John Fuentes is the director of internal auditing for a large regional sales distributor of auto parts and accessories. The company purchases directly from manufacturers and markets the products through a chain of stores throughout the multi-state region. The company has its own line of products, which are made by manufacturers to its specifications. Other brands also are marketed through the company stores. In some towns and small cities where the company does not operate stores, consignment sales are contracted with locally owned auto parts dealerships.

Mr. Fuentes has a staff of seven auditors who have been assigned to a variety of jobs during the first quarter of the year.

Illustrated on the following page are portions of the internal auditing department’s annual Master Budget and Job Status Log. The Master Budget shows the job number assigned to each audit project, the job name (or auditee), the initials of the assigned auditors, the budgeted hours for each project, and the calendar time scheduled for each project, from the beginning of preparation to the target date for release of the audit report. The Job Status Log is updated and reviewed weekly by Mr. Fuentes. It contains job numbers, job names, assigned auditors, budget hours, actual hours to the date of log preparation, the target report date, and the current job status as of the log date. Job status classifications include the following:

• Pending — scheduled, but not yet started.

•  Preparation — audit preparation has begun, but no audit work has been performed.

•  In progress — audit work is being performed.

•  Writing/review — audit work is concluded, and the written report is being prepared.

•  Wrap-up — filing of working papers, audit evaluation, and follow-up.

•  Closed — audit project is finished.

Mr. Fuentes is studying these reports as of February 14.

Required:

a. How would you evaluate the progress of audit work so far in 1987? Explain.

b. How would any problems you identified in part

(a) affect other operations in the department during the year?