The internal auditors for a large electronics manufacturing corporation were planning an audit of the central purchasing department. More specifically, the auditors intended to study the department’s approved vendor listings to: (1) determine whether the approved vendors were being used; (2) evaluate the individual vendors approved for the listings in terms of availability of desired products, quality of products, prices, and timeliness of delivery; (3)

examine any potential conflicts of interest among corporate employees and approved vendors; and (4) evaluate how vendors are selected from the listings for individual orders when more than one approved vendor is listed.

The auditors have decided to interview the purchasing director, his assistant, and two purchasing clerks. The auditors also will examine a statistical sample of purchase orders from the past three years and the first six months of this year. They plan to examine the approved listings and catalogues from the last four years for each of the approved vendors.

Questionnaires also will be distributed among other departments that receive goods through the purchasing department. The auditor plans to begin the audit on January 8, 1986. Two auditors — Mary Lou Cantwell and Lewis Cary — have been assigned to do the work, which is estimated to take seven days on-site. The audit report will be distributed to Bill McFinney, vice president of operations; Carl Gordon, director of central purchasing; and the corporate audit committee.

Required:

Assuming the audit already has been prearranged by telephone with Mr. Gordon, draft an engagement letter or interoffice memorandum explaining the upcoming audit. Address your letter or memo to him with copies going to all others who will receive the audit report.