MAS chapter 1: theories

1. Governance and Management is different. Gov – set strategies and policies

usually by BOD. Management develops and executes operating standards and
systems to deliver the goals of business.
2. In Mgt Consultancy field, CPAs differentiated their service from audit, tax, legal
services by calling it advisory services, risk analysis, transax analysis, financial
advisory services, business finance services, corpo finance services, B&F advisory
services, transax advisory services etc.
3. MAS – analytical approach and process applied in engagement
4. Analytical approach – aka systematic, objective and rational way to solve org
problem (determine obj, define prob, evaluate alternative, formulate, follow up);
- Identify problem, not the symtopms (sales go low is the symptom, not the
problem)
5. MAS also includes operational advice or counselling management on operating
and controlling function, conduct special studies and provide guidance on
implementation, org analysis on their system, methods, procedures realations,
or introduce new ideas, approaches, technique, etc
6. Areas of advisory services:
a. Traditional
b. Emerging consultancy services
7. MAS practice standards should be moral, ethical (MAS Practice standards) and
Legal
8. MAS1: Independence in mental attitude: MAINTAIN impartiality and clarity in
performing task to attain obj. not easily easily influenced by things that may
impair integrity while Objectivity is a mental attitude to be impartial and free
from bias as conduct to engagement.
9. Competence – practioner should reject clients which require a level of required
intelligence, expertise and skills
10. Professional Competence – personal quality of work, technical qualification to
negotiate with client, organize and supervise staff, use analytical skills (identify
prob to follow on), and deliver satisfactory results
11. MUST – due care at all times – but it doesn’t guarantee perfection; more
conscerned with what and how he does it, needs attention, adequate planning,
supervision of work, careful review of output and relevant presentation of results
(Use COE, AccLaw, MAS PS)
12. Client benefit – practitioner should determine what client wants to achive from
engagement bef initiating an engagement. Notify client on reservation of
 realization of benefit BEFORE accepting engagement. If during mo lang nalaman,
COMMUNICATE THE SAME.
- Assess benefits thru professional judgment and sufficient explo work. Also
consider client’s willingness to accept recommendation and ability to
implement
13. Understanding with client- should be forged to determine NTLimit of eng to be
performed. After accepting but before undertaking engagement, establish oral or
written understanding with client. (Eng obj/results expected, nature of services,
scope including areas of operation to address and limit, CLEAR expesssion as to
role and responsibility of practicitioner, client and other parties, anticipated
engagement approached, major tasks and methods to be used, work schedule,
timing of report and fee arrangement)
- Forma contract, letter of understanding memo sumrmarizing terms
- Require to communicate: significant? Outline of work program, people
involved, detailed schedule of work to be done from initiation to progress,
completion
14. PSC – required to provide REASONABLE ASSURANCE that work is in accordance
to obj
a. Planning: prepare work program (used to supervise and control
activities), translate engagement obj to concrete list of actions and events
to be undertaken within defiend time frame
b. Supervision- depends on personnel and complexity. Careful selection of
people is critical step in personnel supervision. Members should have
technical knowledge and necessary ability.
c. Control- quail, quanti and pacing of work is to be monitored with the
defined engagement obj. evaluate results strategically at interva44thru
accomplishment, time sched, quality of work. Careful review of work
output to ensure engagement outcome
15. Sufficient relevant data- provides reasonable basis of reports. Gathering and
analysis should be documented to serve as basis in verifying degree of evidence
obtained and manner on how evidences are treated to generate conclusion.
- Use prof judgment in sufficiency and relevance
- Data gathering and analysismust be documented. Formality of documentation
depends on nature and scope of eng. Data docu = evidence of due care in
engagement
16. Communication of results:
a. Report on interim and OR end of eng
b. Interim reports – usually in long eng/complex
c. Report may be oral, written, or visual
 d. If no written report, keep memo file documenting results and process and
all correspondence with client
17. Role of MAS- advisor lang, bawal mag assume in mgt deicisons. He should not
take positions that may impair his objectivity so he hsud always maintain
independence to make prof judgment
18. MAS Engagement process:
A. Eng nego – 1,2,3,4,5,8
b. plan –all
c. exec – 45678
presentation of eng results – 7,8
implement reco – 8
post eng follow up – 6

1. MAS Eng Nego -

a. Identify client’s problem and services needed to render
b. Identify eng goal (report findings, suggested system)
c. Agree on Task by advisor
d. Agree on billing
- All these are confirmed in writing thru MAS eng letter
2. ENG planning
a. Develop work program
3. Engagement exec – data gathering (to provide info to problem) and data
analysis(systematic and logical evaluation of indo)
- Working paper- ducment DG and dA. Records to advisor to support position
and clarification by client if any
4. Presentation of ENG results
- Oral or written
- Present findings, analyses, conclusions, recommendations
- Oral – emphasize on significant part
- Written – reference and oral complement
o Long detailed all and issued when client decides to implement decision
without assistance
o Short – advisor’s key findings and recom. Issued when interim reports
were extensively used during exec and when there is close supervision
between client and eng member
5. Implementation of recommendation
Advisor’s limit: only on providing technical advice and assistance to client to
maintain objectivity.
In implementing recom: consider the ff:
 a. Client understanding on nature and omplication of recommendation
b. Client decision on accepting overall responsibility in implementing
chosen action
c. Client expertise – must be present to have available resources needed
to comprehend signiciance of changes being made during
implementation
d. Client ability to maintain new set up – when changes have been fully
implemented, client is expected to have the knowledge and ability to
adequately maintain and operate newly implemented systems,
processes or procedures
6. Eng evaluation- assess quality aof work and make improvement for future
eng. Evaluate in term’s of client’s satisfaction.. usually evaluate eng proposal,
program aschedual source data and docu, eng results
7. Post eng and follow up
- Made after sufficient amount of time has elapsed to ensure that system
procedures and other recomm implemented are executed as designed
- Modify or correct any difficulties encounteresd if instructions are
misunderstood or other factors not foreseen during implementation stage
- After sale service for client’s satisfaction

19. MAS proposal letter- formal written communication by advisor to prospective

client for approval. Determine role of client and advisor
20. Eng program – written detailed plan prep by advisor and reviewed by client or
can be jontly developed, specific approach or technique and resp distri
21. Consultancy fee- Not free
- GR: actual cost + reasonable mgt fee
- Cost consist of the ff and presented in the agreement iwht client
o Salaries/billing rates – consultant’s staff or any direct involvedon the
manning schedule made
 OH cost
 Social charges- welfare or benefits
 Mgt fee- competence fee
o Reimbursable cost
 Based on Agreed fixed rate – payable at agreed unit rate
 Agreed actual cost= needs invoice and other paper
o Escalation – price and interest changes adjustments. Includes
contingency cost
 - Methods of billing client:
 Actual fee + per diem (day) = time x hourly rate
 Fixed/flat
 Max fee – per diem with limit agreed
 Retainer – predetermined for a month or semi annual basis
 Out of pocket cost – eg travel exp normally client

Chapter 11:

Change follows following what client demands,

5 S’s (principles in institituting quality)

1. Sorting
2. Systematic arrangement
3. Spic and Span (sweep) – clean internal and external
4. Standardizing – measure performance and expectations as to output etc
5. Self discipline- internalize all 5’s

In order to produce quality products, Quality cost are incurred:

1. Conformance cost-
a. Prevention cost
b. Appraisal cost
2. Non conformance cost-
a. Internal FC
b. external failure cost