CHAPTER 8 Auditing Marketing and Sales

OUR LADY OF THE PILLAR COLLEGE CAUAYAN
COLLEGE OF ACCOUNTANCY
OPERATIONS AUDITING
CHAPTER 8:
AUDITING MARKETING AND SALES
INTRODUCTION
In this chapter we consider the operational auditing dimensions of the marketing and sales functions.
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PRODUCT DEVELOPMENT
This subject area is predominantly about the future cost-effective positioning of product lines in association
with the driving strategic direction of the organisation and taking into account the implications of external
market and economic forces. Where product developments are justified, appropriate, realistic and suitable,
coordinated plans will be required to support the development process and bring the product to the market
on time and at the right price.
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MARKET RESEARCH
To keep the marketing direction of the organisation pertinently focused, it is critical that an accurate and
up-to-date awareness of customer and market expectations is maintained. Where it is justified, the use of
market research techniques can provide the necessary marketing intelligence to reinforce or influence the
marketing strategy. In this section, we consider the implications of market research for the business and
seek to ensure that such techniques are cost-effectively and efficiently applied.
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PROMOTION AND ADVERTISING
Setting the appropriate tone and approach for advertising and promotion can be seen as a crucial
requirement given the high costs normally associated with these processes. It is debatable whether they
are, in truth, arts or sciences—much depends on the study and interpretation of human expectation,
susceptibility and desire. In this section, we consider the key business-related issues, incorporating those
relating to the engagement and use of external specialists in the field.
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PRICING AND DISCOUNT POLICIES
When an organisation establishes its pricing policy it needs to ensure that all the internal and external
economic and market-related factors have been duly considered and incorporated; otherwise there is the
danger that the product or service will fail in the real world. This section explores the related accounting,
marketplace and business strategy issues.
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SALES MANAGEMENT
How best to organise, target and utilise the sales force resources are the key points here. On the one
hand we are concerned with the development of a clear overall strategy for achieving the desired sales
levels, but on the other hand there is a need to contain the costs of seeking out suitable and stable
customers and maintaining their ongoing interest in the organisation’s products and services.
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SALES PERFORMANCE AND MONITORING
The overall development, production, pricing, promotion and marketing strategies associated with a given
product or service will interface with the real world through a comparison between forecast and actual
sales performance levels. The initial determination of sales forecasts needs to be both realistic and accurate.
The actual performance of the sales force (in terms of both sales achievement and operating costs) will
require accurate ongoing monitoring against the predicted targets, in order that management are provided
with up-to-date and reliable data to support their decision making. It will also be necessary to evaluate
whether an adequate and suitably trained sales force is provided and maintained in relation to the
performance requirements.
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DISTRIBUTORS
The use of external distributors may offer an organisation competitive, strategic or economic advantages.
For example, using an established external distribution infrastructure, avoids the substantial costs
associated with the development of an internal distribution system. In this section we take into
consideration the relevant internal and customer-related issues, with the underlying objective of seeking
the most advantageous, efficient and cost-effective distribution solution. The following material on
distributors is duplicated in Chapter 17, which takes a broader view of the overall subject of distribution
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ORDER PROCESSING
Sales orders may be generated in a number of ways (e.g. through a dedicated internal sales force, external agents,
telephone sales enquiries). Irrespective of how they are generated, the organisation’s management will need to be
assured that all orders are accounted for and efficiently processed. However, there will be the attendant
requirement to ensure that customers are (and remain) suitable, financially stable and that they operate within the
confines of realistic credit limits so as to contain any financial exposures.
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WARRANTY ARRANGEMENTS
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MAINTENANCE AND SERVICING
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SPARE PARTS AND SUPPLY
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OUR LADY OF THE PILLAR COLLEGE CAUAYAN

PROMOTION AND ADVERTISING

PRICING AND DISCOUNT POLICIES

SALES PERFORMANCE AND MONITORING

MAINTENANCE AND SERVICING

SPARE PARTS AND SUPPLY

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