You are employed as an internal auditor at Finch group, an organization involved in making B2B sales of products. Finch group employs a sales team of 50 sales executives and they are assigned to different geographical territory. Sales representatives are responsible for maintaining the existing contacts and to search for new business.

A team of internal auditors have been assigned to carry out an audit to review the internal control over the sales department.

Sales executives spend their time almost in field work. They have provided with fully maintained company car with fuel allowance and mobile phones. Further the company incur expenses of sales executives accommodation, meals and the cost for entertaining the existing and potential customers. The sales executives are called for head office only once a month for reporting purpose.

The sales representatives are left with large amount of freedom. The regional managers are not involved in inspecting the daily routine of sales executives unless otherwise if they are not satisfied with the performance of the sales executive. The sales executives performance is appraised based on their achievement of monthly targets. (the value of sales and the number of potential customers and existing customers).

The regional managers are responsible to provide the report containing the value and volume of business won by each sales executive to finance department. The finance department will analyse the performance of each sales executive by comparing the cost spent by them monthly to win the business. Finally, the analysis will be report back to regional sales managers for discussion.

During the internal audit the team identified that the sales executives expenses as a proportion to the sales revenue are increasing continuously over last three years. It is transparent the reason for high cost is due to lack of control over the sales executives and their expenses.

Requirement: You are required to prepare a report addressing to Head of Internal Audit by:

Critically evaluating the use of financial controls at Finch Company. (the sales teams performance is evaluated based on achievement of sales budget)