The auditors for a greeting-card company became concerned when, during their audit of production operations, they discovered 10 percent more waste and 5 percent more rework on jobs than for the same period two years before. Further examination revealed that these excessive costs were being caused by relaxed standards and two faulty machines that needed either major repair or replacement. The auditors requested a follow-up statement from the production manager within 30 days explaining the corrective measures that had been taken. The production manager’s reply follows:

We have corrected the waste and rework problem. Our calculations show that these two costs are now in line with our best performance periods in the past.

Required:

a. Evaluate the production manager’s follow-up response. Explain your evaluation.

b. What questions do you think should be addressed in this auditee’s response?