Chapter 5: MAS Practice Standards and Ethical Consideration

Besana, Kae Andrea M

1. Which of the following statements is false?

a. An accounting firm may admit a non-CPA as principal who is a professional expert in
management services to enhance the firm’s competence to offer management advisory
services to clients.
b. The accounting firm is not allowed to advertise that it is offering management advisory
services.
c. A CPA after presenting his report in a management services engagement may accept
further engagement to render advice and technical assistance in the implementation of
his recommendation.
d. A CPA may continue rendering management services to a client even after conflict of
interest has arisen if in good faith he was not aware of the same at the time he accepted
the engagement.

2. Which of the following statements is true?

a. In management services engagement, the independent CPA renders technical advice.
b. A CPA in a management services engagement may take position that would impair its
independence if the client is not his audit client at the same time.
c. Strict adherence to generally accepted accounting principles in MAS is required
d. A non-CPA is prohibited under the revised accountancy law to engage in professional
management advisory practice.

3. Which of the following statements is correct?

a. A CPA-MAS practitioner need not be concerned with independence in his clients since
the overriding consideration for the MAS engagement is competence.
b. Management advisory services by independent CPA may involve making decisions for
client.
c. To maintain his independence, a CPA limit his services to that of recommending and
designing an accounting system but leave the actual implementations and installation to
the client.
d. Documentation is not as essential in an MAS engagement as it is in an audit
engagement.

4. Which of the following statements is true?

a. Due professional care may or may not be exercised in the performance of a
management advisory service engagement.
b. Before accepting an engagement, a practitioner does not have to notify the client of any
reservation he has regarding anticipated benefits
 c. Before undertaking an engagement, a practitioner is to inform his client of some if not
all significant matters related to the engagement.
d. Engagements are to be adequately planned, supervised and controlled.

5. To attain the highest standards of professionalism, highest level of performance and meet public
interest requirement, a CPA who provides management consultancy services should meet the
following basic requirements except
a. Credibility
b. Professionalism
c. Confidence
d. Top-of-the-line and world-class facilities

6. To achieve the objective of the accountancy profession, professional accountants including

those providing management advisory services should observe among the others the following
principles except
a. Integrity
b. Confidentiality
c. Knowledge of up-to-date technical and professional standards
d. Careful selection of clients to include only those big and financially capable business
entities

7. Should ethical conflict arise, the professional accountant who is also a management consultant
should observe the following except
a. Follow the established policies of the firm to seek resolution of such conflict
b. Review the conflict problem with the immediate superior unless it appears that the
immediate superior is the one involved in the conflict problem
c. Seek counselling and advice publicly with the applicable professional accountancy body
(e.g., PICPA) or regulatory body (e.g., BOA)
d. Resign if all possible levels of internal review and courses of action have been exhausted
and submit an information memorandum to an appropriated representative of the firm.

8. Confidentiality of information about a client’s affairs is one of the ethical principles that should
always be observed by a management consultant. The following situations allow the consultant
to disclose information otherwise considered confidential except
a. When disclosure is authorized by the client
b. To produce documents to give evidence in the course of legal proceedings
c. When disclosure is necessary to protect the professional interests of a professional
accountant in legal proceedings.
d. To respond to an inquiry of shareholders and creditors of the business entity.
9. Management consulting is a non-assurance engagement that may be performed by professional
accountants. If management consultancy service is provided to the audit client of the same
professional accountant during or after the period covered by the financial statements but
before the start of the audit engagement, consideration should be given to threats to
independence, if any, arising from the consultancy service. If the threat is significant, safeguards
are to be considered and applied as necessary to reduce the threat to an acceptable level. These
safeguards include the following except
a. Obtaining the audit client’s acknowledgement of responsibility for the results of the
consultancy service.
b. Precluding personnel who provided the consultancy services from participating in the
audit engagement
c. Engaging another firm to review the results of the consultancy services or another firm
to re-perform the non-assurance services to the extent necessary to enable it to take
responsibility for those services
d. Declining acceptance of the audit engagement

10. The significant matters related to an engagement generally include:

a. The engagement’s objectives
b. The engagement scope
c. Role of the personnel
d. All of the above

11. The documentation of scope of engagement should record, as appropriate:

a. The evidential matter obtained and its source
b. The alternatives considered
c. Analytical process leading to specific recommendation
d. All of the above

12. Interim communications should normally summarize:

a. Findings to date
b. Work accomplished in relation to plan
c. When appropriate, tentative recommendation
d. All of the above

13. Professional accountant should not be associated with reports, returns, communications or
other information where they believe that the information;
a. Contains a materially false or misleading statement
b. Contains statements or information furnished recklessly
 c. Omits or obscures information required to be included where such omission or
obscurity would be misleading
d. All of the above

14. In performing management advisory services, a practitioner must act with

a. Integrity
b. Objectivity
c. Be independent in mental attitude
d. All of the above

15. All are included in eight MAS practice standards except

a. Personal Characteristics
b. Competence
c. Diligence
d. Due Care

Answers:

1. D
2. A
3. C
4. D
5. D
6. D
7. C
8. D
9. D
10. D
11. D
12. D
13. D
14. D
15. C