OVERVIEW OF MGT.

ADVISORY
SERVICES BY CPAs
 COVERAGE
1. Evolution of MAS
2. Developing Trends
3. Future Prospects
4. The Consulting Industry
5. Career Structure in Consulting Firms
6. Nature of MAS by Independent Acctg. Firms
7. Rationale for Using Mgt. Consultants
8. Independent Acctg. Firm’s Role in MAS
9. CPA’s Objective in Engaging in MAS
 EVOLUTION OF MAS
• Mgt. consulting: grew out of audit work of
CPAs
• Many assignments relied heavily on acctg. &
related info
• CPA firms created separate MAS divisions
 DEVELOPING TRENDS
• Mgt. consulting: changed dramatically since
mid-1990s
• Has dealt with information systems,
automated offices, organization structures,
strategic planning, etc.
• Improved in business education produced
better consultants
 DEVELOPING TRENDS
• Change in mgt. culture, growth in size &
complexity of institutions: increased need for
consultants
• Other factors:
– Competition
– Employee empowerment
– Flattening of organizations
– Pace of technological developments (esp. internet)
– Globalization
 FUTURE PROSPECTS
• Mgt. consulting will become even more
specialized
• Consultant’s orientation: insight provider, creator
& sharer of information
• Mgt. consulting firms will tend to remain small or
be quite large
• More sophisticated mktg. of consulting services
• Bright graduates will continue to join consulting
ranks
 THE CONSULTING INDUSTRY
• Industry is large & includes:
– Information technology
– Consulting & system integration
– Corporate strategy
– Operations management
– Human resource management
– Outsourcing
 THE CONSULTING INDUSTRY
• Main types of consulting firms:
1) IT firms (e.g., IBM)
2) Accounting firms offering consultancy
- Firms sold off mainstream consulting
operations due to Andersen scandal & Sarbanes-
Oxley law
- Firms tend to focus on financial & mergers &
acquisitions services
 THE CONSULTING INDUSTRY
• 3) Major consulting only firms
– Offer wide range of services
– With global reach
– McKinsey & co., Accenture, Atos KPMG, etc.
4) Independents
- Individuals: sole practitioners, small limited
companies, partnerships
 CAREER STRUCTURE
• Common roles (job titles may vary):
1) Analysts
• Entry-level positions for new graduates
• Responsible for info gathering & processing
• Only in large firms
2) Consultants
• Promoted analysts or “career changers” from industry
• Evaluate client’s business & make recommendations
 CAREER STRUCTURE
3) Senior Consultants or Managers
- Experienced consultants who lead consulting teams (3
to 5 years’ experience)
- With demonstrated ability to run consulting projects
- More involved in dealing with client team
4) Business Development Managers
- Develop firm’s products & build relationship w/ client
- Involved in large, complex projects at strategic level
- 5 – 10 yrs’ experience
 CAREER STRUCTURE
5) Directors or Partners
- Most experienced; responsible for
organizational development & strategy
development
- Maintain links with senior client personnel
- Overall project responsibility
- 10+ years of experience
 NATURE OF MAS
• Management advisory services (or mgt.
consulting)
1) – The function of providing professional advisory
(consulting) services
- Prime purpose: improve client’s use of its
capabilities & resources to achieve org. objectives
OR
2) – Independent & objective advisory service
provided by qualified persons to clients
to help them identify & analyze problems &
opportunities & recommend solutions & actions &,
if asked, to aid in implementation
 NATURE OF MAS
• Characteristics of MAS (not in book):
– For mgt.
– Problem-solving oriented
– Future-oriented
– Broad in scope
– Varied assignments
– Many non-recurring engagements
– Highly qualified staff
– Vital role of human relations
 NATURE OF MAS
• Mgt. consulting: 2 types of encounters with
clients:
1) Consultations
2) Engagements
Consultation
- Providing advice/info in a short time
- Provided orally in discussions
 NATURE OF MAS
• Engagement
- Analytical approach & process applied in a
study/project
- Approach involves:
1) Ascertaining pertinent facts & circumstances
2) Seeking & identifying objectives
3) Defining problem or opportunity for improvement
4) Evaluating & determining possible solutions
5) Presenting findings & recommendations
6) Implementing solution, if appropriate
 NATURE OF MAS
- Independent acctg. firm may also be involved in:
1) Planning & scheduling actions to achieve desired
results
2) Advising & providing technical assistance in
implementation
- Areas of consultant knowledge & experience:
1) Org. & mgt. methods
2) Office & mgt. functions
3) Systems & procedures
4) Data processing methods
5) Quantitative methods
6) Financial mgt.
 NATURE OF MAS
• Possible consultant-proposed solutions:
1) Mgt. information system
2) Sales reporting system
3) Cost accounting system
4) Work measurement program
5) Improved production control, etc.
 RATIONALE FOR USING MGT.
CONSULTANTS
• At least 4 reasons:
1) Independent viewpoint
- unbiased, objective, detached
2) Professional advisor & counselor
- w/ special knowledge, skill & attributes
- can inject new ideas learned from other
engagements
- CPAs generally preferred
3) Temporary professional service
4) Agent of change
INDEPENDENT ACCTG. FIRM’s ROLE
• To provide advice & technical assistance - the
only basis on which work shall be done
• Role of advisor
• Avoid making mgt. decisions or taking
positions impairing objectivity
 CPA’s OBJECTIVE
• - “To utilize essential qualifications in giving
advice & assistance that would enable client mgt.
to conduct its affairs more effectively.”
• Essential qualifications include:
• 1) Technical competence
• 2) Familiarity w/ client’s systems & problems
• 3) Analytical ability & experience in problem
solving
• 4) Professional independence, objectivity &
integrity