A Case Analysis on Management Consultancy

Case 1 and 9

Submitted by:
Group 1
Abando, Katherine Jane
Abellada, Benidict Justine
Adduru, Allan
Aoshima, Maryonette
Albino, Erika Lee

November 17, 2014

CASE 1
Summary of the Case
The junior consultant discovered illegal activities on a companys management
practices. The client is a large publicly held corporation. Shortly after the discovery, the
junior consultant makes the ff. comment:
Were here as a confidential counselors and have been made privy to innermost
secrets by a client who has been completely open. What right do we have to tell him
whats right or wrong? Do we have to be a policemen as well as father confessors?
Assumptions
Being a junior consultant and doing his first job,he was unsure of what is right to
do, so upon discovering the fraud, the former didnt want to disclose the
discovery due to being a large public corporation which is exposed and owned
by the general public, and such exposure may harm the reputation of the
corporation.
The consultant, upon the discovery of the illegalities, was promised by one
person involved that he will obtain a higher pay, so he was playing innocent,
convincing us that we didnt have the right to disclose the facts, instead just call
an authority to put an end to the issue.
The junior consultant is having thoughts on disclosing the matter due to having a
immediate family member, in which it that issues where exposed, it may affect his
family member.

Dilemma faced by the consultant(s)

The consultant is confused on whether he has a right to tell his client that what
they are doing is wrong because he thinks that he has no power to say such
things.
He thinks that he should use the power of policemen instantly to resolve the
problem
State the Ethical Considerations and Practice Standards Applicable to the Case

Standard No. 8 All significant relevant data is to be obtained, documented

and evaluated in developing conclusions and recommendations.
Confidentiality

Alternative Courses of Action

Set a meeting with the board of directors, probably chairman of the board and
disclose that there are illegal payments and fraud happening and make
recommendations. :
o Pros:
The management will become aware to the problem.
The management can apply the necessary recommendations made
to eliminate irregularities
o Cons:
Disclosure without the action may worsen the condition, due to
evidences being exposed.
If still cannot be resolved, must obtain professional advice from relevant
professional bodies.
o Pros:
Can seek other advice/guidance that may help to resolved the
issue.
o Cons:
Disclosure without the clients consent, can breach the consultants
responsibility on confidentiality.
If applying all the possibilities to eliminate the illegal payments and fraud are
still not enough, the last recourse is to withdraw from the engagement.
o Pros:
Rule on confidentiality will not be breached
o Cons:
There is no communication of results to the client thus, standard
no. 8 is not applied.
Instead of disclosing the facts directly to the Board, the consultant will tell the
matter to the Government body without consulting the client
o Pros:
The consultant may find quick solution to the problem.
The consultant may find help in solving the problem.
o Cons:
The rule on confidentiality will be violated.
The Junior consultant will tell the matter to the Board of Directors but they will
refuse to take necessary actions and he will tell the government bodies after.
o Pros:
To give quick solution on the matter, higher authority is need for
them to be afraid on not giving solution to problem.
The management was already informed to wrongfulness.

o Cons:
The rule on confidentiality was violated.
The company missed the chance to resolve the problem internally.
Involvement of the proper authority may put the company in a risky
situation (investigation).
The Junior consultant will tell the matter to the Board of Directors but they will
refuse to take necessary actions and he will withdraw the engagement after the
refusal.
o Pros:
The members involved will be more careful or maybe will lessen the
wrong doings.
The consultant is already free and may avoid committing unethical
actions.
o Cons:

Not taking necessary action implies that the company operates

illegally.

Not doing the right action may worsen the situation.

Best Course of Action with Justification

Disclosure is very important on a engagement, the client hired you so that he can
get relevant information regarding a specific engagement. Thus, the consultant must tell
the Board of directors the illegal acts done by the management, if they refuse to take
necessary corrective action then you should withdraw the engagement.

CASE 9
Summary of the Case
A person serve as a both director and consultant at the same time for a mediumsized, publicly held company. In reviewing your plans for the following months, he go
through the ff. thought process:
As a director Im supposed to represent the shareholders, but I wouldnt be here unless
our firm had been doing a lot of good consulting work for management. I know, too that
weve got a couple of darn good consultants coming off a long assignments next month,
and so far theres new assignment for them. The president has been thinking about
applying some sophisticated planning techniques to replace the current, old fashion
forecast. Now might be the time to do it. Frankly, I dont think a company this size has to
get so fancy, but if he wants it, and considering keeping those two good staffers at full
billing I think Id better have Charles bring it up at the next directors meeting. Ill
refrain from voting, so there should be no question
Assumptions

Charles, the president of the company brings up the application of sophisticated

techniques to replace current, old fashion forecasts.

The director-consultant refrains from voting. In reality, he does not want such
idea of the president to pursue. He will just give the work on commenting to ideas
that the president presents, to the consultants that theres no assignment.
In addition, the director decides to remain silent as he knew that the president
has an attitude that what he thinks is always the best. Opposing his ideas may
just lead into a disagreement. And at the end, there will be no points of arguing
since that president always win.

Dilemma faced by the consultant(s)

The consultant is concerned to make sure that the company is utilizing all of its
resources, like labor and based on his statement, it is not utilized.
The consultant believes that the sophisticated planning techniques should not
push through but he did not gave his opinion to the board regarding such
although he has relevant information for the decision

State the Ethical Considerations and Practice Standards Applicable to the Case

Objectivity - a professional accountant should not allow bias, conflict of interest or

undue influence of others to override professional or business judgments.
Standard No. 7 Sufficient relevant data is to be obtained, documented, and
evaluated in developing conclusions and recommendations

Alternative Courses of Action

The consultant should resign as a director and just be a consultant so that he
can manage properly the utilization of the companys resources.
o Pros:
Will be able to utilize the company's resources, esp. labor.
The direction/consultant will have the proper mindset on what to
prioritize first.
o Cons:
Will not be able to voice out his opinion regarding to the changes in
planning process.
The consultant should also advise the board regarding the installation of the
sophisticated techniques since he is the one who know relevant information for
that decision.
o Pros:
His advice will help the BOD decide if the said project will give them
more advantages than disadvantages.
o Cons:

Being against the president's idea might make the president mad
thinking that his idea is being disregarded.

Best Course of Action with Justification

The consultant should resign as a director and just be a consultant so that he can
manage properly the utilization of the companys resources.
The consultant should also advise the board regarding the installation of the
sophisticated techniques since he is the one who know relevant information for that
decision.