in MAS practice must observe the ethical requirements of the accountancy profession except
a. independence
b. expression of opinion
c. incompatible occupation
d. integrity and objectivity
27. Integrity is an ethical requirement for all financial managers/management accountants. One aspect of integrity
requires
a. Performance of professional duties in accordance with applicable laws
b. Avoidance of conflict of interest
c. Refraining from improper use of inside information
d. Maintenance of an appropriate level of professional competence
28. Which ethical standard is most clearly violated if a financial manager/management accountant knows of a
problem that could mislead users but does nothing about it?
a. Competence
b. Legality
c. Objectivity
d. Confidentiality
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29. The following statements refer to competence of CPA's in management advisory services except
a. In concept, it refers to the technical qualifications of the practitioner and his ability to supervise and evaluate
the quality of work of his staff assigned 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 MAS work, and research
c. It is the ability to identify client needs, use analytical approach and process, apply technical knowledge,
communicate recommendations and assist in implementation
d. It must be retained in 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
32. If a financial manager/management accountant has a problem in identifying unethical behavior or resolving an
ethical conflict, the first action he should normally take is to
a. Consult the board of directors
b. Discuss the problem with his immediate superior
c. Notify the appropriate law enforcement agency
d. Resign from the company
34. During the course of an audit, the client’s controller asks your advice on how to revise the purchase journal so as
to reduce the amount of time his staff takes in posting. How should you respond?
a. Explain that under the Code of Ethics you cannot give advice on MAS areas at the same time you are doing
an audit
b. Explain that under the IFAC Standards informal advice of this type is prohibited.
c. Respond as practicable at the moment and express the basis for your response so it will be accepted for
what it is.
d. Respond and take full account for the consequences of the recommendation.
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36. The CPA who undertakes the performance of a MAS engagement should bear in mind that the results should
a. Increase the client’s earnings capabilities
b. Be communicated in quantitative terms
c. Not be set forth as quantitative estimates
d. Not be explicitly or implicitly guaranteed
38. A letter written by the CPA and constitutes the CPA’s understanding of the work to be done in an MAS
engagement
is a
a. Representation letter
b. Management letter
c. Letter of proposal
d. Comfort letter
39. The most important factor in selecting an engagement team is to assign consultants:
a. With prior experience in the client's industry.
b. With a combination of skills and experience in various business function areas as well as in different
industries.
c. With the appropriate skills and experience and types of thinking to deal with the client's problems.
d. Who are likely to employ different approaches to problem solving such as highly imaginative thinking, or
unusual skill in the interpretation and use of financial and statistical data.
REO UNDERGRAD REVIEW Be accelerated above the rest with REO BASICS
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