Developing Trends

Future Prospects
PREDICTIONS
1. Management Consulting will become even more
specialized.
2. Consultants orientation will be toward insight
provider, creator and sharer of information
3. Management Consulting firms will tend to
remain small or to become quite large
4. Consultants will develop more sophisticated
means of marketing their services.
5. Graduates of Accounting, Management and Business
schools will continue to be attracted to careers in
management consulting.
Chapter 2

Areas of Management
Advisory Services
Part I
Types of MAS Engagements
SIX DIMENSIONS

1. Nature of the Problem

2. Service Delivery Area
3. Phase(s) of the Analytical Process
SIX DIMENSIONS
4. Techniques and Methodologies applied
5. Industry to which the client belongs
6. Geographical Area(s) where the engagements
take place
NATURE OF THE PROBLEMS
1. Corrective
2. Progressive
3. Opportunistic
SERVICE DELIVERY AREAS
1. General management
2. Manufacturing
3. Personnel
4. Finance and accounting
5. Marketing
SERVICE DELIVERY AREAS
6. Procurement
7. Research and development
8. Packaging
9. Administration
10. International Operations
APPLICATION OF THE
ANALYTIC PROCESS
1. Identifying the objectives
2. Defining the problem
3. Finding out the facts
4. Developing solutions
5. Implementing solutions
 TECHNIQUES AND
METHODOLIGIES APPLIED
INDUSTRY OR NATURE
OF ORGANIZATION
GEOGRAPHICAL AREA
Areas of MAS Practice
MANAGEMENT CONSULTING CAN RELATE TO
AREAS SUCH AS
1. Management functions and of analysis, planning,
organizing and controlling.
2. Introduction to new ideas, concepts, and methods to
management
3. Improvement of policies, procedures, systems,
methods and organizational relationship
4. Application and use of managerial accounting, control
systems, data processing, and mathematical
techniques and methods
5. Conduct of special studies, preparation of
recommendation
TYPES OF CONSULTANCY WORK
1. Business planning and development or Project feasibility
studies
2. Information systems consulting
3. Internal audit services
4. Management operations audit
5. Business improvement / reengineering
TYPES OF CONSULTANCY WORK
6. Others such as
a. Marketing research
b. Marketing strategy development
c. Developing promotional campaign
d. Planning sales force activity
e. New product development
TYPES OF CONSULTANCY WORK
6. Others such as
f. Developing proposal for financial
support
g. Staff recruitment
h. Exporting and international
market
BUSINESS PLANNING AND DEVELOPMENT / PROJECT
FEASIBILITY

~ great opportunity to those who have ambitions to

grow and develop
EFFECTIVE CONSULTANT
- can use the project proposal to establish exactly what
the client wants and manage expectations about what
can realistically be achieved.
INFORMATION SYSTEM CONSULTING

*MANAGEMENT INFORMATION SYSTEM aim to

collect and organize information and present it to
managers in a usable form.
INTERNAL AUDIT SERVICE
MANAGEMENT / OPERATIONS AUDIT
BUSINESS PROCESS IMPROVEMENT /
REENGINEERING
REENINGEERING
- Complete redesign of a process with an emphasis in
finding new ways to accomplish an objective
BUSINESS PROCESS IMPROVEMENT /
REENINGEERING

(a) Cultural Factors

(b) Managing Organizational Change
OTHER TYPES OF CONSULTANCY WORK

MARKETING RESEARCH
PRIMARY REASEARCH
- Quantitative Research
- Qualitative Research
SECONDARY RESEARCH
MARKETING STRATEGY
DEVELOPMENT
DEVELOPING PROMOTIONAL
CAMPAIGN
PLANNING SALES FORCE ACTIVITY
NEW PRODUCT DEVELOPMENT
DEVELOPING PROPOSALS FOR
FINANCIAL SUPPORT
STAFF RECRUITMENT
EXPORTING AND INTERNATIONAL
MARKETING
Chapter 3

Areas of Management
Advisory Services
Part II
MCS by CPAs can be categorized as:

TRADITIONAL SERVICES
A. MANAGERIAL ACCOUNTING
B. DESIGN AND APPRAISAL OF ACCOUNTING SYSTEM
C. FINANCIAL MANAGEMENT-RELATED SERVICES
D. PROJECT FEASIBILITY STUDIES
EMERGENCY CONSULTANCY SERVICES
E. GLOBAL RISK MANAGEMENT SOLUTION (Financial,
Strategic, Operational & System Compliance and Internal
audit)
F. TRANSACTION SERVICES
G. FINANCIAL ADVISORY SERVICES
H. PROJECT FINANCE AND PRIVATIZATION
I. VALUATION SERVICES
J. BUSINESS RECOVERY SERVICES
K. DISPUTE ANALYSIS/INVESTIGATIONS
L. COMPUTER RISK MANAGEMENT
M. APPLICATION SOFTWARE SELECTION AND
IMPLEMENTATION
Determining the
Scope of Service
TYPES OF CLIENTS SERVED:
CONTACT CLIENTS
INTERMEDIATE CLIENTS
PRIMARY CLIENTS
UNWITTIN CLIENTS
INDIRECT CLIENTS
ULTIMATE CLIENTS
GROUP OF CLIENTS:
1. Privately-owned business firms
2. Governmental agencies and organizations
3. Not-for-profit nongovernmental organizations
4. Professional Associations
5. Others
HOW CONSULTING ADDS VALUE TO THE
CLIENT:
The decision to use consultant.
Provision of information, Special expertise new
perspective, for internal arguments and support in
Gaining a critical resource.
Facilitating organizational change.
Chapter 5

MAS Practice Standards

and
Ethical Consideration
MAS Practice Standards
STANDARD NO. 1
PERSONAL CHARACTERISTICS
In performing MAS, a practitioner
must act with integrity and objectivity and be
independent in mental attitude.
STANDARD NO. 2
COMPETENCE
Engagements are to be performed
by a practitioner having competence in the analytical
approach and process, and in technical subject
matter under consideration.
STANDARD NO. 3
DUE CARE

Due professional care is to be exercised in

the performance of MAS engagements.
STANDARD NO. 4
CLIENT BENEFIT
Before accepting an engagement, a practitioner is
to notify the client of any reservations he has
regarding anticipated benefits.
STANDARD NO. 5
UNDERSTANDING WITH CLIENT
Before undertaking an engagement, a practitioner
is to inform his client of all significant matters
related to the
engagement.
STANDARD NO. 6
PLANNING, SUPERVISION AND CONTROL

Engagements are to be adequately planned,

supervised and controlled.
STANDARD NO. 7
SUFFICIENT RELEVANT DATA
Sufficient relevant data is to be obtained,
documented, and evaluated in developing conclusions
and recommendations.
STANDARD NO. 8
COMMUNICATION OF RESULTS
All significant matters relating to the result of
the engagement are to be communicated to the
client
INTERIM COMMUNICATIONS
- Encourages management involvement
- Helps preserve managements role as decision maker
- Keeps management informed of
progress towards final conclusions, recommendations
and accomplishments
FINAL REPORT
A final report should be made to the client upon
completion of an engagement to ensure that results
and recommendations are communicated.
Ethical Considerations
CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS IN THE
PHILIPPINES RELEVANT TO MANAGEMENT CONSULTANCY
SERVICES
Professional Accountants as defined in the Code of Ethics
are those person who hold a valid certificate issued by the Board of
Accountancy whether they be in public practice, industry, commerce,
the public
sector or education.
A professional accountant is required to comply with
the following fundamental principles:

1. Integrity
2. Objectivity
3. Professional Competence and Due Care
4. Confidentiality
5. Professional Behavior
Some Ethical Issues
DO THE RIGHT THING. YOU CANT DO MUCH
BETTER THAN CONSISTENTLY TRY TO DO
THE RIGHT THING.
SOME ETHICAL ISSUES
1. Should You Change the Highest Fees You Can Get Away
With?
2. Should You Travel First Class and Bill the Client?
3. Bill More Than One Client for the Same Basic Expenses?
4. Should You Accept an Assignment from a Clients
Competitor?
5. Should You Use Tickets by Your Client to Bring Your
Spouse Along?
GUIDELINES THAT A CONSULTANT FIND USEFUL IN
DETERMINING WHETHER HE IS DOING THE RIGHT THING
OR NOT ARE:
1. Does the activity improves the clients condition or merely his
own?
2. Is the activity something that one will be comfortable
explaining to the client?
3. Is the activity something that the consultant could be proud
of and would publicize as a trait?
4. Is there harm being done to anyone without their being able
to respond?
5. Is this treatment something the consultant would willingly
subject himself to?
CODE OF ETHICS FOR
MANAGEMENT CONSULTANTS
Code of Conduct- Represents the attitude, principles and principles
that have been found to contribute most to success and make for
equitable and satisfactory client relationship.
COMMON PRINCIPLES IN CODE OF ETHICS
I. Basic responsibilities
II. Practice Standards
III. Fee arrangement
IV. Business Conduct
I. BASIC RESPONSIBILITIES OF
MANAGEMENT CONSULTANTS
a.Integrity and Objectivity
b.Independence
c.Confidential Information
II. PRACTICE STANDARDS FOR
MANAGEMENT CONSULTANTS
a.Professional Competence
b.Planning, Supervision and due care
c.Reporting Results
III. FEE STRUCTURE STANDARDS FOR MANAGEMENT
CONSULTANTS

IV. BUSINESS-CONDUCT STANDARDS FOR MANAGEMENT

CONSULTANTS
Chapter 6

Organization and
Management of
MAS Practice
Developing MAS Practice
Must assess his or her own talents and expertise

1. Engineering
2. Industrial Management
3. Marketing
4. Business Management
5. Financial Areas
Goals and Objectives

A desired income level

Potential clients
Strategies to obtain those clients
ORGANIZATION OF MAS DIVISION
1. It can employ additional consultants with adequate knowledge and skills or
2. It can undertake a variety of staff development activities
Staff Pyramid and Fee Structures
LEVEL
Partners
1 1 Principal
Director

Senior Managers
2 1-3 Managers
Supervisors

Senior Consultant
3
1-5 Senior

Associate Consultant
4
2-6 Staff
Billing Rates
Level 1 P 6,000 to P 12,000 per hour

2 P 3,600 to P 6,000 per hour

3 P 2,000 to P 3600 per hour

4 P 1,200 to P 2,000 per hour

Defining the Target Level of
Competence of Management
Consultants
Four Major Factors on Defining Target
Level of Competence
1. Scope of Practice Area
2. Service Variety
3. Client Requirements
4. Service Delivery Capability
 1. Scope of Practice Area

1. Review the economic region in w/c the consulting firm draws or expects to draw,
most of its clients
2. Inventory the services required by the existing clients the consultant would like to
add (e.g. related to audits, reviews and tax planning
3. Select services from this inventory that will be provided
4. Acquire the competence needed to provide the selected services
5. Notify clients and potential clients that the consulting firm is able and willing to
perform the selected advisory and consulting services
2. Service Variety
Planning, control and reporting systems
Operational computer system analysis, design, implementation and
evaluation
Specialized technical services
3. Client Requirements

Will a fully implemented service (e.g., a system or

recommendation) be turned over to the client ready for use?
If so, these services will require more care, organization and
attention to detail more than other services.
Will the service require changes or adaptation? If so, the
client must be told explicitly what to do in order to realize
the service benefits.
4. Service Delivery Capability
Setting objective, identifying problems and needed services, predicting
specific expected benefits from these services, and gathering essential
facts pertaining to the problem and means of delivering the services
Adapting and beginning the services that are to be the principal
deliveries from the Engagement
Implementing these services to the clients satisfaction
Evaluating the results in operation, in order to determine the extent to
which the anticipated benefits were received from the services.
Steps in Starting
the MAS Practice
1. Determine and make a list of services that one can truly
offer with a confidence of competence to perform.

2. Review a client list classified by industry, size, etc. and

prepare a package tailored to fit the firms competence
and a particular type of clientele.
3. Prepare a line-up of MAS personnel.

4. Seek out advisory engagements.

 Sources of
MAS Engagements
1. Referrals from other CPAs.
2. Referrals from audit clients.
3. Referrals from businessmen.
4. Referrals from financial and government
institutions.
5. Referrals from legal and other professional
firms.
Determining Market
Opportunities
PRIVATE SECTOR
1. Individuals
2. Small businesses
3. Medium-sized businesses
4. Large companies
PUBLIC SECTOR
Government
GRANT CONSULTING
 Problems Areas in
Rendering MAS by an
Independent
Accounting Firm
1. Questions as to the effect of the practice of
MAS on the firms independence.
2. Development and maintenance of a high level
of competence in MAS.
3. Questions of what fee to charge.
4. Questions of AUDIT-MAS cooperation in
obtaining engagements.
5. Questions of regular communication between
the MAS function and the rest of the firm.
Financial Management
of a MAS Practice
1. Working Capital Requirements
2. Office Facilities and Equipment
Requirements
3. Revenues and Expenses of Management
Consultants
4. Billings and Collection
PLAN