CPA REVIEW SCHOOL OF THE PHILIPPINES MANAGEMENT ADVISORY SERVICES OVERVIEW OF THE MS Practice by the CPA
1. That kind of of accounting accounting concerned concerned with providi providing ng informati information on to management management in making making decisions decisions about the operations of the business a. Responsibility accounting c. Management accounting b. Cost accounting d. Correct answer no given 2. Mana Managem gemen entt acco account untin ing g a. Is governe governed d by generally generally accepted accepted accounti accounting ng princip principles. les. b. raws from disciplines other than accounting. c. Is geared geared primarily primarily to the the past past rather rather than the future. future. d. !laces more more emphasis emphasis on precision precision of data data compared compared with financial financial accounting accounting which which does snot. snot. ". # type type of managerial managerial accounting accounting which refers refers to the determin determination ation of the operating operating cost cost regardless regardless of cost behavior is a. ifferential accounting c. Responsibility accounting b. $ull cost accounting d. !rofitability accounting %. &hich of the following following characte characterist ristics ics does not not relate relate to management management accounti accounting' ng' a. #ccounting #ccounting reports reports may may include include non(monetary non(monetary informati information on b. It is sub)ect to restrictions restrictions imposed by *##!. c. Reports Reports are often often based on estimates estimates and are are seldom useful useful for anythin anything g other than the the purpose for which they are prepared. d. It provides provides data for for internal internal users users within within the business business orga organi+ati ni+ation. on. ,. Mana Managem gemen entt acco account untin ing g is an inte integr gral al part of the manag managem ement ent proce process ss.. #s suchsuch- it provid provides es essential information for the following ob)ectives ecept a. Main Mainta tain inin ing g the the curr curren entt leve levell of reso resour urce ce util utili+ i+at atio ion n as well well as inte intern rnal al and and ete etern rnal al communication. b. Measuring and evaluating performance. c. !lanning !lanning strategie strategiess and controlli controlling ng current current activities activities of the organi+a organi+ation. tion. d. /nhanci /nhancing ng ob)ectiv ob)ectivity ity in decisi decision(m on(maki aking. ng. 0. tat tatem ement ent 1 tatem tatement ent 2
Manag Manager eria iall cont contro roll and and engi engine neer erin ing g cont contro roll are are synon synonym ymous ous.. Control Control from from the viewpo viewpoint int of managem management ent account accounting ing is define defined d as the process process of setting maimum limits on financial ependitures. a. b. c. d. tatement 1 True $alse True $alse tatement 2 True $alse $alse True
. &hich type type of author authority ity do managem management ent accountants accountants generally generally eercise' eercise' a. $unctional b. Company c. 3ine d. taff 4. &hich of the following following is not a characteri characteristic stic of a 5taff6 5taff6 author authority' ity' a. It gives gives support support-- adviseadvise- and service service to line line manager managers. s. b. It is eercised laterally or upward. c. It has the the authority authority to to command command action action or give give orders orders to subordin subordinates. ates. d. 7one 7one of the abov abovee 8. In financial financial accountingaccounting- certain certain rules rules and regulations regulations must must be followed followed on how financial financial statements statements must be presented presented to the reader. reader. In managerial managerial accountingaccounting- no such restricti restrictions ons generally generally apply because it is9 a. #n entirely entirely different different field field that need not observe observe the the broad guidelines guidelines in financia financiall accounting. accounting.
MSQ 1 !age 1 of
b. esigned to provide management with non(financial information for decision(making. c. esigned to provide accounting and other financial data to assist management in making business decisions. d. # discipline that does not re:uire preparation of other financial statements. e. #ll of the above. 1;. &hich of the following characteristics relate to $inancial #ccounting' a. Reports are promptly prepared and submitted to preserve its usefulness. b. ata may be both historical and estimates. c. It must adhere to the generally accepted accounting principles. d. It provides information needed by management in making decisions. 11. The following characteristics refer to $inancial #ccounting ecept a. !rovides information to eternal users b. /mphasi+es on ob)ective data c.
s responsibility' a. Ta planning and accounting c. In charge of credit and collection b. Custodian of funds d. #rranging short(term financing 1%. ?ou were newly appointed as controller of C@A Corporation. #mong the )obs your department would do include the following9 a. Cash receipts- cash disbursements- general accounting- taation- financial accounting analysisand internal auditing. b. $inancial reporting- strategic planning- managerial accounting- taation- financial statement analysis- and internal accounting. c. $inancial accounting- managerial accounting- cost accounting- inventory accounting- payroll accounting- ta accounting and sales forecasting. d. Ta accounting- managerial accounting- internal auditing- general accounting. 1,. Controllership has attained special recognition in corporate management as business epands in compleity and reach- and as the controller eerts influence for management to take organi+ation>s goals. Controllership and treasurership constitute corporate finance. These are among the controller>s traditional functions9 1. Ta management. 2. $inancial reporting and interpretation. ". Credit management. %. ourcing and investing of funds. ,. Reporting to government regulatory agencies. 0. Risk management. . /conomic appraisal. 4. !lanning for control. a. #ll eight items. c. Items 1- 2- "- %- ,- - and 4 only. b. Items 1- 2- ,- - and 4 only. d. 2- "- ,- and - and 4 only.
MSQ 1 !age 2 of
10. The chief management accountant called 5controller6 traditionally performs these functions ecept9 a. The establishment and implementation of the financial planning process. b. $inancial and management reporting and interpretation. c. !rotection of company resources and economic evaluation. d. !reparation of proposals for product promotions. 1. #s business increase in compleity- the function of controllership has attained top level recognition in the corporate area. Many areas related to finance and accounting have been identified with controllership. Bne 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. 3ong(range financial planning. d. Taation and reporting to government agencies. 14. &hich of the following is not usually a controller>s function' a. !lanning for control. c. Ta administration. b. !rotection of assets. d. Credit and collection. 18. &hich of the following is not a Controller>s function' a. In charge of planning and control b. !rotection of assets such as ade:uate insurance coverage. /tc. c. Interpreting and reporting on effects of eternal factors on the business d. #rranging short(term financing 2;. Controllers are generally not concerned with a. Reporting to government b. !reparation of ta returns
c. !rotection of assets d. Investor relations
21. &hich of the following is a Controller>s responsibility' a. Ta planning and accounting c. In charge of credit and collection b. Custodian of funds d. #rranging short(term financing 22. &hich of the following is not a controllership function- as distinguished from a treasury function' a. Reporting and interpreting c. !rotection of assets b. Credit and collection d. *overnment reporting 2". The primary purpose of management advisory services is a. To conduct special studies- preparation of recommendation- development plans and programsand provision of advise 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 resources to achieve the ob)ectives of the organi+ation. d. To earn the best rate of 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%. &hich of the following statements is not true' a. In the rendition of M#- independence must be observed so as to maintain the essential re:uisites of impartiality and ob)ectivity. b. #ll provisions of the code of professional ethics are applicable to the practice of M# ecept those rules related to the epression of an opinion on financial statements. c. M# serves only in the areas of accounting and finance. d. Defore accepting an engagement- a practitioner should notify the client of any reservations he has regarding anticipated benefits.
MSQ 1 !age " of
2,. &hich of the following acts is not performed by an independent C!# engaged to install an accounting system' a. $ormulation of the chart of accounts b. esign of business and accounting forms c. upervision of application of system and procedures recommended d. !reparation of an accounting manual. 20. The following characteri+e management advisory services ecept a. Involve decision for the future. b. Droader in scope and varied in nature. c. Etili+e more )unior staff than senior members of the firm. d. Relate to specific problems where epert help is re:uired. 2. &hich of the following is not a characteristic of management services' a. # wider variety of assignments are encountered in M# than in audit. b. M# engagements are recurring. c. M# pinpoint actions to be taken- the benefits of which will be received in the future. d. In M# engagements- the nature of work involved re:uires a lesser need for )unior assistance. 24. &hich of the following is not a characteristic of Management #dvisory ervices' a. M# is broad in scope b. M# involves problem(solving affecting the future operations of the client c. Deneficiary of service is management d. M# is repetitive as far as the same client is concerned 28. &hich 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. Fob evaluation and salary administration. ";. &hich of the following types of management services is not directly related to accounting and finance functions' a. Cost analysis of ma)or investment decision. b. 3ong range planning. c. esign- installation and review of budgetary system. d. Galuation of capital stock of companies for purposes of merger or sales. "1. # certified public accountant>s scope of management services is broad and covers all of the following ecept a. Change management engagements. c. #udit engagements. b. Computeri+ation engagements. d. Re(engineering )obs. "2. &hich of the following is not classifiable as a management advisory service by C!#s' a. ystems design. c. Make or buy analysis. b. !ro)ect feasibility study. d. #ssistance in budgeting. H' "". &hich of the following is not classifiable as a management advisory service by C!#s' a. #nnual financial planning and budgeting. c. Information systems. b. !ublic relations work. d. 3ease(or(buy analysis. "%. Management services of certified public accountant cover all of the following ecept a. !ro)ect feasibility studies. c. Brgani+ational development and planning. b. ystems design- development and implementation. d. #udit- ta and legal services.
MSQ 1 !age % of
",. &hich of the following does not relate to management services by C!#s' a. esign andJor installation of accounting systems. c.Cost analysis of ma)or investment decisions. b. $inancial analysis for pro)ect feasibility studies. d. 7one of the above. "0. &hich of the following is not an area related to the performance of management services by independent accounting firms' a. Introducing new ideas- concepts and methods to management. b. Improving eisting policies- methods and procedures c. !erforming special studies- preparing recommendations- and formulating plans and programs d. !erforming management functions and making decisions ". # management advisory services engagement involves the following activities in what order' I. !ost(engagement follow(up. II. Implementing the recommendation. III. Conducting the engagement. IG. 7egotiating the engagement. G. !reparing for and starting the engagement. GI. /valuating the engagement. GII. !reparing and presenting report and recommendations. a. GII- GI- G- IG- III- II and I. c. IG- III- G- GI- II- GII- and I. b. III- IG- G- GI- GII- I and II. d. IG- G- III- GII- II- GI- and I. "4. The following statements refer to competence of C!#>s in management advisory services ecept a. In concept it refers to the technical :ualification of the practitioner and his ability to supervise and evaluate the :uality of work of his staff assigned to the engagement so as to be responsible for the successful completion of the pro)ect. b. It is ac:uired by education- self study- attendance to professional development courses- actual eperience in M work and research. c. It is the ability to identify client>s needs- use analytical approach and process- apply technical knowledge- communicate recommendations and assist in implementation. d. It must be retained in the rendition of M# work and it can be impaired if the C!# performs decision(making for the client or acts as employee of the client. "8. &hich of the following statements is True' a. #de:uate training and eperience in both the analytical approach and process in the particular undertaking are re:uisites for the C!# to be involved in a management service engagement. b. # C!# with MD# and !h degrees is automatically :ualified to render management services. c. Competence as a standard in the rendition of management services by a C!# may be e:uated to having ecellent scholarly preparation to include the usual baccalaureate degree- an MD#- and other post graduate studies. d. # certified public accountant by virtue of having the necessary academic preparation and by hurdling the licensure eaminations re:uired to have a C!# license can readily render management services to the public. %;. These statements relate to M# practice standards 1. # practitioner is to notify the client of any reservation he has regarding anticipated benefits. 2. Throughout the engagement- there ought to be a systematic critical review of accomplishments and work should be done within the framework of the code of ethics and other professional standards. ". uring the engagement- should there be a significant change between cost and anticipated benefits- the client should be informed. %. Defore the engagement- the practitioner must make arrangements with- and inform the client on significant matters related to engagement- in writing. Bf these statements- which pertain to the practice standard on client benefit' a. tatements 1 and " only. c. tatement 1 only. b. #ll statements. d. tatement 1- " and % only.
MSQ 1 !age , of
%1. &hich of the following is not a :ualification of a C!# in M# practice' a. $amiliarity with the client>s financial accounting and internal control systems b. #nalytical eperience in problem solving c. !rofessional independence- ob)ectivity and integrity d. #uditor of the client %2. #s a consultant- the C!# practitioner should a. /ercise administrative control over the client>s staff to avoid unnecessary delays in implementation. b. /ncourage dependence of client on the consultant>s staff so as to pinpoint clear responsibility in implementing systems. c. 7ot take responsibility for making decisions and policy )udgments in M# engagements. d. Conduct his engagement as if he is a member of the client>s organi+ation. %". The Revised #ccountancy 3aw incorporates the Code of !rofessional /thics for C!#s. The provision of management advisory services is among the areas of public accounting. It is- howevernot eclusive to C!#s. Considering these premises- which of the following statements is applicable' a. Management advisory services as a field of practice is considered as an integral part of public accounting thus- the Code of !rofessional /thics for C!#s covers management advisory services. b. C!#s in the practice of audit and management consulting services may advertise and charge contingent fees. c. The practice of management advisory services should not be etended to eisting audit clients since this will adversely affect the C!#>s independence. d. C!#s in the practice of management advisory services are not bound by the Doard of #ccountancy but are bound by the said law in the practice of audit. %%. &hich of the following statements is $alse' a. C!#s provide management services to go around the ethical constraints as mandated by the #ccountancy #ct. b. Dusinesses hire management consultants to help define specific problems and develop solutions. c. Included in the practice of consulting is the provision of confidential service in which the identity of the client is concealed. d. C!#s performing management services may be considered to be in the practice of management consulting. %,. &hich of the following statements is not acceptable' a. # C!# represents three ma)or players in the industry in rationali+ing the industry>s incentive before the government public hearing. b. # C!# shares with a new and substantial client information regarding another client belonging to the same industry. c. # C!# provides consulting services to an eisting audit client. d. # C!# offers and provides consulting services to two ma)or competing client. %0. Mr. Rey Carlos- a C!# firm>s partner(in(charge of :uality assurance and review is arguing with Mr. Reuben $ortuna- the consulting partner regarding the :uestion of independence as Mr. $ortuna is presently rendering consulting services to T. #ng and 7ga Co.- an audit client of the firm. Related to this issue of independence- all of the following statements are not valid ecept a. Independence is never sacrificed for as long as the auditorJconsultant is correct in his decisions for the client. b. # C!# who renders both audit and consulting services to a client by virtue of his competenceJepertise and etensive knowledge of the client>s business is in the best position to render decisions for the client and should do so. c. The client is the ultimate decision maker and the auditor andJor consultant should not make decisions for the client. d. It is us up to professional )udgment and discretion of the auditorJ consultant to render decisions for the client for as long as his professional fees are commensurate to the benefit that the client will derive from the engagement.
MSQ 1 !age 0 of
%. &hich of the following acts is not performed by an independent C!# engaged to design the accounting system' a. $ormulation of the chart of accounts. b. esign of business and accounting forms. c. upervision of implementation of system and procedures recommended d. !reparation of an accounting manual. %4. &hich of the following will not impair the independence of a C!# in the rendition of Management ervices' a. The C!# performs decision(making services for his client. b. The C!# performs services wherein he is in effect- acting as an employee of the client. c. The C!# loses his ob)ectivity and acts in a manner as if he is advocating for the interest of his client. d. The C!# does not etend his services beyond the presentation of recommendations or giving of advice. %8. # C!# should re)ect management advisory services engagement if a. It would re:uire him to make management decisions for an audit client. b. The proposed engagement is not accounting related. c. s responsibility for the detection of errors and irregularities. c. # statement that management advisory services would be available upon re:uest. d. # statement that management letter will be issued outlining comments and suggestions as to any procedures re:uiring the client>s attention. ANSWER !EY 1. C 2. D ". D %. D ,. # 0. D . 4. C 8. C 1;. C
11. 12. 1". 1%. 1,. 10. 1. 14. 18. 2;.
C # # D D
21. 22. 2". 2%. 2,. 20. 2. 24. 28. ";.
# D C C C C D C D
"1. "2. "". "%. ",. "0. ". "4. "8. %;.
C D # #
%1. %2. %". %%. %,. %0. %. %4. %8. ,;.
C # # D C C # C
MSQ 1 !age of
