NOTE: The approved syllabus for Business Law and Taxation mandates maximum of 70 items (not 100 items). MANAGEMENT SERVICES This subject tests the candidates' knowledge of, and proficiency in the concepts, standards, techniques, and methodology applicable to management services / consultancy practice by CPAs; management accounting; financial management-related services; capital budgeting concepts and techniques; and project feasibility studies. Each examination will contain a minimum of 50 and a maximum of 70 multiple choice questions, allocated to the different subject areas, as indicated below. 1.0 Management Accounting-Related Services COMPETENCY 1.1 Describe the role, historical perspective, and direction of management accounting a. Objectives, scope, relationship with financial accounting and cost accounting, role and activities Management functions and accounting; information needs of managers and other users for c. Management Accounting and Ethical Conduct Ethical behavior and code of conduct of management accountants, Code of conduct on the d. Current focus of Management Accounting Impact on organization structure: focus on the customer, cross-functional teams, computer integrated manufacturing, product life cycles and diversity; time-based coinpetition, global competition; information and communication technology management; just-in-time inventory; total quality management, continuous improvement and benchmarking, cost manageinent system, e. Certification available to Management Accounting The Institute of Management Accountants and CMA Certification 1.2 Describe and illustrate the foundations of management accounting a. Understanding and analysis and interpretation of financial statements Objectives, general approach, limitations and steps in financial statements analysis Analysis of business performance and financial position such as comparative financial b. Cost terms and concepts/cost behavior design of cost and management accounting systems Basics of cost behavior, cost classification on financial statements, flow of costs in Splitting mixed costs - high-low method, least-squares regression, scatter graph System design: Job order costing and process costing System design. Activity-based costing and management, rationale, advantages, limitations and desion of an ABC system c. Variable costing and absorption costing Underlying concepts, advantages and disadvantages of variable costing Coinparison between variable costing and absorption costing Preparation of financial statements under variable and absorption costing including reconciliation of net income d. Business planning Objectives and uses of a business plan Distinction between a business plan and strategic plan Setting short term objectives consistent with long term strategies Development of business plans to meet agreed objectives, basic segments and contents of a business olan Strategic planning 1.3 Describe and illustrate Management accounting concepts and techniques for planning and control Basic concepts, significance, uses, assumptions and limitations of CVP analysis b Responsibility accounting, transfer pricing, performance evaluation, and balanced scorecard Types of responsibility centers (revenue, cost. profit and investment), transfer pricing- Nature of decentralized operation (a) Advantages of decentralizauon (b) Limitauons of decentralization (c) Segment reporting Levels of segmented statement (a) Segmented income statement in the contribution format 1 Sales and contribution margin 2 Traceable and common fixed costs 3 Problems related to proper cost assignment 4 Ormission of costs (i) Inappropriate methods for allocating costs among seginents (ii) Arbitrarily dividing common costs among seginents (iii) Advanced management control and strategic performance measurement 1.43% 1 1 : COMPETENCY 1.5 Advanced analysis and appraisal of performance financial and non-financial a. Describe the financial and nonfinancial performance measures Performance measurement in multinational companies Computation of foreign division's ROI Distinguishing performance of managers from performance of organization units Managing productivity and marketing effectiveness b. Illustrate managing productivity Measuring productivity Partial productivity (a) Partial operational productivity Partial financial productivity Advantages/limitations of partial productivity measures Total productivity (b) Benefits and limitations of total productivity measures -1 Managing marketing effectiveness -2 Summary of variance analysis to assess marketing effectiveness c. Describe the objectives of management compensation Executive performance measures and coinpensation Cash compensation Noncash compensation Bonus plans Bases for bonus compensation (a) Bonus compensation pools (b) Bonus payment options (c) Performance measures at the individual activity level Performing tasks Team-based compensation arrangements Environmental and ethical responsibilities Management Consultancy Practice by CPAS 2.0 Determine the overview of Management Advisory Services 2.1 Evolution of MAS, developing trends, future prospects Nature of MAS by independent accounting firms, rationale of using management consultants, Areas of Management Advisory Services Areas of MAS practice: traditional and emerging, Detennining scope of service, Types of chent served Professional attributes of management consultants (technical, interpersonal and consulting process Code of ethics for professional accountants in the Philippines applicable to non-assurance services Organization and management of the MAS practice 2.2 Stages of management consulting engagement 2.3 Project inanagement and control 2.4 Presentation of engageinent reports 2.5 Management of the client relationship 2.6 Management of people relationships 2.7 Managing the quality of consulting engageinents 3.0 Financial Management-Related Consultancy Services Financial forecasting 31 Identify Role of financial management a. Objectives of the firm b. Nature of financial forecasting c. Steps in financial forecasting d. Projected financial statement method e. Working capital management and financing decision 1.2 Identify the basic concepts and significance of working capital management Working capital policy, advantages of adequate working capital, disadvantages of inadequate or excessive working capital, alternative current asset investiment and financing policies, risk-return a. trade off, external financing needed (EFN) b. Management of current assets 33 Illustrate the objectives of current assets managcinent, cash conversion cycle a. Cash and marketable securities management b. Objectives, reasons for holding cash, cash management techniques securities 2 Receivables management Objectives, factors in determining accounts receivable policy, costs associated with accounts C. receivable, sumunary of trade-offs in credit and collection policies 1 Marginal or incremental analysis of credit policies 2 Inventory management d. Objectives, reasons for carrying inventories 1 Inventory management techniques 2 Inventory control systems 3 Short-term credit for financing current assets 6.1 Nature a. Effectiveness versus efficiency; economy b. Objectives of operational audits c. Scope of operational audit d. Distinction between operational auditing and financial auditing e Types of operational audits f. Who performs operational audit? g. General approach to operational audit h Planning phase : Evidence accumulation and evaluation 2 Reporting and follow-up 3 Illustrative reports i Examples of operational audit findings j Business process improveinent Re-engineering consultancy services 62 Nature and objectives a Approach b. Business Environment and Concepts |