Prelims - MANREP

Chapter 1
Consultant is someone who has expertise in a specific area or areas and offers
unbiased opinion and advice for a fee. A consultant generally works in
conjunction with the resources and personnel of the client but uses employees,
sub-consultants or others as required for a specific project in accordance with
the agreement..

Role of Independent Accounting Firm’s Role in MAS

The role of an independent accounting firm in performing management advisory
services is “to provide advice and technical assistance which should provide for
client participation in the analytical approach and process….”

CPA’s Objective in Engaging in MAS

An independent accounting firm’s purpose in engaging in MAS is “to utilize the
essential qualifications it has available to provide advice and technical assistance
which will enable client management to conduct its affairs more effectively.”

Nature of MAS by Independent Accounting Firms

Management Advisory Services by independent accounting firms can be
described as the function of providing professional advisory 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.

Management Consulting can also be described as an independent and

objective advisory service provided by qualified persons to clients in order to help
them identify and analyze management problems or opportunities. Management
consultantsd also recommend solutions or suggested actions with respect to
these issues and help, when requested, in their implementation
Management Consultants help to effect constructive change in private or public
sector organization through the sound application of substantative and process
skills. These activities of management consultants can involve two types of
encounters with clients

1. Consultations

2. Engagements

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 Consultations normally consists of providing advice and information during a
short time frame. This advice or information is provided orally during one or more
discussions with the client.

Engagement consists of that form of management advisory or consultinbg

service in which an analytical approach and process is applied in a study or
project.

Rationale for Using the Management Consultants

A management accountant is hired for atleast four valuable reasons:

Independent Viewpoint - A consultant is independent, objective and detached to

the problems faced by the organization. These qualifications enable him to see
the nature of the problems and distinguish between feasible and infeasible
solutions.
Professional Advisor and Counselor - An experienced management
consultant possesses special knowledge, skills, and a variety of personal
attributes that make him the most desirable candidate to undertake an
engagement involving his area of expertise
Temporary Professional Service - The use of consultants will be probably less
expensive to the company than hiring new managers or employees to provide
professional advisory services.

Agent of Change - A management consultant is a catalyst for change. In

providing solutions to the client’s problems, changes may have to be made to the
organizational structures, to procedures, and to job responsibilities.

The Consulting Industry

The consulting industry’s definition would include

Information Technology

Consulting and System Integration

Corporate Strategy

Operations Management

Human Resources Management

Outsourcing

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 Types of Consultancy Firms
The main types of consultancy firms are as follows:

IT Firms - IT Companies have increasingly looked towards consulting as a

means of increasing revenue.

Accounting Firms Offering Consultancy - Many accountancy firms have sold

off their mainstream consulting operations either to management or to other
consultancies.

Major Consulting Only Firms - There are a number of large firms with a global
reach. They offer a whole wide range of services but their core business is
consulting.
Independents - Many individuals run their own consulting services as sole
traders, small limited companies and partnerships. They offer a range of services,
often specialized.

Career Strcuture in Consulting Firms

Job Titles vary but some of the common roles include the following:
Analysts - Analysts are responsible for gathering information and processing it
for the consulting team.
Consultants - Consultants undertake the evaluation of the client business and
make recommendations on its behalf.
Senior Consultants or Managers - More experienced consultants have
responsibility of leading a consultancy team undertaking a project on behalf of
the client.

Business Development Managers - They are responsible for developing the

firm’s products and building its relationship with clients.

Directors are the most experienced consultants, who take on responsibility for
the development of the organization as a awhole and who lead its strategic
development.

Chapter 2
Types of MAS Engagements
1. Nature of the Problem

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 2. Service Delivery Area

3. Phase of the Analytic Process

4. Techniques and Methodologies applied

5. Industry to which the client belongs and

6. Geographical area where the engagement take place

Nature of the Problem

Classifications of the nature of problem:

1. Corrective

2. Progressive

3. Opportunistic

Corrective Problem involves a situation in which conditions have worsened. It

usually arises suddenly and demands urgent action.

Progressive Problem involves an existing situation that can be improved.

Opportunistic Problem involves a situation in which a future opportunity exists.

Service Delivery Areas

The functions or activities in which the problema situation exists may be
classified in a number of ways. Within each principal area are several narrower
areas.

Application of the Analytic Process

An engagement could involve one or more or all of the phases and generally
could not be totally isolated.

Techniques and Methodologies Applied

Most engagements could be aided by technical models or methodologies.

Industry or Nature of Organization

A client who is the subject of an engagement may be privately owned business
firm, a government agency, or non profit non governmental organization, a

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 professional association or some other type of organization.

Geographical Areas
A consulting engagement may bve restricted to a single location, such as home
office of the client.

Information Systems Consulting

Managers need information if they are to make decisions. They need information
on both the business’ external affairs, its competitive environment and its internal
state. Information is a corporate resource.

Internal Audit Services

Internal Auditing is an independent, objective assurance and consulting activity
designed to add value and improve an organization’s operations. It helps an
organization accomplish its objectives by bringing a systematic, disciplined
approach to evaluate and improve the effectiveness of risk management, control
and governance processes.

Management / Operations Audit

Operational Audits also knowns as management audits and performance audits
are conducted to evaluate the effectiveness and or efficiency of operations.

Business Process Improvement / Reengineering

Process Reengineering is considered a more radical appraoch to improvement
than TQM.

Business Process is a diagrammed in detail, questionned and then completely

redesigned.

Cultural Factors
Organizational Culture refers to the mindset of employees including their
shared beliefs, values and goals.

Managing Organizational Change

Employee Assitance is a current problem in reengineering.
Changed Champion is an individual who recognized the need for change and
seeks to bring it about through his or her own efforts.

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 Other Types of Consultancy Work
Marketing Research is the process through which managers discover the nature
of the competitive environment in which they are operating.

Primary Research is information collected for the specific project.

Quantitative Research provides answers to questions when those answers
need to be expressed in statistical or numerical form. It aims to answer “how
much, how often, how many”

Qualitative Research provides answer to question that do not demand a

quantified answer. It provides insights that answer managers “who, what and
why”
Secondary Research is based on information tht has been collected earlier for
reasons other than the project on hand.

Marketing Strategy Development

Marketing Research is a powerful approach to identifying business
opportunities. Exploiting them, though, requires a marketing strategy.

Marketing Strategy defines the approach the business will take in order to get
the customers’ attention and critically get them to spend their money on the
business’ products or services.

Developing Promotional Campaigns

Promotional Campaigns is any program of activitiers dedicated to informing
customers about a product, stimulating their interest and encouraging purchase.

Planning Sales Force Activity

Expenditure on sales force activity is one of the most important investments
the firm will make.

New Product Development

New Product Development represents a complex project that draws in most,if
not all, of the firm’s function. It is often undertaken by interdisciplinary teams,
which cut across departmental boundaries.

Developing Proposals for Financial Support

Business often need infusion of Capital.

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 Staff Recruitment
Successful Recruitment can demand degree of specialist knowledge.

Exporting and International Marketing

The international stage offer the companies a route for expansion.

Chapter 3
Areas of Management Advisory Services
Management Consultancy services by CPAs can be categorized as follows:

TRADITIONAL SERVICES

1. Managerial Accounting this engagement involves providing assistance to

management related to planning and controlling the business operations as
well as decision-making.

2. Design and Appraisal of Accounting System

3. Financial Management Related Services

4. Project Feasibility Studies

EMERGING CONSULTANCY SERVICES

5. Global Risk Management Solution involves managing the totality of risks -

financial, operational and systems, and strategic to improve financial and
business performance.

Areas of Risk Management

Financial Risk Management measurement of risk-adjusted return on capital

and link performance evaluation to creation of shareholder value.

Strategic Risk Management review of a whole business unit, departures,

function or process so that senior management can fully understand the risk
of the operation

Operational and systems risk management controls assurance services,

technology risk services and operational risk services, corporate governance.

Compliance risk Management review of the compliance with regulatory

requirement and ethical conduct stndards.

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 6. Transaction Services this involve services related to mergers, acquisition,
divestitures, joint ventures, spin-off, and strategic alliance. Due diligence is
an example of this service which uncovers potential financial and strategic
risks and rewards.

7. Financial Advisory Services CPAs provide comprehensive financial,

economic and strategic advice to companies with complex business
problems and disputes.

8. Project Finance and Privatization this involves management advisroy

services related to partnership between the public and provate sectors in
delivering infrastracture and services or privatization and project finance.

9. Valuation Services these include service that guide clients through complex
business transactions such as acquisition or divestiture of investment, debt
structuring and finance raising entry to major stock exchange mergers.

10. Business Recovery Services CPAs provide services to troubled businesses

by emphasizing on the implementation and rationalization and recovery
programs designed to rebuild value.

11. Dispute Analysis and Investigations Most common type of services under
this categpory are environmental analysis, real estate damage, investigative
services, construction disputes, economic and financial analysis

12. Computer Risk Management Management consultants help client

undertsand and manage their business risks relating to the implementation
and use of technology.

13. Application Software Selection and Implementation The management

consultant assists clients in prioritizing their needs identifying the right
software and tailoring it to meet their specific requirement.

Determining the Scope of Service

Responsibility to Establish Scope of Services The accounting firm has the
responsibility to determine the scope of services it is competent to offer to the
public.
Independence The accounting firm, when providing MAS should give particular
consideration to both independence and the appearance of independence.

Competence Independent accounting firms have the responsibility of evaluating

their ability to render MAS of a professional quality in each specific area.
Competence in professional work involves both the technical qualifications of

Prelims - MANREP 8
 staff personnel and the firm’s ability to supervise and evaluate the quality of work
performed.

Requirements for Specialization The requirements for specialization in certain

areas may limit the scope of MAS offered by any given independent accounting
firm.

Identification and Resolution of client’s basic problems The scope of

services offered by an independent accounting firm should be adequate to
identify and resolve the basic client’s problems and not just problem symptoms.

Referrals Referral of MAS work to other independent accounting firms is another

way of developing that firm’s capability.
Code of Professional Ethics It is the responsibility of the independent
accounting firm to assure itself that the nature and scope of the MAS it elects to
offer are in conformity with the code of professional ethics.

Types of Clients Served

The proposed six client types are:

Contact Clients The contact client is the person, who first approaches the
consultant and proposes that the consultant addresses a problem or issue on
behalf of the organization

Intermediate Clients are members of the organization who become involved in

the consulting project. They will work with consultants and provide information.
They will sit on meetings and influence the way the project unfolds. They may be
the real recipients of the final report.

Primary Clients is the person or persons who have identified the problem or
issue the consultant has been called in to address and who are most immediately
affected by it. It is they who will be willing to pay in order to have the issue
resolved.

Unwitting Clients members of the organization who will be affected by the

intervention of the consultant. They do not initiate the project and have no direct
or formal control over it. They are nto aware that they will be affected by the
project.
Indirect Clients are members of the organization who will be affected by the
intervention of the consultant and who are aware that they will be affected.
However, the consulatnt is not aware that the project will have impact on them.

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 They may feel positive or negative about the consultants’ intervention. They can
be very influential behind the scene and unbeknown to the consultant.

Ultimate Clients are the total community that will be affected by the consultant’s
intervention. This will include members of the organization and possibly members
of the organization which come in contact with the client organization. They form
the universe of whose interests the consultant must take account when
progressing with the project.

Groups of Clients that CPAs can provide MAS

Privately owned business firms business enterprises involved in
merchandising, manufacturing, banking, transportation, insurance, food services,
education, telecommunications and others are potentially consultancy clients.

Governmental agencies and organizations engage management consultants

at one time or another.

Not for profit governmental organizations such as hospitals, research

institutions and charitable institutions are increasingly using management
advisory and sonculting services particularly on areas of proper raising of funds
and revenues while reducing costs.

Professional Associations organized by professionals often need advice and

assistance with respect to management and organizational problems
Others A catchall category to include such groups like labor unions, sports
organizations, and religious organizations will also provide potential clients of
management consultants.

Provision of Information
Information is valuable to a business. As a result, it has cost. It is a resource
that must be managed.

Provision of Specialist Expertise

Certain projects require the application of technical knowledge and an ability to
use specialist analysis techniques. Rather than have to learn these themselves,
managers will often call upon the support of consultants.

Provision of a New Perspective

Managers are not decision making automata. They are human beings who must
analyze complex environments, use well-developed but necessarily limited

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 cognitive skills and then make decisions in the face of uncertainty. Managers use
cognitive maps, mindsets, dominant logics through which they see their
managerial world.

Provision of Support for Internal Disagreements

A lot of times managers do not always agree with one another. Disagreements
arise over a wide range of issues. Conflicts of opinion take a variety of forms,

Provision of Support in Gaining a Critical Resource

An organization must attract resources in order to survive. One of the manager’s
critical functions i s attracting resources on behalf of the firm.

Facilitating Organizational Change

Organizations undergo change all the time. Sometimes this is a natural response
to the internal dynamics of organizatinal growth. At other times it may be in
response to the external impetus or shock that forces the organization to modify
the way in which it does things. Change usually meets resistance.

Chapter 4

Professional Attributes of Management

Consultants
Technical skills these include both understanding and experience in a technical
discipline

Interpersonal skills include personal attributes that make an individual amiable

among people and effective in accomplishing desirable objectives through people

Consulting process skills involve the ability to understand and use the
following approach in solving business problems:

a. Identify the cause of problems or inefficiencies

b. Identify alternative solutions

c. Select the most desirable alternative, and

d. Implement the chosen solution

Technical Skills

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 Education requirements - it depends on the area of specialization
A. Technical Training

a. Length of Education - bachelor’s degree is prerequisite, if not, have one or

two graduate degrees

b. Type of Education - technical degree and/or a general degree

B. Common Core Requirement

Regardless of a person’s area of specialization, the following common core

courses should be included:

1. Communications

2. Mathematics and statistics

3. Computer data processing

Interpersonal Skills or Developed Attributes

Intelligence or capacity for logical thinking and reasoning refers to the ability
to absorb and relate facts to reason inductively and deductively
Integrity pertains to the number of attributes, such as moral and ethical
soundness; fairness; equity; etc.

Objectivity is the ability to grasp and to represent facts, unbiased by prejudice

while being independent

Understanding of people (human relations; empathy) - ability to anticipate

human reactions to differing situations

Judgment - ability and reasoning power to arrive at a wise decision, a course of

action or a conclusion, especially when only meager facts are available
Courage is the strength of mind and character; the ability to stand by one’s
convictions regardless of pressure
Ambition is the desire and motivation to earn and obtain full recognition for the
attainment of professional status
Psychological maturity is the ability to view situations in perspective and to take
action needed on calm and controlled basis

Physiological equilibrium - high-energy level to (1) support his/her intellectual

and emotional activities, (2) enable him/her to withstand pressure and frustration,
and (3) avoid physical illness

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 Relationship-building skills

a. An ability to build rapport and trust with the client

b. An ability to question effectively

c. An ability to communicate ideas succinctly and precisely

d. An ability to negotiate objectives and outcomes

e. An ability to convince through verbal, written and visual mediums

f. An ability to use information to make a case for a particular course of

action

g. An ability to develop selling strategies

h. An ability to work effectively as a member of a team

i. An ability to listen effectively

j. An ability to demonstrate leadership

Common Barriers in Effective Communication Between the

Client and the Consultant
Know-It-All-Attitude and/or prejudice of some personnel of the client - the
consultant should try to develop a cooperative and supportive climate and should
approach the person from his/her own perspective.
Inability to understand technical language - the consultant should exercise
care when using words that may be misunderstood by the receiver and seek
immediate feedback, when necessary
Inadequate background or knowledge - the consultant should have patience
and empathy for the receiver
Resistance to change - the consultant should seek the support of the client and
its employees and encourage their input regarding the proposed change
Information overload - try to guide clients by helping them manage their time,
set priorities and delegate work responsibilities to others
Project management skills

a. An ability to define objectives and outcomes

b. An ability to develop formal plans

c. An ability to sequence and prioritize tasks

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 d. An ability to manage the financial resources that are to be invested in the
consulting project

e. An ability to recognize the human expertise necessary to deliver the project

f. An ability to manage personal time

Analysis skills

a. An ability to identify what information is available in a particular situation

b. An ability to identify what information is needed in a particular situation

c. An ability to process that information to identify the important relationships

within it

d. An ability to draw meaning from that information and use it to support

decision-making

e. An ability to recognize the business’s profile of strengths, weaknesses and

capabilities

f. An ability to recognize the opportunities and challenges the environment

offers the business

g. An ability to assess the business’s financial situation

h. An ability to evaluate the business’s markets and how they are developing

i. An ability to assess the business’s internal conditions

j. An ability to analyze the way in which decision-making occurs within the

business

Consulting Process Skills

1. Problem definition phase has the purpose of fully describing the underlying
problem

2. Identification of Alternative Solutions - fact-finding and analysis phase

3. Selection of the most desirable alternative - solution development phase;

developing a detailed plan of action

4. Presentation

5. Implementation phase - putting the detailed plan into operation; it may,

however, involve a high degree of logistic complexity

Prelims - MANREP 14
 Chapter 5
MAS Practice Standards
The AICPA’s Management Advisory Services Division made and recommended
these as guidelines to all MAS practitioners:

1. Personal Characteristics - must act with integrity and objectivity and be

independent in mental attitude

2. Competence - engagements are to be performed by competence in the

analytical approach and process and in the technical subject matter

3. Due Care - this is to be exercised in the performance of engagements

4. Client Benefit - before accepting an engagement, notify the client of any

reservations he has regarding anticipated benefits

5. Understanding with client - before accepting an engagement, inform the

client of all significant matters related to the engagement

6. Planning, Supervision and Control - engagements are to be adequately

planned, supervised and controlled

7. Sufficient Relevant Data - this is to be obtained, documented. and

evaluated in developing conclusions and recommendations

8. Communication of Results - all significant matters relating to the result of

the engagement are to be communicated to the client

Personal Characteristics
Integrity - highly personal characteristic which ensures that statements of
findings and recommendations are free of intentional distortions or
misstatements
Objectivity - the ability to avoid bias and to maintain an impartial attitude on
all matters under review
A practitioner may undertake only those engagements in which he can
maintain an independent mental attitude
He must avoid assuming the role of management

His services is limited only to those of an objective researcher, analyst, or

advisor, NOT a decision maker

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 Competence
Competence in the professional work involves:

a. the technical qualifications of the practitioners; and

b. the ability to supervise the personnel assigned, to evaluate the quality of

work performed, and to accept responsibility to the client for successful
completion of the engagement

Competence is acquired and maintained through a combination of education

and experience.
Competence may be augmented by research and by consultation with others

Due Care
Due care involves diligence and appropriate attention in carrying out the
assignment
It requires that all work be done within the provisions of the Code of
Professional Ethics and other Professional Standards for CPAs.

Client Benefit
An assessment of anticipated benefits often requires sufficient exploratory
work to establish their reasonableness and also requires the exercise of
judgment
Unwillingness to accept or inability to implement appropriate
recommendations could impair realization of potential benefits

Understanding with Client

The significant matters related to an engagement include:

a. the Engagement’s Objectives

b. its Scope

c. the Approach

d. the Role of all Personnel

e. the Manner in which Results are to be Communicated

f. the Timetable

g. the Fee

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 There should be a clear expression by the practitioner as to both the
engagement objectives and the extent and nature of the practitioner’s
involvement
A formal contract, in a letter of understanding, or in a file memorandum
summarizing the terms of an oral agreement with the client should be
prepared.

Planning, Supervision, and Control

Planning is the translation of engagement objectives into a structured set of
activities and events within a targeted time schedule. The engagement plan
is then to be used in supervising and controlling the engagement

Supervision - an engagement must be performed and supervised by

competent personnel
Control - effective control requires measurement of progress in meeting the
engagement plan and objectives

Sufficient Relevant Data

The source and reliability of the data, and any limitations with respect thereto;
must be considered in formulating conclusions

The documentation should record, as appropriate:

a. the evidential matter obtained and its source

b. the alternatives considered

c. the analytical process leading to specific recommendations

Communications of Results
Reports to the client may be written or oral

Interim Communications
It is desirable as it encourages the involvement of management
It should normally summarize:

a. findings to date

b. work accomplished in relation to plan

c. when appropriate, tentative recommendations

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 Final Report
This should be made to the client upon completion of an engagement to
ensure that results and recommendations are communicated.
It should be responsive to the objectives and scope of the engagement

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
persons who hold a valid certificate issued by the Board of Accountancy (i.e.
CPA), whether they be in public practice, (including sole proprietorship or
partnership), industry, commerce, the public sector or education.”

The following provisions in the Revised Code of Ethics for Professional

Accountants in the Philippines are applicable and relevant in providing
Management Consultancy services among the non-assurance services of
professional accountants

PART A
Section 100.1 states that a distinguishing mark of the accountancy profession
is its acceptance of the responsibility to act in the public interest
Section 100.4 describes the Fundamental Principles that every professional
accountant must observe:

a. Integrity - obligation to be straightforward and honest and fair dealing

and truthfulness

b. Objectivity - obligation not to compromise their professional or business

judgment because of bias, conflict of interest or the undue influence of
others

c. Professional Competence and Due Care - a continuing duty to

maintain professional knowledge and skill at the level required; to act
diligently in accordance with applicable technical and professional
standards
Professional competence may be divided into two separate phases:

attainment of professional competence; and

maintenance of professional competence

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 d. Confidentiality - respect the confidentiality of acquired information
The need to comply with the principle of confidentiality continues even
after the end of relationships between a professional accountant and a
client or employer
Professional accountants are or may be required to disclose
confidential information when:

a. Disclosure is permitted by law and is authorized by the client or the

employer

b. Disclosure is required by law

c. There is a professional duty or right to disclose, when not prohibited

by law

e. Professional Behavior - obligation to comply with relevant laws and

regulations and avoid any action that discredits the profession
In marketing, professional accountants should be honest and should not:

a. make exaggerated claims for the services they offer, qualifications

they posses, or experience they gained

b. make disparaging references or unsubstantiated comparisons to the

work of others

Ethical Conflict Resolution

A professional accountant should consider the following, either individually or
together with others, as part of the resolution process:

Relevant facts;

Ethical issues involved;

Fundamental principles related to the matter in question;

Established internal procedures; and

Alternative courses of action

If it cannot be resolved, a professional accountant may wish to obtain advice

from the relevant professional body or legal advisors
If, after exhausting all relevant possibilities. the conflict remains unresolved, a
professional accountant should, where possible, refuse to remain associated
with the matter creating the conflict

Prelims - MANREP 19
 Some Ethical Issues
“Do the right thing. You can’t do much better than consistently try to do the
right thing.”
Guidelines that may find useful in determining whether he is doing the right
thing or not are:

1. Does the activity improve the client’s 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

It represents the attitude, principles and approaches that contributed most to
success and make for equitable and satisfactory client relationship

The common principles found in this Code of Ethics is broadly classified into
four areas:

1. Basic responsibilities

2. Practice standards

3. Fees arrangements

4. Business conduct

Basic Responsibilities of Management Consultants

Integrity and objectivity

1. Do not knowingly misrepresent facts and never subordinate judgment to

others.

2. Place the interests of clients ahead of personal interests and serve the
client with integrity.

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 3. Inform the clients of any special relationships, circumstances, or interest
that might influence judgment or impair objectivity.

4. Do not assume the role of management or take any positions that might
impair objectivity.

Independence

1. Take an independent position with the client, making certain that advise
to a client is based on impartial consideration of all pertinent facts and
responsible opinions.

2. Do not serve an enterprise without independence with respect to that

enterprise.

3. Do not serve a client under terms or conditions that might impair

objectivity, independence, or integrity. Reserve the right to withdraw if
conditions develop that interfere with the successful conduct of the
assignment

4. Do not serve two or more competing clients in areas of vital interest

without informing each client.

Confidential Information

1. Guard as confidential all information concerning the affairs of a client that

is gathered during the course of a professional assignment.

2. Do not take advantage of material or inside information resulting from a

professional relationship with a client.

3. Do not disclose any confidential information obtained in the course of a

professional engagement except with the client’s consent.

Practice Standards for Management Consultants

Professional competence

1. Undertake only engagements that can be completed with professional

competence.

2. Accept only assignments for which the necessary qualifications are

possessed.

Prelims - MANREP 21
 3. Present qualifications for serving a client solely in terms of competence,
experience, and standing.

Planning, supervision, and due care

1. Before accepting an assignment, confer with the client or prospective

client in sufficient detail and gather sufficient facts to gain an adequate
understanding of the problem, the scope of study needed to solve it, and
the possible benefits that may accrue to the client.

2. Accept only assignments believed to be beneficial to the clients, and do

not accept any assignment of such limited scope that the client cannot be
served effectively.

3. Adequately plan and supervise an engagement.

4. Assign personnel qualified by knowledge, experience, and character to

give effective service in analyzing and solving the particular problem or
problems involved.

5. Provide the client with a written proposal that outlines the objectives,
scope, approach, and - where possible - the estimated fee or fee basis
for the proposed services, except where client relationships make it
unnecessary.

6. Exercise due professional care in the performance of an engagement.

7. If conditions change during the engagement, discuss with the client any
changes and obtain the client’s agreement (preferably in writing) to such
changes before taking action on them.

8. Obtain sufficient relevant data to afford a reasonable basis for

conclusions or recommendations in relation to an engagement

9. Do not knowingly without permission use proprietary data, procedures,

materials, or techniques that others have developed but not released for
public use.

Reporting results

1. Perform each assignment on an individual basis and develop

recommendations designed specifically for the solution of each client’s
problems.

Prelims - MANREP 22
 2. Develop solutions that are realistic and practical and that can be
implemented promptly and economically.

3. Acquaint client personnel with the principles, methods, and techniques

applied, so that the improvement suggested or installed can be properly
managed and continued after completion of the engagement.

4. Maintain continuity of understanding and knowledge of client’s problems,

and the work that has been done to solve them, by maintaining
appropriate files of reports submitted to clients.

5. Do not guarantee any specific result, such as the amount of cost

reduction or profit increase.

6. Do not permit your name to be used in conjunction with any forecast of

future transactions in a manner that could lead to the belief that you
vouch for the achievability of the forecast.

Fee Structure Standards for Management Consultants

1. Charge reasonable fees that are commensurate with the nature of
services performed and responsibility assumed.

2. Do not offer or render professional services under an arrangement

whereby no fee will be charged unless a specified finding or result is
obtained.

3. Where feasible, agree with the client in advance on the fee or fee basis.

4. Do not pay a fee or commission to obtain a client or franchise a business

practice; do not accept as well

5. Do not structure pricing or charging practices in a way that impairs

independence or objectivity or contributes to a conflict of interest with the
client

Business-conduct Standards for Management Consultants

1. Strive continuously to advance and protect the standards of the
consulting profession.

2. Contribute to the development and understanding of better ways to

manage corporations, organizations, and other institutions.

3. Share methods and techniques used in serving clients.

Prelims - MANREP 23
 4. Avoid not only professional improprieties but also the appearance of
improprieties, and never commit an act discreditable to the profession.

5. Do not advertise services in a manner that is false, misleading, or in any

other manner derogatory to the dignity of the profession.

6. Do not concurrently engage in any business or occupation that would

create a conflict of interest in rendering professional services.

7. Do not accept an assignment for a client with another management

consultant is serving that client unless it conflict is satisfied between the
two and have been consented by the client.

8. Do not make offers of employment to consultants on the staff of another

consulting firm without first informing the other firm.

9. Do not solicit employees of clients except with the client’s consent.

10. Do not associate with any consultant who does not adhere to the code of
professional ethics.

Prelims - MANREP 24