You are the director of the internal audit department of Malone, Jones & Company, a manufacturing national enterprise with sales of $1.5 million. The president, Mr. Malone, asks you to his office and expresses his concerns regarding the following:

"As you are no doubt aware, our company's profit for this year is non-existent. We are producing high-quality products; however, our sales are low. Our marketing department is operating well above its budget. In fact, in a 3-month period, our marketing activities required expenditures of over $600,000. Some of these expenditures are repetitive, directed to the same advertising supplier or to a restricted number of advertising suppliers, and are not producing the expected results.

"You recall that the director of marketing and sales is new to this organization; in fact, he was appointed only 1 year ago. When I confronted him 2 days ago about this situation, he just blushed and could not offer any explanations, nor did he suggest that he would look into this matter. I am very concerned about his attitude.

"This is a very important division and I am concerned about the economy, efficiency, and effectiveness of marketing operations, as they have an impact on the bottom line."

Required

Can you provide a comprehensive management audit plan to respond to the president's concerns. Such a plan should include the following:

1. Identify in detail the processes and procedures to be undertaken in the planning phase of the management audit of the marketing function.

1. Identify the procedures that should be followed in the examination phase of the management audit of marketing. The procedures should cover all the marketing department activities so as to identify the reasons for the reduction in sales plus any other considerations that result from the concerns expressed by the president, Mr. Malone. For each procedure, provide reasons or a rationale for applying it. Use the following format to answer this part of the question

Procedure Reasons or Rationale

marks are allocated for clarity, logic, impact, and persuasiveness.