Paul Adamson, audit director of North American Airlines, assigned Maxwell Cannes and Leanne Shoemaker to audit the company’s Salt Lake City terminal operations. Maxwell was designated the lead auditor. The audit included ticket sales, freight, passenger boarding, baggage handling, customer relations, and the terminal’s accounting system. The audit began July 16, 1986, with an opening conference on that date. The closing conference was conducted on July 31, 1986.

The objectives of the audit were (1) to test compliance of the terminal operations with company policy, (2) to evaluate the effectiveness and the efficiency of the terminal operations, and (3) to evaluate the integrity (accuracy and completeness) of the terminal accounting records.

The audit team had several significant findings. In general, company policies were being followed in each of the six areas reviewed, although there were a few exceptions. First, air freight items were being collected in the same work and storage area as passenger luggage, and although freight items were clearly tagged and marked, there were problems with some shipments. Second, rather than training someone or hiring a specialist, the terminal manager for the airline was handling customer relations. The result was that many complaints were either not attended to or were resolved unsatisfactorily.
The auditors concluded that the effectiveness and efficiency of the Salt Lake City operations appeared to be satisfactory with the exception of freight handling and customer relations. These areas had suffered badly. In fact, ticket sales had decreased 4 percent over the last year’s sales, while overall ticket sales for the company had increased 8 percent over the same period.
They also found that the integrity of the accounting system appeared to be satisfactory.
The few errors and inaccuracies that did occur in the system were minor and were corrected by routine internal review procedures. The auditors found no discrepancies in the accounting records.
As a result of their review, the auditors made three recommendations: (1) the deposit and collection areas for freight and passenger baggage should be separated; (2) the terminal manager should train or hire a customer-relations specialist to handle special problems and complaints; and (3) due to the time demands of his other responsibilities, the terminal manager should become involved with customer problems and complaints only in the most extreme cases.
The terminal manager was cooperative with the auditors during the audit and agreed to all recommendations, which were implemented within 30 days after the closing conference.
The auditors believe that if the customer-relations problem is solved, this terminal operation could become a sales leader in the company because of rapidly increasing air traffic through Salt Lake City. Further, the auditors think that future audits should correlate overall passenger growth for the Salt Lake City Airport to North American’s passenger growth at the terminal, in an effort to monitor a turnaround in the sales downturn.
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