tiry ing the critical business processes and kay s0ccess factors for each process. As leader of the internal audit team, you have agreed to: A. Identify and list the key processes used by Pizza Inc. at their individual site locations. B. Determine 10 business risks for the typical site location and assess the impact and likelihood of these risks. C.Link the business processes to the business risks. Determine which are key versus secondary links. (Complete a risk by process matrix-exhibit 5-11.) D. Select a key process (one you consider critical to the success of an individual site location) and create a detailed-level process map of the activities. E. Identify the specific risks associated with the activi- ies of the key process (that is, the process you select- ed for process mapping). (Complete the risk portion of a risk/control matrix-exhibit 5-14.) F Map the identified risks according to their inherent impact and likelihood of occurrence. (Complete a risk map-exhibit 5-15.) G. Based on the case facts provided above, identify controls (actions management currently takes) to mitigate the identified risks and put them on the risk/control matrix (in the risk response column- exhibit 5-14). H Dotouns i nhniques for assessing the effectiveness 1.mn slipped to an average of 43.8 minutes. For me on one driver's notorious reputation for beatingh Delivery promptness is also dependent on thev there have been persistent rumors about bea Pizza Inc, a pizza take-out and delivery chain, is expe- riencing decreasing revenues and steadily losing market share despite favorable market testing of its products/ recipes. The company's strategy has traditionally been defined as gaining increased market share through cus- tomer satisfaction. Management has asked your inter- nal audit function to help them understand the reasons for declining sales at the Uptown location and how the decline might be related to internal operations. Your prior internal audit experience and direct observation of work performed at the troubled location identified the following information: In 20XX, Pizza Incs corporate office screened this site location prior to construction to ensure that neigh borhood demographics supported the ideal business environment. This resulted in locating the chain near a suburb where typical residents were in the mid- to upper-middle class income range and who owned homes with three to four bedrooms. Despite the favorable location, the site you are reviewing continues to have gross and operating margins lower than their local competitors. CASE 1 delivery deadline every time. of completed pizzas at any given time and the ne borhood traffic pattern. Drivers are initialy we at hire for outstanding traffic violations or uhe infractions (such as driving while intonicated, Th original site manager posted a large map on the w so drivers can identify their routes. Mileap w bursed as part of the compensation for using the vehicles so each driver turns in a mileage log a end of the shift to indicate both starting and en mileage. The manager randomly checks the m starting or ending mileage against the cars odn Pizza Inc.s company policy requires that eah restrict itself to a five-mile service area; howeve,i an order comes in, the work ever refused. Ph orders occur in predictableterns, but wal orders are more random ans frequent S staff to match the anticipate workload is dene week in advance. The averae orkload durige hours is 29 orders taken per hour. Orders are m written on pre-numbered pads. When mistakes e made, the original order ticket is tossed out andan order form is created to avoid confusion. Informto On-the-job training is the primary method used by managers to communicate company policy and pro- cedures. However, documented policies and detailed procedures do exist for each key process and are avail- able by request from the shift manager. Employees are typically male (comprising 65 percent of total staff), 17 to 23 years old, with little or no prior work experience at the time of hire. Unscheduled absenteeism is high captured includes: date, time of call (or walk inl a address, phone number, type of erust, and toppinp requested. Hand calculators are available to asis with pricing quotes that are told to the customer a recorded on the delivery ticket. Shift managers dei every order to ensure that information is complet prior to processing the order. and part-time shift assignments are rotated frequently to reward those individuals who regularly work as scheduled. The internal audit team noted in last year's review that management has documented an average annual turnover rate of 18 percent. Employees who make the pizza are instructed in proper quantity of ingredients for various standan topping combinations. Frequently, special requs orders are received that add items to the standa recipe. Measuring cups are available, but your ist audit team noted on prior visits that when actity reaches peak load, emplovees generally "know much of key ingredients to use. The manager an the supply cabinets and refrigerators at the endd shift to ensure adequate inventory is on hand Se months ago, the evening shift manager determin that inventory deliveries should be increased t r per week, up from the usual three. Oven tempea The shift manager is responsible for ensuring that all pizza orders are completed within the advertised time deadlines, a long-held competitive advantage. Drivers are required to record on a delivery ticket the time of their arrival at the delivery location. This time is compared with the time recorded on the order ticket to calculate total elapsed minutes. Review of the last six month's delivery tickets indicates that the company benchmark delivery cycle time of 25 minutes from "placing the order to when we're on the doorbell has 5-36 INTERNAL AUDITING ASSURANCE & ADVISORY SERVICES tiry ing the critical business processes and kay s0ccess factors for each process. As leader of the internal audit team, you have agreed to: A. Identify and list the key processes used by Pizza Inc. at their individual site locations. B. Determine 10 business risks for the typical site location and assess the impact and likelihood of these risks. C.Link the business processes to the business risks. Determine which are key versus secondary links. (Complete a risk by process matrix-exhibit 5-11.) D. Select a key process (one you consider critical to the success of an individual site location) and create a detailed-level process map of the activities. E. Identify the specific risks associated with the activi- ies of the key process (that is, the process you select- ed for process mapping). (Complete the risk portion of a risk/control matrix-exhibit 5-14.) F Map the identified risks according to their inherent impact and likelihood of occurrence. (Complete a risk map-exhibit 5-15.) G. Based on the case facts provided above, identify controls (actions management currently takes) to mitigate the identified risks and put them on the risk/control matrix (in the risk response column- exhibit 5-14). H Dotouns i nhniques for assessing the effectiveness 1.mn slipped to an average of 43.8 minutes. For me on one driver's notorious reputation for beatingh Delivery promptness is also dependent on thev there have been persistent rumors about bea Pizza Inc, a pizza take-out and delivery chain, is expe- riencing decreasing revenues and steadily losing market share despite favorable market testing of its products/ recipes. The company's strategy has traditionally been defined as gaining increased market share through cus- tomer satisfaction. Management has asked your inter- nal audit function to help them understand the reasons for declining sales at the Uptown location and how the decline might be related to internal operations. Your prior internal audit experience and direct observation of work performed at the troubled location identified the following information: In 20XX, Pizza Incs corporate office screened this site location prior to construction to ensure that neigh borhood demographics supported the ideal business environment. This resulted in locating the chain near a suburb where typical residents were in the mid- to upper-middle class income range and who owned homes with three to four bedrooms. Despite the favorable location, the site you are reviewing continues to have gross and operating margins lower than their local competitors. CASE 1 delivery deadline every time. of completed pizzas at any given time and the ne borhood traffic pattern. Drivers are initialy we at hire for outstanding traffic violations or uhe infractions (such as driving while intonicated, Th original site manager posted a large map on the w so drivers can identify their routes. Mileap w bursed as part of the compensation for using the vehicles so each driver turns in a mileage log a end of the shift to indicate both starting and en mileage. The manager randomly checks the m starting or ending mileage against the cars odn Pizza Inc.s company policy requires that eah restrict itself to a five-mile service area; howeve,i an order comes in, the work ever refused. Ph orders occur in predictableterns, but wal orders are more random ans frequent S staff to match the anticipate workload is dene week in advance. The averae orkload durige hours is 29 orders taken per hour. Orders are m written on pre-numbered pads. When mistakes e made, the original order ticket is tossed out andan order form is created to avoid confusion. Informto On-the-job training is the primary method used by managers to communicate company policy and pro- cedures. However, documented policies and detailed procedures do exist for each key process and are avail- able by request from the shift manager. Employees are typically male (comprising 65 percent of total staff), 17 to 23 years old, with little or no prior work experience at the time of hire. Unscheduled absenteeism is high captured includes: date, time of call (or walk inl a address, phone number, type of erust, and toppinp requested. Hand calculators are available to asis with pricing quotes that are told to the customer a recorded on the delivery ticket. Shift managers dei every order to ensure that information is complet prior to processing the order. and part-time shift assignments are rotated frequently to reward those individuals who regularly work as scheduled. The internal audit team noted in last year's review that management has documented an average annual turnover rate of 18 percent. Employees who make the pizza are instructed in proper quantity of ingredients for various standan topping combinations. Frequently, special requs orders are received that add items to the standa recipe. Measuring cups are available, but your ist audit team noted on prior visits that when actity reaches peak load, emplovees generally "know much of key ingredients to use. The manager an the supply cabinets and refrigerators at the endd shift to ensure adequate inventory is on hand Se months ago, the evening shift manager determin that inventory deliveries should be increased t r per week, up from the usual three. Oven tempea The shift manager is responsible for ensuring that all pizza orders are completed within the advertised time deadlines, a long-held competitive advantage. Drivers are required to record on a delivery ticket the time of their arrival at the delivery location. This time is compared with the time recorded on the order ticket to calculate total elapsed minutes. Review of the last six month's delivery tickets indicates that the company benchmark delivery cycle time of 25 minutes from "placing the order to when we're on the doorbell has 5-36 INTERNAL AUDITING ASSURANCE & ADVISORY SERVICES
