Audit of a sales engineering department -- A Case study of a management audit;

              Audit of a Sales Engineering Department — A Case Study of a Management Audit
by DWIGHT A. JOHNSON Consultant, Management Advisory Services, Chicago Office
Presented before The Institute of Internal Auditors, Dayton—October 1965
IN SELECTING MATERIAL for my talk tonight, I have attempted to find a subject that might be considered a bit out of the ordinary from the standpoint of operational auditing. As you all know, The Institute of Internal Auditors has conducted a number of research studies and has issued reports on such subjects as Purchasing, Traffic, Receiving, Facili­ties,
Insurance, and so on. Furthermore, I am sure that many of you have attended Institute seminars and meetings for the discussion of audit approaches in many other so-called "operating" areas of a business.
However, one area that I believe has been touched only lightly in internal auditing literature might be termed "technical" operations— those relating to the activities of engineers and other technicians as­signed
to projects of a creative or development nature and working in a climate that provides considerable latitude for individual effort.
I shall discuss tonight an audit made in one such organization—the Sales Engineering Department of a company in the aerospace industry. Although it is a case study of an actual audit, certain aspects of the Department's activities have been disguised to prevent its identification with any specific company.
BACKGROUND OF THE AUDIT ASSIGNMENT
The Marketing Division of the company consisted of three major organizations—Sales, Sales Engineering, and Contract Administration. The principal function of Sales was to interview prospective customers and lay the groundwork, so to speak, for future sales efforts. The cus­tomers
were major companies in private industry and governmental de­fense
agencies, both in the United States and in many foreign countries.
When a specific customer-interest was developed, the Sales Engi­neering
Department was called in to present the technical aspects of the company's products and to make further promotional contacts with the prospective customer's own engineering staff.
After the signing of a sales contract, the Contract Administration Department took over to ensure the satisfactory fulfillment of the con­tract.
For several years the Auditing Department had been expanding the scope of its audit program into operating areas and had made pre­vious
reviews of Contract Administration. It had perhaps been con-
185