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Sunday, June 14, 2020

Course Outline in Management Services

Course Description

The course is a 6-unit course, which covers the basic consideration in Management Advisory Services (MAS); how and when it is required. It provides students a board description of the nature of management services, how they are conducted, what specific techniques may be applied. Management Advisory Services can be described as the function of providing professional advisory (consulting) services, the primary purpose of which is to improve the client's use of it's capabilities and resources to achieve the objectives of the organization.

Course Content

Grading Period	Topics
Midterms	UNIT 1 Introduction to Management Advisory Services: Entering the New Field in Management Accounting Topics: 1. Management Advisory Services defined/scope/characteristics 2. Professional qualifications ion the practice of Management Advisory Services 3. Certified Public Accountants (CPAs) as Consultants 4. Management Advisory Services Practice Standards 5. Stages of Management Advisory Services Engagement 6. Management Advisory Services Proposal Letter 7. Managerial Accounting and Financial Accounting Distinguished 8. Management Accounting and the Business Environment
	UNIT 2 Understanding Financial Statements: The Business Communication medium Topics: 1. Financial Statements (Balance Sheet, Income Statement, Retained earnings, Cash Flow, Notes to Financial statements) 2. Financial Statement Analysis 1 and 2 3. Cash Flow Statement Analysis 4. Gross Profit Analysis 5. Earnings per share determination.
	UNIT 3 Cost Concepts, Classification, Behavior and Applications: Basic foundation of Management Accounting Topics: 1. Cost concepts and classifications 2. Cost behavior: Analysis and use 3. Systems design: Job Order costing, 4. Process Costing and Activity Based Costing
	UNIT 4 Decentralized Operations and Responsibility Accounting System and Transfer Pricing Topics: 1. Nature of Decentralized operations 2. Advantages of Decentralization 3. Concepts, Objectives and Advantages of Responsibility Accounting 4. Cost centers, Profit centers, Investment Centers and Revenue Centers 5. Segment Reporting 6. Rationale and definition of Pricing 7. Discuss the need for transfer price 8. Alternative transfer pricing schemes
	UNIT 5 Variable (Direct) Costing: A Precision Gem in the Treasures of Management Topics: 1. Nature of Variable Costing and Absorption Costing 2. Variable Costing and Absorption Costing Distinguished 3. Advantages and disadvantages of Variable Costing 4. A balanced sales and production Sales and production out of balanced 5. Preparation of income statement under variable and Absorption Costing. 6. Comparison and reconciliation of net income under variable and absorption costing
	UNIT 6 Break-even Analysis: An Indispensable Management Decision-Making Tool. Topics: 1. Definition, Nature, Scope 2. Variable Costs, Fixed Costs & Contribution Margin 3. Margin of Safety 4. Mix (Composite) Break-even.
	UNIT 7 Budgeting: An Indispensable Instrument for Business Survival Topics: 1. Definition, nature, scope 2. Budget defined/types and uses of budget 3. Composition of a master budget 4. Steps in budget preparation 5. Detailed illustration of each of the components of the master budget through problem-solving
FINALS	UNIT 8 Standard Costing: The Ladder to Attain Business Topics: 1. Basis of setting standards 2. Analysis of Materials cost variance Material Quantity Variance Material Price Variance 3. Analysis of Labor Cost variance Labor Efficiency Variances under the fixed budget Labor Rate variance 4. Analysis of Factory Overhead Variances under the fixed budget Two-variance method Three-variance method 5. Analysis of Factory Overhead under the flexible budget Two-variance method Three-variance method Four-variance method Material mix variance
	UNIT 9 Relevant Revenue, Costing and Decision Making: A Tool Financial Managers Use Topics: 1. Decision making process 2. Identifying relevant costs 3. Types of decisions · Make or buy · Add or drop a product or other segment · Sell now or process further · Utilization of scarce resources · Shut-down or continue operations Pricing
	Unit 10 Capital Budgeting: The Road Map to Growth in Business Topics: 1. Definition, nature and scope 2. Characteristics of Capital Budgeting 3. Factors to consider in evaluating capital expenditures · Net investment · Net returns · The lowest acceptable rate of return 4. Techniques used in analyzing capital expenditures 5. Methods, which do not consider the time value of money. a. Payback Period b. Accounting rate of return c. Methods which consider the time value of money d. Net present value e. discounted rate of return f. profitability index g. discounted payback period

References

A. Textbook:

B. Books:

Whittington, O. Ray, author. Wiley CPAexcel exam review study guide 2016 : business environment and concepts. Hoboken, New Jersey : Wiley, 2016.

C. Online References

www.maaw.infor/relevantcostingarticles.htm.

Prepared by:

SIEGFRIED M. ERORITA

MANAGERIAL ACCOUNTING/ MANAGERIAL ADVISORY SERVICES

MANAGEMENT ADVISORY SERVICES DEFINED:

Management advisory services refer to the function of providing professional advisory (consulting) services, the primary purpose of which is to improve the client’s use of its capabilities and resources to achieve the objectives of the organization.

CHARACTERISTICS OF MANAGEMENT ADVISORY SERVICES:

1. Service is for management

2. Related to the future

3. Problem solving

4. Non-recurring

5. Broad in scope

6. Varied assignments

7. Greater job specifications

8. Require good human relations

MANAGERIAL ACCOUNTING vs. FINANCIAL ACCOUNTING

Bases of Comparison Managerial Financial

a. Users internal external

b. Nature of reports special general

c. Time frame future historical

d. Reporting standards flexible GAAP

e. Analysis of data subjective objective

& Objective

The Work of Management and the Planning and Control Cycle.

1. Planning

2. Directing and motivating

3. Control

4. Decision-making

Need for Information. (information vs data)

CHARACTERISTICS OF MANAGERIAL ACCOUNTING REPORT

1. Relevance

2. Timeliness

3. Accuracy

4. Clarity

5. Conciseness

AREAS OF MANAGEMENT ADVISORY SERVICE

1. The management functions of analysis, planning, organizing and controlling.

2. The introduction of new ideas, concepts and methods to management.

3. The improvement of policies, procedures, systems, methods and organization relationship.

4. The application and use of managerial accounting, control systems, data processing and mathematical techniques and methods.

5. The conduct of special studies, development of plans and programs, preparation of recommendations and provision of advice and technical assistance in their implementation.

Organizational Structure. Organizational structure refers to the way in which responsibilities and authority are distributed within an organization.

1. Centralization vs. decentralization.

2. Organization charts.

3. Line and staff relationships.

4. The Chief Financial Officer. The controller is the manager in charge of the accounting department and he/she reports to the Chief Financial Officer (CFO). The CFO is usually a member of the top-management team and should be an active participant in the planning, control, and decision-making processes at the very highest levels in the organization.

TREASURERSHIP vs. CONTROLLERSHIP FUNCTIONS

1. Provision of Capital 1. Planning and control

2. Investor relation 2. Reporting and interpreting

3. Short-term financing 3. Evaluating and consulting

4. Banking and custody 4. Tax administration

5. Credits and collection 5. Government reporting

6. Investments 6. Protection of assets

7. Insurance 7. Economic appraisal

The Changing Business Environment.

-JIT

-TQM

-Benchmarking

-Process Reengineering.

-Theory of Constraints (TOC).

-Professional Ethics. ( ethics vs values)

MANAGEMENT ADVISORY SERVICES PRACTICE STANDARDS:

1. Personal Characteristics

a. Integrity c. Independence

b. Objectivity

2. Competence

a. Analytical proficiency

b. Knowledge and techniques

3. Due Care

4. Client Benefit

5. Understanding with the client

6. Planning, Supervision and Control

7. Sufficient relevant data

8. Communication of results

ETHICAL CONSIDERATIONS IN MANAGEMENT ADVISORY SERVICES:

Professional limitations or restrictions imposed by the ethical codes:

a. Solicitation of clients and encroachment.

b. Advertising

c. Use of the CPA's name

d. Division of profits and fees with the laity

e. Incompatible occupation/confidentiality (independence/integrity)

f. Contingent fees

g. Competitive fees

h. Forecasts

STAGES IN MAS ENGAGEMENT:

1. Negotiating the engagement

2. Preparing for and starting the engagement

3. Conducting the engagement

4. Preparing and presenting the report and recommendations.

5. Implementing the engagement

6. Evaluating the engagement

7. Post-engagement follow-up

CONFIRMATION OF THE UNDERSTANDING IN WRITING:

a. Letter of Proposal

A letter of proposal includes the following:

1. The objectives and benefits of the engagement

2. The scope of the work and the role of the CPA

3. The approach to the study

4. The project organization

5. Fees and billing arrangements

6. Firm qualifications where appropriate

b. Letter of Agreement

ENGAGEMENT PROGRAM - a detailed plan, usually in writing, for carrying out a management services engagement.

a. Contents of an Engagement Program

1. The objectives and description of each task to be accomplished

2. A description of tangible output required at completion of each task

3. A list of the manpower required

4. A list of the personnel assigned

5. The starting and completion dates

b. Conducting the Engagement

In general, the conduct of an engagement may be divided in two phases:

1. Gathering of data, and

2. Evaluating or analyzing the data gathered

c. Standard Techniques Utilized by Consultants in Fact-Finding:

1. Personal interviews

2. Document reviews

3. Previous studies

4. Observations

5. Charting

PREPARING AND PRESENTING THE REPORT AND RECOMMENDATIONS:

a. Interim report

b. Final report

1. Long form report

2. Short-report Letter