Sales Order Cycle Review Report

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Table of Contents
Executive Summary
 Executive Summary 3
 Objective, Scope & Procedures Performed 4
Background
 Background Statistics 5-6
Action Matrix
 Action Matrix Summary 7
 Action Matrix Detail 8-15
Appendices
 A: Best Practice Scorecard 16
 B: Internal Control Assessment 23
 C: Process Maps 30
 D: Testing Matrix 36
 E: Acknowledgments 37
mpany X Confidential: Do not distribute 2

Executive Summary
Internal audit conducted a review of the sales order processing process with the objective of evaluating the overall function for
adequate controls and operational effectiveness. Specific areas of focus included quote-to-invoice process, contract
operations/maintenance, accuracy and integrity of data captured in the order management system, and the quote-to-invoice cycle
time. This review was completed in (insert date).
The current sales order processing process is inefficient and results in increased quote to invoice cycle time. Also, the company’s
information system is currently not collecting valuable sales discount information. This lack of information hampers management’s
ability to make informed decisions relating to pricing. Other key observations noted during our review include:
➲ Discounts are currently not being tracked on an overall basis. This lack of discount information hinders management’s ability
to create and maintain effective pricing strategies. In an analysis performed by Internal Audit, it was noted that XX% discount
($XXM) was given on orders of $XXXM during the period (insert dates).
➲ Discount authorization documentation is incomplete or missing. Potential unauthorized discounts may be given to customers
which results in lost revenue and undermines the company’s overall pricing strategy.
➲ Contracts and agreements are not consistently submitted to contract operations for review.
➲ Tool configuration information is not readily available to regional marketing and sales personnel. As such the overall
quotation/order process cycle time is increased because quotes and purchase orders do not contain complete information.
➲ Sales quotes do not consistently have complete tool configuration information, resulting in incomplete purchase orders from
customers. Incomplete tool configuration information on purchase orders creates process inefficiencies in the configuration
process and ultimately increase the overall order cycle time.
➲ A global clean book checklist (CBC) to address the overall sales order process do not exist. As CBC requirements are not
consistent between departments, quotes and purchase orders are sometimes passed on to the next process step without
complete information.
➲ The master price list in the (system) is not maintained. Pricing information provided to customers may be incorrect and could
potentially result in lost revenue. Maintaining a manual system is costly and time consuming.
➲ The shipping log is not consistently filled out to reflect all appropriate shipping information. Failure to record shipping
information in the shipping log could potentially hinder the company’s ability to trace shipments and respond to customer
inquiries regarding shipments in a timely manner.

Objective, Scope, & Procedures Performed
Objectives
• Evaluate the internal control environment and the effectiveness and efficiency of the sales order cycle from quote to invoicing.
• Review and evaluate the adequacy of existing policies and procedures in the sales order process.
• Benchmark Company X’s sales order process with “Best Internal Control Policies” and “Best Practices” information.
• Identify opportunities for internal control and process improvements.
Scope
• The scope of the work included a review of the sales order cycle at (company).
• Our work did not include other Company X locations
Procedures Performed During This Review

• Reviewed existing policies and procedures in the processing of sales orders from quote to invoicing.
• Interviewed key personnel in regional marketing, order management, and systems engineering to obtain an understanding of
the sales order process.
• Performed transaction testing of sales orders to evaluate cycle time, proper authorizations and support for entries.
• Perform CAAT (Computer Assisted Auditing Testing) analysis on sales order records.
• Evaluated the efficiency and effectiveness of the sales order process and related internal controls and compared to “Best
Practices,” noting opportunities for improvement.

Background Statistics
Key Discount Statistics:

 Sales order statistics from (dates):
Total Orders Received $xxx.xM
Top 10 Customer Discounts
Less: Total Discounts xx.xM (xx%) CUSTOMER NAME LIST PRICE BOOKING VALUE DISCOUNT GIVEN DISCOUNT %
Net Bookings Value xxx.xM
 The table at right shows the top 10

customers by discount given. This
represents approximately $xx.xM (xx%) of
the total discounts over the period from
(dates).
 The table below shows the top 10

discounted parts over the same period.
Discounts relating to the xxxMM Indexer
accounted for approximately $xx.xM (xx%)
of total discounts ($xx.xM) given. TOTALS
Note: Data for both tables taken from sales

order data from (dates).
Top 10 Part Discounts
PART # PART DESCRIPTION LIST PRICE BOOKING VALUE DISCOUNT GIVEN DISCOUNT %
TOTALS

Background Statistics
Stratification of Order Values
The total order value of $ is comprised of x,xxx orders and is broken out
below:
Stratified Value # of Orders % of Orders Total Value % of Value
*The data above was obtained from the system and includes all orders received from
(dates).
Top Ten Customers as Percentage of Total Order Value
The top ten customers below accounted for $ (xx%) of the total
booking value and x,xxx (xx%) of total orders from (dates). The
detailed breakdown is outlined below:
Customer Name Booking Value Percent Of Total

Action Matrix Summary
Issues / Observations Page Priority
1. Discount information is not tracked on a global basis and is therefore not available for management’s 8
analysis.
2. Discount authorization documentation is incomplete or missing. 9
3. Contracts and agreements are not consistently submitted to contract operations for review. 10
4. Tool configuration information is not readily available to regional marketing and sales personnel which 11
increases the overall order process.
5. Sales quotes do not consistently have complete tool configuration information, resulting in incomplete 12
purchase orders from customers.
6. A global clean book checklist (CBC) to address the overall sales order process do not exist. 13
7. The master price list in the system is not maintained. 14
8. Repeat Item: The shipping log is not consistently filled out to reflect all appropriate shipping information. 15
Priority Rating High Medium Low

Action Matrix Detail
Issues / Observations Action Required Owner Date
1. Discount information is not tracked on the system and is therefore not A. The gross value of the
available for management’s analysis. product and the discounts
offered should be entered
Internal audit conducted analysis of sales orders received from (dates). We compared and tracked in the system.
the booking value of orders received to the master price list in the system. It was noted
that approximately XX% discount was given ($XX.XM) on total orders of $XXXM. This B. Perform periodic margin
information is not readily available to management (i.e., no reports from which detail and profitability analysis of
this information, is currently available). the sales order in the
system to ensure that
When customer orders are entered into the system, the total price on the orders is overall discounts given to
input into a field called “booking value.” Orders are currently entered in at the net sales customers are in
amount and not at the gross price with the associated discount (if applicable). Per accordance with
discussion with the Project Specialist, the system has this capability (tracking both the management’s strategies.
gross price and the discount) but it is currently not being utilized. As such, the
company is not tracking discounts through its order management system.
As the company currently does not have good visibility of total discounts given to
customers on a global basis, management is not informed on how much discount is
actually given away. Additionally, margin & profitability information on the various
product lines is difficult to ascertain because of the lack of detailed discount
information.
Business Impact:
• Lack of discount information affects management’s ability to create and maintain
effective pricing strategies.
• Margin & profitability information on the various product lines is difficult to ascertain
because of the lack of detailed discount information.

2. Discount authorization documentation is incomplete or missing. A. Train applicable sales

personnel to ensure that
According to the company’s sales authorization matrix (on the company’s intranet), all discount authorization is
discounts greater than XX% must be signed by either the CEO or the COO. obtained prior to providing
discounts to customers.
At the request of the Operations Controller, we reviewed X purchase orders (with the Additionally, make sure
purpose of verifying proper discount authorization) for the following customers; approved discounts are
(companies). Our findings are as follows: (insert findings) supported by the
appropriate documentation.
Business Impact: B. Evaluate the current

• Unauthorized discounts given to customers. discount authorization
matrix/policy for relevancy
and make changes as
appropriate.

3. Contracts and agreements are not consistently submitted to contract A. Establish a systematic
operations for review. process to review non-
standard contracts.
According to the Director of Contracts/Intellectual Property, the company does not Additionally, create a matrix
currently have a formal contract and agreement review process. of potential sales
opportunities with
There are currently no formal guidelines or policies governing sales individuals when corresponding action items
they are negotiating contracts/agreements with customers. As such, sales individuals to help sales individuals
have at times entered into agreements with customers without first consulting the know when they should
company’s in-house legal counsel. Per discussion with the Director of obtain assistance from the
Contracts/Intellectual Property, any non-standard agreement (i.e., any modification or in-house legal counsel.
deviation from Company X’s standard Terms & Conditions) should be reviewed by
contract operations. However, this is a verbal policy only at this time and no formal
documentation exists.
Establishing a formal documented review process will help mitigate potential legal risks
the company may be exposed to during contract negotiations.
Business Impact:
• Although we did not encounter any significant issues, the company may have
potential exposure by entering into agreements without first obtaining the necessary
legal advice.

4. Tool configuration information is not readily available to regional A. A periodic report of known
marketing and sales personnel which increases the cycle time in the sales tool configuration should be
order process. provided to by Systems
engineering should provide
Sales personnel request pricing and availability information from regional marketing regional marketing and
when preparing a quote for a customer. This is done for both tool (configurable) and sales personnel.
non-tool (not configurable) products. If the quote involves a tool then it will require
configuration information. B. Management should
consider creating an online
Per discussion with the Senior Regional Marketing Representative, tool configuration database of known tool
information is not consistently available to regional marketing and sales personnel. configuration that regional
Systems engineering maintains a database of known configurations with tool names; marketing and sales
however, regional marketing and sales personnel do not have access to this personnel can access.
information. If quotes do not contain accurate tool configuration information then the Such database should be
whole order process is slowed down because systems engineering can not configure updated with accurate tool
tools without complete information from the customer. As both regional marketing and configuration information.
sales personnel are heavily involved in the quoting process, they need to have easy On-site field engineers and
access to this information to be able to provide customers with accurate tool selected customers should
information. be provided access to such
tooling information.
Providing regional marketing and sales personnel with a report of known tool
configurations will help them to better communicate with the customer on the front end
and expedite the quoting process.
Business Impact:
• The overall quotation/order process cycle time is increased because quotes and
purchase orders do not contain complete information. This in turn increases the
overall cycle time from quote to shipment.

5. Sales quotes do not consistently have complete tool configuration A. Establish a systematic
information, resulting in incomplete purchase orders from customers. process to ensure that
complete configuration
Per discussion with the Senior Regional Marketing Representative, sales personnel information is provided by
do not consistently provide regional marketing with all the necessary information to the customer before the
ensure that quotes (which customers use to issue purchase orders) are accurate and purchase order is submitted
complete. Additionally, sales personnel are required to complete a clean book to systems engineering.
checklist (CBC) for the quote before they issue it to the customer; however, this is not
consistently done. A standardized quote request form has been developed for sales B. Systems engineering
personnel but is not consistently used. As such, customer purchase orders do not should be involved in the
always have complete information. According to the Systems Engineer, purchase quote process to ensure
orders need to be more specific to allow the systems engineering team to accurately that customers are
configure tools. provided with accurate
configuration information
According to the Systems Engineering Manager, approximately XX% of purchase up-front.
orders received from order management have incomplete or incorrect tool
configuration information. When this happens, systems engineering is required to C. The standardized quote
communicate with regional marketing or directly with the customer to obtain the request form should be
necessary information to complete the tool configuration process. used to ensure complete
and accurate quote
Internal audit tested XX purchase orders received by systems engineering over a one information is captured from
week period and noted that X purchase orders contained incomplete (X) or incorrect customers. Sales
(X) tool configuration information. These types of issues prevent systems personnel should review
engineering from completing tool configurations in a timely manner and thereby completed quotes for
increases the cycle time to process customer orders. accuracy and
completeness before
Business Impact: submitting to regional
• Incomplete tool configuration information on purchase orders creates process marketing and systems
inefficiencies in the configuration process and ultimately increase the overall engineering.
order cycle time.
• Incorrect configuration information could potentially cause the company to incur
additional costs associated with rework.

6. A global clean book checklist (CBC) to address the overall sales order A. Regional marketing, order
process do not exist. management, and systems
engineering should
Regional marketing and order management are required to complete a clean book evaluate consolidating the
checklists (CBCs) which are unique to their respective area. Additionally, systems existing CBCs and EDA
engineering completes an engineering design analysis (EDA) when configuring into one global document
tools. However, there is no global document that addresses the overall sales order that contains all necessary
process. As such, customer purchase orders are processed without regard to the information (i.e., billing
overall sales order process. This has resulted in inefficiencies in the sales order information, tool
process. configuration information,
etc.)
For example, the order management CBC does not contain all the information
needed by systems engineering. Items such as the customer contact name, tool
name and model name are not addressed by the current order management CBC.
As a result, purchase orders “pass” the order management CBC which do not meet
systems engineering information requirements. These purchase orders require
additional follow-up work (i.e., locating the customer contact name, tool name, etc.).
We tested XX purchase orders that passed the order management CBC and were
faxed to systems engineering and noted that X of the purchase orders required
follow-up work.
In order to expedite the sales order process, management should consider aligning
the CBCs and the EDA among the various departments involved in the sales order
process. This will help streamline the overall process as all the necessary
information is captured from the customer at one point in time.
Business Impact:
• As CBC requirements are not consistent between departments, quotes and
purchase orders are sometimes passed on to the next process step without
complete information. This inefficiency increases the overall cycle time from
quote to shipment.
7. The master price list in the system is not up to date. A. Update and maintain the
master price list on the
Per discussion with the Information Technology specialist, the master price list in is system.
not complete and is not kept up to date.
B. Establish a formal process
Internal audit reviewed the list price for XX part numbers in the price book used by to ensure that pricing
regional marketing for quote purposes and traced and agreed the price to the information is consistently
master price list contained within and noting one discrepancy. Additionally, we obtained and updated.
performed CAAT testing on the master price list within and found that XXX part
numbers were missing from the master price list.
The master price list within should be kept current with all existing tools and their
associated prices. Maintaining pricing information on system X will increase the
accuracy and integrity of the pricing information and decrease the cost of
maintaining and updating the manual system which is currently being employed.
Business Impact:
• Pricing information provided to customers may be incorrect and could
potentially result in lost revenue.
• Maintaining a manual system is costly and time consuming.

8. Repeat Item: The shipping log is not consistently filled out to reflect the A. Implement policy that
carrier and routing number. requires shipping log to be
completely filled out the
The shipping department is required to keep a shipping log to capture daily same day product is
shipping information and activity. Each log entry is supposed to capture key shipped.
information on the shipment, which includes the carrier and the applicable routing
number. B. Create an X database
database to maintain the
Per review of the shipping log, it was noted that key shipping information is not shipping log. The invoicing
consistently being recorded in the shipping log. It was noted that XX% of the log department should have
entries did not contain carrier and routing number information. Additionally, we access to the database so
were unable to locate the supporting shipping documentation in XX% of the they can verify items have
transactions reviewed. been shipped before
invoicing occurs.
Shipping employees should record all applicable shipping information in the
shipping log on the same day that shipment occurs. This practice will ensure that
all supporting information is properly recorded and documented.
Business Impact:
• Failure to record shipping information in the shipping log could potentially
hinder the company’s ability to quickly respond to customer questions
regarding shipments.
• Potential loss of traceability for products in transit.

Appendix A: Best Practices Scorecard
The matrix The “Best Practices” Summary on the following pages is based on Company Y’s Global
Best Practices. As part of this review, Company X’s practices were benchmarked against the “Best
Practices.” An evaluation of Company X’s processes is noted in each instance. Best Practices
were evaluated as follows:
Good/World Class - “Best Practice” currently in use.

✔ Moderate Use - Improvement possible in order to achieve “Best Practice” status.
✖ Limited/Some Use - Improvement recommended to improve process
efficiency/effectiveness.
Where possible improvement can be made in the company’s best practice structure, a reference
has been made to the Action Matrix, where management’s change implementation is described
along with the responsible party and estimated implementation timing.

Best Practices
Key Internal Control Objective Page Priority
1. Provide one primary contact point for each type of customer. 18
2. Create a simple, easy-to-use order-taking process. 19
3. Create an integrated system that is informative and flexible and used 20

throughout the company.
4. Make decisions at the time of customer contact. 21
5. Establish and periodically reevaluate long-term agreements between 22

customers and the company.

Best Practices
Key Internal Control Objective Company X Practice Rating Reference
1. Provide one primary contact point for each type of customer. Company X customers currently Action Item #4,5
interact primarily with the sales
• The company has records that indicate customer person servicing their account.
characteristics such as order frequency, volume, and
complexity. When the customer needs
• Customer technological and personnel capabilities are a major technical information then
consideration in deciding how a company's orders are placed. someone from the systems
• Employee responsibilities relating to taking customer orders is engineering department will
well defined, and questions about products are referred to a interact with the customer to
trained customer service representative. exchange the relevant technical
• The company has mechanisms in place to measure how well data.
employees taking orders respond to customers.
Systems engineering does not
Benefits: currently have a formal process
for communicating this information
• Reduced customer frustration in searching for answers to to the customer. The company
questions. should evaluate the feasibility of
• Improves order cycle time. dedicating a systems engineer (or
• Reduces company costs and customer complaints. another employee with a sufficient
• Improves the company’s responsiveness and ability to track technical background) to working
orders. exclusively with customers to
determine technical specifications.

Best Practices
2. Create a simple, easy-to-use order-taking process. Sales personnel do not Action Item #4,5
consistently provide regional
• Computer systems are always accessible while employees marketing with all the necessary
are taking orders. information to ensure that quotes
• The company considers the complex or specialized needs of (which customers use to issue
certain customer groups in designing its order-taking process. purchase orders) are accurate
• The company always confirms a customer's order before and complete.
completing the order-taking process.
• The company uses the order date as the primary means of According to the Systems
ranking orders by priority. Engineering Manager,
approximately XX% of purchase
Benefits: orders received from order
management have incomplete
• Order process time is reduced. information. When purchase
• Reduces customer inquiries/complaints and internal follow-up orders have incomplete
on orders. information systems engineering
is required to communicate with
regional marketing or with the
customer to obtain the necessary
information to complete the tool
configuration process.

Best Practices
3. Create an integrated system that is informative and flexible The company currently uses the Action Item #4
and used throughout the company. system, which is an
enterprisewide system. The order
• Customers are transferred from the primary contact when entry system resides in system x;
order status must be checked. however, only regional marketing
• All departments involved in the order cycle share a common and order management use the
database. system to locate pricing
• If the company sells to distributors, its system is linked with information and to input
individual distributor's sales data. configuration information. Sales
• Customers who place orders on a credit basis must have and systems engineering do not
each order approved by the credit department. use the system to perform their
specific functions.
Benefits:
• Improves order cycle time.

• Reduces internal follow-up on orders.
• Improves the accuracy of the order process.
• Improves the efficiency of tracking and monitoring the order
status.

Best Practices
4. Make decisions at the time of customer contact. The company does not currently Action Item #5
have a systematic process to
• The customer contact representative is empowered to make ensure that complete configuration
most decisions regarding customers during the course of information is provided by the
taking an order. customer prior to the purchase
• The company has a system mechanism by which it can order being submitted to systems
monitor representatives to ensure they adhere to preset engineering.
credit/discount authorizations.
• In most cases, calls from customers with questions about Systems engineering should be
order status must be referred to someone other than the involved in the quoting process to
customer contact representative. ensure that customers are
provided with adequate
Benefits: configuration information before
the purchase order is submitted to
• Reduces the number of times customers have to call. Company X.
• Reduces the time spent on answering questions and taking
orders.
• Eliminates frustration with not getting an answer.
• Speeds up the customer's decision process.

Best Practices
5. Establish and periodically reevaluate long-term agreements Contract operations is currently Action Item #3
between customers and the company. attempting to institute a formal
contract and agreement review
• The company makes an effort to identify customers with process to ensure that terms
whom to establish long-term contracts. and conditions of contracts and
• The company jointly decides with the customer on the terms agreements are clear and
and conditions of the sale that should be expected of both the understood by both parties.
company and the customer.
• Terms and conditions of sale in general and for specific
customers are reflected in the company's order processing
system.
Benefits:
• Improves customer relations.

• Allows the company to cooperate with their customers on
price, service, and quality.
• Enables the company to estimate product demand.
• Increases customer satisfaction by providing reliable sources
and predictable lead times.
• Eliminates expectation gaps.
• Reduces customer claims for non-conformance.

Appendix B: Internal Control Assessment
The matrix on the following pages lists process controls which should be present within the
warranty/field services environment. We evaluated the adequacy of each control in Company X’s
warranty/field services process. Controls were evaluated as follows:
Strong Controls - Controls are present to mitigate process/business risk and are operating
effectively and efficiently.
✔Moderate Controls - Controls are present to mitigate most process/business risk, but
management should evaluate opportunities to enhance existing controls.
✖Limited Controls - Existing controls may not mitigate process/business risk, and
management should consider implementing a stronger control structure.
Where possible improvement can be made in the control structure, a reference has been made
to the Action Matrix, where management’s change implementation plan is described along with
the responsible party and estimated implementation timing.

Internal Control Assessment
Key Internal Control Objective Page Priority
1. Discounts should approved by appropriate personnel. 25
2. Use a comprehensive control documentation to ensure that all relevant sales order 26
information is captured on quotes and purchase orders prior to processing.
3. Standard quote request forms should be used when obtaining quotes. 27
4. Sales order information on quotes should be reviewed by the appropriate 28

personnel prior to final distribution to the customer.
5. Shipping logs should be filled out completely and maintained on a daily basis. 29

1. Discounts should approved by appropriate personnel. It was noted during our review that Action Item #2
standard authorization
• Discount authorization forms should be signed and dated by the documentation for discounts was
appropriate personnel. missing or incomplete.
• Discount authorization forms should be filed with the applicable The sales authorization matrix on
purchase order or contract. the company’s intranet states that
all discounts greater than XX%
must be signed by either the CEO
Business Impact: or the COO.
• Discount authorization policies and procedures protect the
company’s pricing strategy and provide management with visibility Train applicable sales personnel to
over the discounts given to customers. ensure that discount authorization
is obtained prior to providing
discounts to customers.
Additionally, make sure approved
discounts are supported by the
appropriate documentation.
Management should also evaluate

and update the current discount
authorization matrix/policy for
relevancy.

2. Use a comprehensive control document to ensure that all Order Management currently uses Action Item #5,6
relevant sales order information is captured on quotes and a Clean Book Checklist (CBC).
purchase orders prior to processing. The CBC ensures that the PO
contains all the necessary
• Ensures all the necessary information is obtained on the purchase information for entry into the
order for entry into the system system. However, the CBC does
• Provides accountability and allows management to track not require that all necessary
breakdowns in the process. configuration information be on the
• Ensures all the correct information is on the quote before it is purchase order before entry is
distributed to the customer. made into the system.
Business Impact: According to the Quote

• Improves cycle time from quote to entry into the order backlog. Completion process map (date ),
• Improves process efficiency. sales personnel should complete
• Provides control points to ensure all information is complete and a CBC for the quote before they
accurate. distribute it to the customer.
However, this is not done
consistently.

3. Standard quote request forms should be used when Per discussion with the Senior Action Item #5
obtaining quotes. Regional Marketing
Representative, a standardized
• Ensures that all the information needed by regional marketing, quote request form has been
order management, and systems engineering is provided by the developed for sales personnel but
sales personnel on the front end of the sales order process. is not used consistently.
• Reduces the overall time spent obtaining the necessary quote
information (i.e., pricing, tool configuration) from regional This form should be used to
marketing. ensure complete and accurate
quote information is captured from
Business Impact: customers. Have sales personnel
• Improves overall sales order cycle time. review completed quotes for
• Pricing and tool configuration information is more accurate and accuracy and completeness.
timely.

4. Sales order information on quotes should be reviewed by the Quotes generated by regional Action Item #4,5
appropriate personnel prior to final distribution to the marketing for sales personnel are
customer. not consistently reviewed by
systems engineering.
• Quotes are reviewed by the engineers to ensure the product
configuration is technically correct. Systems engineering should be
• Systems engineering should interact with the customer (if involved early on in the quoting
necessary) early on in the quoting process to ensure the integrity process to ensure that customers
of the quote process is maintained. are provided with adequate tool
configuration information.
Business Impact:
• Improved process efficiency in the quotation process.
• Reduce the number of purchase orders that need to be
reconfigured.
• Provide accurate quotes to the customers.

5. Shipping logs should be filled out completely and The shipping department does not Action Item #8
maintained on a daily basis. consistently record the carrier and
routing number in the shipping log
• All information in the shipping log should be filled out daily at the on the same day of shipment.
time of shipment. Currently, this information is
• Shipping information allows the company to verify shipments for recorded the day after the product
invoicing purposes and to track shipments once they have been actually ships.
sent.
Detailed testing revealed that this
Business Impact: information is often not recorded
• Improve traceability on products shipped to customers. in the shipping log. Also, we were
• Provide complete and accurate shipping documentation. unable to locate much of the
source documentation providing
the applicable information.
It should be noted that the

company is in the process of
determining the feasibility of using
an electronic shipping log.
Additionally, the company is
evaluating using bar code
technology for all shipments. As
such, all the shipping information
will be electronically recorded and
input into the company’s
information system.

Appendix C: Sales Order Process Map
Sales Customers Sends Order Management System Engineering PO is entered into

Representative Purchase Order to specialist reviews determines the System
request a quote from Company X PO and enters it into configuration
Regional Marketing the system
• Regional Marketing • The PO comes into  The PO is logged into the X • When PO passes the CBC, • When PO passes the CBC,
obtains Standard product Company X and is database that tracks the it is entered into as “System it is entered into .
and pricing information distributed to the sales order process. Engineering.”
from product marketing. appropriate Order
✔ The Order Management • The Order Management
Management Specialist.
✖ Sales Representatives do (OM) Specialist utilizes the Specialist faxes the PO to
not use a standardized • A folder is created to clean book checklist (CBC) Person X in System
quote request form. maintain copies of the PO, to review the PO. Engineering.
CBC check list, X
 Quote is sent to the sales  If the PO fails the CBC, then ✔ System Engineering
database log sheet, order
representative for review. the OM Specialist will note configures the toll and
entry check list, any
This review is not in Access, the reason why emails the configuration to
change order check list,
consistently performed. the item failed and who the the appropriate Order
copy of fax set to system
PO is sent to in Regional Management Specialist.
✔ Non standard orders that engineering (for non
Marketing. ✔ Order Management
are not in the visibility standard products), and
system or in the price any product configurations. ✖ A standard form is not used Specialist enters the
book are sent to system to communicate problems to information into backlog.
engineering for Regional Marketing.
configuration, even if the
✔ One copy is placed in the
tool has been created
PO folder and one copy is
before.
sent to appropriate Regional
✖ Known tool name report is Company X Control Points In Place:
Marketing personnel.
not distributed monthly to • Process Step
RM.
 Quote is not consistently
✔ Internal control point (manual)
generated by product  Internal control point (system based)
marketing with System
Company X Control Weaknesses:
Engineering input.
 Quote is emailed to the
 Internal control weakness
Sales Representative ✖ Process inefficiency
before receiving system
engineering input.
• Sales Representative
sends quote to the
customer.
Appendix C: Shipping/Invoicing Process Map
The Shipping Product is pulled Product is inspected Packing slips are Invoice is generated. The product is
Request Form (SRF) from the inventory by Quality generated. invoiced and
is created. warehouse. Assurance (QA). shipped.
✔ Order management enters ✔ The LPT line manager ✔ QA inspects the product and ✔ Once SRF information has ✔ The packing slip is sent to ✔ A copy of the invoice is
sales order information into provides a daily shipping verifies that the information on been verified it is entered invoicing and an invoice is mailed to the customer.
the system. sheet which the finished the SRF matches to the actual into the system and a generated by system.  Product loaded onto freight
goods coordinator reviews items on the shipping floor packing slip is generated. ✔ A copy of the invoice is sent carriers is not being
✔ Regional Marketing creates
and matches up to the SRF (i.e., part number, description, ✔ The packing slip is used to to the shipping floor (for sufficiently monitored as
a Shipping Request Form
details. quantity, serial number) create the invoice. international shipments) and its being loaded.
(SRF) based on the sales
order information within the ✔ The finished goods  QA is using the SRF, rather  Packing slips are not being is attached to the product  The daily invoice log is not
system. The SRF triggers coordinator then examines than the packing slip, to verify reviewed/checked against being shipped (along with all being matched up to the
the shipping process. the serial numbers on the the serial numbers instead of the SRF. of the other shipping shipping log.
goods to be shipped and the packing slip. documentation).
✔ A copy of the SRF is sent to writes the serial numbers on
the finished goods the SRF. Tools requiring
coordinator. serial numbers include:
✖ Some SRFs are created SmartComm, SmartTag,
manually because of LPTs, Indexer, & 300MM
efficiency limitations within . Pods
✔ The items on the SRF are
✔ The serial number is allocated (transferred from
assigned to product on the finished goods) to the sales
manufacturing floor. order.
 Serial numbers are ✔ Finished goods not already Company X Control Points In Place:
duplicated or are incorrectly on the shipping floor are
assigned. pulled from the inventory
• Process Step
warehouse. ✔ Internal control point (manual)
✔ The SRF is then passed on  Internal control point (system based)
to Quality Assurance for
review. Company X Control Weaknesses:
 Serial number information is  Internal control weakness
still manually transferred on
some of the shipping docs, ✖ Process inefficiency
and is therefore subject to
human error.

Appendix C: Proposed Sales Order Non-Tool Processing
Process Map
Sales Representative Customers Sends Order Management PO is entered into

request a quote from Purchase Order to specialist scrub PO the system
Order Management Company X and enters it into the
system
✔ Sales Representative • The PO comes into  The PO is logged into the X • When PO passes the CBC,
requests a quote for tool Company X and is database. it is entered into system.
and non-tool products distributed to the
✔ The Order Management
from Regional Marketing appropriate Order
Specialist utilizes the clean
utilizing the standard Management Specialist.
book checklist (CBC) to
quote request template.
• If the PO is new, a folder is review the PO.
✔ Standard products, pricing created to maintain copies
 If the PO fails the CBC, then
information is obtained of the PO, CBC check list,
the OM Specialist will log
from product marketing X database log sheet,
under the PO number in
system. order entry check list, any
Access, the reason why the
change order check list,
✔ Quote is sent to Order item failed and who the PO
copy of fax set to systems
Management for technical is sent to in Regional
engineering (for non
review. Marketing.
standard products), and
✔ Quote then forwarded to any product configurations. ✔ One copy is placed in the
the sales representative PO folder and one copy is
✖ There are no policies or
for order completeness sent to appropriate Regional
procedures in place that
review. Marketing personnel.
indicate the proper way to
• Sales Representative receive/process PO, to • The Order Management
sends quote to the maintain a folder, what to Specialist fills out the Company X Control Points In Place:
customer. put in the folder, and what standard CBC fail sheet and • Process Step
to enter into Access. sends the PO to Regional
Marketing . ✔ Internal control point (manual)
• This process is completed  Internal control point (system based)

util the PO passes the CBC Company X Control Weaknesses:
✖ Process inefficiency

Appendix C: Proposed Sales Order Tool Based Processing
Process Map
Sales Representative Sales Representative Customers Sends Order Management Systems

request a quote from request a quote from Purchase Order to specialist scrub PO Engineering
Order Management Sales
Order Management Company X and enters it into the determines
(known) Representative
(Unknown) system configuration
request a quote
from Order
Management
✔ Sales Representative ✔ Sales Representative • The PO comes into  The PO is logged into the X • When PO passes the CBC,
requests a quote for tool requests a quote for tool Company X and is database. it is entered into as
and non-tool products and non-tool products distributed to the “Systems Engineering.”
✔ The Order Management
from Regional Marketing from Regional Marketing appropriate Order
Specialist utilizes the clean • The Order Management
utilizing the standard utilizing the standard Management Specialist.
book checklist (CBC) to Specialist faxes the PO to
quote request template. quote request template.
• If the PO is new, a folder is review the PO. (name) in Systems
✔ Check in the visibility ✔ Check in the visibility created to maintain copies Engineering.
system, the price book,  If the PO fails the CBC, then
system, the price book, of the PO, CBC check list,
and the known tool name the OM Specialist will log ✔ Systems Engineering
and the known tool name X database log sheet,
report (provided by SE) for under the PO number in configures the toll and
report (provided by SE) for order entry check list, any
the requested tool. Access, the reason why the emails the configuration to
the requested tool. change order check list,
✔ If tool is not found, send item failed and who the PO the appropriate Order
copy of fax set to systems
✔ Standard products, pricing is sent to in Regional Management Specialist.
to systems engineering for engineering (for non
information is obtained configuration. Marketing. ✔ Order Management
standard products), and
from product marketing Specialist enters the
• Quote is generated. any product configurations. ✔ One copy is placed in the
system. information into backlog.
PO folder and one copy is
✔ Quote is sent to Order ✖ There are no policies or
✔ Quote is sent to Order sent to appropriate Regional
Management for technical procedures in place that
Management for technical Marketing personnel.
review. indicate the proper way to
review.
receive/process PO, to • The Order Management
✔ Quote then forwarded to
✔ Quote then forwarded to maintain a folder, what to Specialist fills out the Company X Control Points In Place:
the sales representative
the sales representative
for order completeness
put in the folder, and what
to enter into Access.
standard CBC fail sheet and
• Process Step
for order completeness sends the PO to Regional
review.
review. Marketing. ✔ Internal control point (manual)
• Sales Representative
• Sales Representative • This process is completed  Internal control point (system based)
sends quote to the
sends quote to the util the PO passes the CBC.
customer. Company X Control Weaknesses:
customer.

Appendix C: Proposed Shipping/Invoicing Process Map
Product is moved Regional marketing Product is pulled Product is packed The product is
from manufacturing coordinates orders from the finished and prepared for invoiced and
to the finished goods with available goods. goods inventory. shipment. shipped.
area and inspected
by QA.
✔ Each manufacturing line ✔ Regional marketing ✔ The pick/pack slips are ✔ QA performs final quality ✔ The product is loaded onto
provides regional marketing coordinate orders from used to pull the products and documentation checks. the freight forwarders and
with an accurate lead time customers with the finished from inventory. shipped.
✔ Pick list goes to the Traffic
report indicating product goods availability and ✔ Invoicing receives copies
Coordinator to print the
availability. manufacturing backlog. of the shipping
Packing slip.
 The serial number is input ✔ Regional marketing assigns documentation so that any
✔ The goods are packed,
into the system at the front finished goods with orders remaining invoices can be
boxed and prepared for
end of the shipping/invoicing and established what is generated and sent to the
shipment.
process (at the end of the available for shipment on a respective customer.
✔ The necessary shipping
manufacturing process). daily basis.  For shipments via Power
documents are attached to
✔ Orders are allocated to Freight, invoicing sets up
✔ QA examines the product to the shipment (i.e., packing
Finished Goods by Regional an intermediate invoicing
ensure it matches the slip, invoice)
marketing. location in and invoices
pick/pack slip (part #, serial ✔ For international shipments,
 The Finished Goods the intermediate location in
#, etc.) and goes through a shipping employee can system.
the remaining QA checklist. Coordinator prints out a list
generate a copy of the  Once a copy of the signed
of goods to be shipped each
invoice at the shipping dock
day and generates the freight document is
location using software
pick/pack list for these returned to invoicing
package.
goods. (indicating final shipment),
the invoice is transferred
out of the intermediate
location and is closed to
Company X Control Points In Place:
the regular revenue
• Process Step account.
✔ Internal control point (manual)
 Internal control point (system based)
Company X Control Weaknesses:

Appendix D: Testing Matrix
The following matrix documents the audit tests performed, relating to the sales order process review, and
the results of these tests. Overall, opportunities exist to improve the process. These improvements will
ensure that internal controls are operating effectively and efficiently in order to mitigate risks associated with
the process.
Non-
Test Attribute Tested % Comments/Detail
compliance
Customer File to Verified that the customer file contained a copy of the Of the XX customer files tested, XX contained a
PO PO and a signed X database entry form copy of the PO
Customer File to Verified that the customer file contained a completed Of the XX files tested, X did not contain an order
Order Entry List and signed CBC and order entry list entry check list
Customer File to Of the XX files tested, XX CBC’s were not signed

Verified that the CBC was signed and completed
CBC and one was not fully completed
System to Verified that the information on the PO was Of the XX sales orders selected from , all XX
Customer PO accurately reflected in the system contained the proper information form the PO
Shipping Log & Verified that shipments had proper weigh bill Of the XX log entries checked X did not have
Supporting Doc. documentation supporting weigh bill documentation
Shipping Log & Verified that shipper documents were properly Of the XX shipper documents checked X did not
Supporting Doc. authorized or signed have shipped by signed
Verified shipping log contained carrier name and Of the XXX log entries checked XX did not have
Shipping Log
weigh bill number information for carrier or weigh bill invoice number
Clean PO to Of the XX clean PO’s tested, only X contained the

Verified with system engineering that “clean” POs
Systems proper information for systems engineering to
sent to them were actually “clean”
Engineering configure the product immediately
Master Price Traced and agreed the list price from the price book Of the XX prices tested, X price discrepancy was
List to the master price list in the system noted

Appendix E: Acknowledgements
We would like to thank all Company X employees who assisted us in our work during this project.
We received input and assistance from the following persons:
Operations Controller
Global Spares and Logistics Manager
Regional Marketing
Contracts/Intellectual Property
Systems Engineer
Systems Engineering Manager
Project Specialist
Regional Marketing
Information Technology
Order Management

Sales Order Cycle Review Report

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mpany X Confidential: Do not distribute 2

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Procedures Performed During This Review

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Key Discount Statistics:

 The table at right shows the top 10

 The table below shows the top 10

Note: Data for both tables taken from sales

mpany X Confidential: Do not distribute 5

Stratification of Order Values

Stratified Value # of Orders % of Orders Total Value % of Value

Top Ten Customers as Percentage of Total Order Value

Customer Name Booking Value Percent Of Total

mpany X Confidential: Do not distribute 6

Issues / Observations Page Priority

2. Discount authorization documentation is incomplete or missing. 9

7. The master price list in the system is not maintained. 14

Priority Rating High Medium Low

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Issues / Observations Action Required Owner Date

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Issues / Observations Action Required Owner Date

2. Discount authorization documentation is incomplete or missing. A. Train applicable sales

Business Impact: B. Evaluate the current

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Issues / Observations Action Required Owner Date

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Issues / Observations Action Required Owner Date

mpany X Confidential: Do not distribute 11

Issues / Observations Action Required Owner Date

mpany X Confidential: Do not distribute 12

Issues / Observations Action Required Owner Date

Issues / Observations Action Required Owner Date

mpany X Confidential: Do not distribute 14

Issues / Observations Action Required Owner Date

mpany X Confidential: Do not distribute 15

Good/World Class - “Best Practice” currently in use.

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Key Internal Control Objective Page Priority

1. Provide one primary contact point for each type of customer. 18

2. Create a simple, easy-to-use order-taking process. 19

3. Create an integrated system that is informative and flexible and used 20

4. Make decisions at the time of customer contact. 21

5. Establish and periodically reevaluate long-term agreements between 22

mpany X Confidential: Do not distribute 17

Key Internal Control Objective Company X Practice Rating Reference

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Key Internal Control Objective Company X Practice Rating Reference

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Key Internal Control Objective Company X Practice Rating Reference

• Improves order cycle time.

mpany X Confidential: Do not distribute 20

Key Internal Control Objective Company X Practice Rating Reference

mpany X Confidential: Do not distribute 21

Key Internal Control Objective Company X Practice Rating Reference

• Improves customer relations.

mpany X Confidential: Do not distribute 22

mpany X Confidential: Do not distribute 23

Key Internal Control Objective Page Priority

1. Discounts should approved by appropriate personnel. 25

3. Standard quote request forms should be used when obtaining quotes. 27

4. Sales order information on quotes should be reviewed by the appropriate 28