AVF Inc. manufactures several lines of packaging equipment. The company considers product reliability and outstanding customer service to be critical to its success. The customer service department is responsible for:
■ Providing prospective customers with product information.
■ Monitoring spare parts availability.
■ Providing equipment operating and maintenance information to customers.
■ Developing and delivering customer training courses.
■ Responding to customer complaints and making service calls
■ Handling customer warranty claims.
■ Maintaining good customer relations. The company recently made a sizeable investment to upgrade its customer service department computer system. The upgrade is expected to improve operational efficiency and customer satisfaction. The outputs of the new system include management reports used to monitor performance in the areas listed above. The audit committee has asked the internal audit function to audit the operational effectiveness and efficiency of the customer service department. This engagement covers the following areas:
■ Security of assets, including information.
■ Compliance with applicable laws and company policies.
■ Reliability of financial records.
■ Effectiveness of performing assigned responsibilities.
■ Valuation of the spare parts inventory.
a. Discuss why each of the five areas specified by the audit committee may or may not be appropriate for this assurance engagement.
b. Identify three other areas of the customer service department that may warrant the internal auditor’s attention.
c. What are the primary audit tasks the internal auditors should perform to evaluate the operational effectiveness and efficiency
of the customer service department in meeting the following responsibilities?
■ Developing and delivering customer training courses.
■ Responding to customer complaints and making service calls.
■ Handling customer warranty claims.