The auditors for a chain of wholesale food distribution outlets conducted an audit of the company’s produce management. They discovered what appeared to be high levels of spoilage in the three oldest storage facilities. Although all three of these facilities experienced almost identical levels of spoilage, which were only slightly greater than the estimated industry standard, these levels were significantly greater than the five newer storage facilities owned by the company. The obvious difference was the refrigeration equipment and the handling procedures of the older facilities compared to the state-of-the art operations in the newer facilities. Executive management recently had adopted plans to renovate the older plants in order to reduce spoilage and improve handling and shipping procedures. The auditors, however, computed some cost comparisons of maintaining the old system as opposed to making the proposed changes. They concluded that the new system would cost far more than the possible benefits the company might receive in cost reductions. The auditors recommended that the company keep and maintain the old system, at least until new technology made such a change more cost-effective. The produce department managers of the eight storage warehouses favored the change and already had begun their own plans for the changeover.

Required:

a. Describe and compare the roles of the auditors, the auditee (i.e., the produce department managers of the eight distribution outlets), and executive management in any future follow-up to the audit.

b. What problems might you anticipate that could interfere with the successful fulfillment of these three different roles?

c. How might you avoid such problems as an auditor?