ACTUAL SITUATION THAT NEEDS A MANAGEMENT CONSULTANT

In 2007, Banco De Oro Universal Bank acquired the majority shares of Equitable PCI
Bank making it the largest bank in the country. During that time, Banco De Oro
ranks number ten among the universal banks and the acquisition resulted to an
abrupt change in their status. The biggest challenge that came to their attention is
on how to retain the clients of Equitable PCI Bank. Another thing is on how to
sustain the bigger bank networks which in reality served as the distribution channel
of their products and services. But before the acquisition, Equitable PCI Bank was
named as among the banks associated with the former president of the country
who is the subject of an impeachment trial. This means, the acquisition was
apparently mixed with the color of politics, thus, creating reputational risks.

One the major decisions made by the board of directors is to change the name of
Bank to clean its name against the political scandal which previously tainted the
image of the acquired entity.
 ACTUAL SITUATION THAT NEEDS A MANAGEMENT CONSULTANT

The top management of the Bank decided to hire an independent management

consultant to give recommendations on what appropriate actions should be made
so that the bank’s operations, customer impact, growth and profitability will not be
adversely affected.

Do you agree that the name of the acquired entity has something to do with the
image of the bank and, thus, has a negative effect as far as customer behavior and
public perception is concerned?

After the merger, the president decided that the name of the bank will be BDO EPCI
Bank, and that some of the branches already replaced their respective signages.
AUDIT FINDINGS AND RECOMMENDATIONS THAT MAY LEAD TO MANAGEMENT
CONSULTANCY SERVICES

1. The company is not practicing the “imprest cash system” wherein cash
receipts for the day should be deposited intact the next banking day. This
system should be immediately implemented to avoid possible temporary
borrowing for personal use of funds still in the possession of the custodian.

This audit finding would give an idea for the client to consult the CPA on the
specific areas in handling cash that needs to be improved. In doing so, an
additional engagement, which is the management consultancy will be
offered, hence, advantageous on the part of the accounting/auditing firm.
AUDIT FINDINGS AND RECOMMENDATIONS THAT MAY LEAD TO MANAGEMENT
CONSULTANCY SERVICES

2. The company experienced a substantial amount of bad debts during the

year that created a huge amount of allowance and provisioning for
uncollectible amounts. It was found out that the company has no clear cut
policy to expedite collections. The accounting/auditing firm can make
recommendations to formulate guidelines and policies on the collection of
bad accounts to strengthen cash position and liquidity. This is another
opportunity for the firm to engage in management consultancy wherein
rules and guidelines will be promulgated to expedite collection of bad
accounts.
 PROFESSIONAL ATTRIBUTES OF MANAGEMENT CONSULTANTS

Formal Education is far different from Informal Education. Topics discussed inside
the classroom as well as the case analysis and problem solving methodology are
activities in formal education. Informal education however refers to the things
that we learned in actual practice of our respective professions. It takes a lot
time, courage, perseverance and outstanding inter-personal skills before we
acquire knowledge and wisdom through information education. We have to
accept the reality that we learned more on informal education rather than on
formal education.

Examples of the things we learned in informal education are understanding the

strength and weaknesses of people by working with them all along; how to inject
audit procedures on audit program depending on the nature of the business of
your company.
 SELECTED CPA BOARD EXAMS QUESTIONS ON MANAGEMENT CONSULTANCY

1. The main focus of management accounting is:

a. Decision making
b. Preparation of financial statements
c. Budget preparation
d. Documenting cash flows

2. Which of the following functions is most directly related to management by

objective?
a. Reporting
b. Decision making
c. Control
d. Planning
 SELECTED CPA BOARD EXAMS QUESTIONS ON MANAGEMENT CONSULTANCY

3. The setting of objectives and the identification of methods to achieve those

objectives is called:
a. Planning
b. Controlling
c. Decision making
d. Performance evaluation

4. In the planning and control process, what is the proper sequence of events?
a. Set goals, set objectives, develop plans, implement plans, evaluate
performance.
b. Establish a master budget, set standard costs, develop variance analysis
c. Develop engineered costs, develop pricing targets, calculate contribution
margins
d. Identify variable costs, identify fixed costs, project the sales mix, determine
break even.
 SELECTED CPA BOARD EXAMS QUESTIONS ON MANAGEMENT CONSULTANCY

5. The primary objective of management accounting is to provide:

a. Stockholders and potential investors with useful information for decision
making.
b. Banks and other creditors with information useful in making credit
decisions.
c. Management with information useful for planning and control of
operations.
d. Supervising government agencies with information about the company’s
management affairs.

6. Management accounting information

a. Uses historical cost as the basis for reports to managers who are making
decisions about future courses of action.
b. Should be developed and provided only if the benefits exceed its costs
c. Does not reflect the financial criteria of verifiability of consistency.
 SELECTED CPA BOARD EXAMS QUESTIONS ON MANAGEMENT CONSULTANCY

d. Should serve the basis needs of investors and creditors.

7. Which of the following is included in the day to day work of the management
team?
a. Decision making
b. Planning
c. Controlling
d. All of the above

8. Which of the following statements is true when comparing managerial

accounting to financial accounting?
a. Managerial accounting places more emphasis on precision than financial
accounting.
b. Both are highly dependent on timely information.
c. Both rely on same accounting information system
d. Managerial accounting is concerned with external decision makers
 SELECTED CPA BOARD EXAMS QUESTIONS ON MANAGEMENT CONSULTANCY

d. Managerial accounting is concerned with external decision makers.

9. Which of the following is true of managerial accounting rather than financial

accounting?
a. The outputs of this accounting system are the basic financial statements
b. The methods of this accounting system are established by an overseeing
board.
c. The accounting methods are standardized to allow comparisons among
companies.
d. The accounting system would be unique to each company.
 SELECTED CPA BOARD EXAMS QUESTIONS ON MANAGEMENT CONSULTANCY

10. Management accounting’s role in the control processes is to provide:

a. Managers with information that can be used to determine customer
satisfaction levels.
b. Investors and creditors the information about financial stability of the
company.
c. Managers with relevant information to compare actual results with
expectations.
d. Input to managers on the best ways to achieve continuous improvement in
the production process.
 SELECTED CPA BOARD EXAMS QUESTIONS ON MANAGEMENT CONSULTANCY

11. Which of the following statements is (are) true regarding financial and
managerial accounting?
I. Both are mandatory
II. Both rely on the same underlying financial data
III. Both emphasize the segments of an organization, rather than just
looking at the organization as a whole.
IV. Both are geared to the future, rather than to the past

a. I, II, III and IV

b. Only II, III and IV
c. Only II and III
d. Only II
 SELECTED CPA BOARD EXAMS QUESTIONS ON MANAGEMENT CONSULTANCY

12. Which of the following statement is false?

a. Management accounting need not mostly conform to PFRS.
b. Financial accounting reports focus on sub-units of the organization.
c. Managerial accounting is not required.
d. Managerial accounting focuses on the needs of the internal users.

13. For internal users, managers are more concerned with receiving information
that is:
a. Completely objective and verifiable.
b. Completely accurate and precise.
c. Relevant, flexible, and immediately available.
d. Relevant, completely accurate, and precise.