( a )Discuss the attitudes of the management in reducing staff numbers.

( b )Identify the risks that the internal auditor needs to take into account in the internal audit of the North Queensland sales function.

In the following senario:

The internal auditor of Hills Host Clothes Lines is conducting a review of the sales department. He finds that over the last 2 years the number of sales administration staff in the North Queensland branch has been reduced by half.

It appears that the reduction from 8 clerks to 4 clerks is due to management targets of maintaining profit per employee.In the last management planning meeting it was felt that 4 clerks would be sufficient.The 4 clerks included 3 ex sales staff who wanted to change to an office job instead of continued travelling.

In reducing staff numbers management considered it necessary to retain the experienced staff.

Six months ago 2 of the experienced staff left for personal reasons and were replaced by junior clerks with no sales experience.Also the other remaining experienced clerk was promoted to supervise a sales region and was rarely in the administration office.

The resulting vacancy has not been filled.