BUSINESS PROCESSES

AND RISKS
MARKETING, PROCESSING, AND PRODUCTION
Explain the role, main activities, and
risks of the marketing function in an
organization.
The role of marketing within the organization is to do the following:
• Identify present and future opportunities in the marketplace.
• Develop and implement strategies and plans for the organization to capitalize on these
opportunities.

The main activities of marketing are as follows:

• market research
• market strategies development
• pricing
• promotion
• sales and distribution customer service
Explain the role, main activities, and
risks of the marketing function in an
organization.
Issues facing marketing, which are potential risks for the organization,
include the following:
• loss of sales and market share due to incompetent or ineffective
marketing efforts
• loss of competitive advantage through failure to maintain confidentiality
of sensitive marketing information
• erosion of unit contribution margins because of inadequate pricing or
cost management
• high marketing costs per unit sold
• excessive inventories leading to high carrying costs and obsolescence
Develop an audit program for a risk-
based internal audit of the
marketing function.
• A complete audit program for marketing includes the following
• audit objectives
• audit criteria
• audit procedures
• planning
• examination
• reporting and monitoring
Explain the role, main activities, and
risks of the purchasing function in
an organization.
The role of purchasing within the organization is to do the following:
• Specify and acquire goods and services of the right quantity and quality, at the right
price.
• Deploy them at the right time, to the right place, with a view to maximizing the value
of the firm.
The main activities of purchasing are as follows:

• strategic positioning and evaluation

• determining needs
• acquiring goods and services
• monitoring
Explain the role, main activities, and
risks of the purchasing function in
an organization.
Issues facing purchasing, which are potential risks for the organization, include the
following:
• loss of sales due to poor quality raw materials, delays in their delivery, or
frequent stockouts.
• excessive inventory levels and resulting high carrying costs caused by
inappropriate or ineffective purchasing practices.
• failure of control information systems and technologies that support purchasing.
• opportunities for fraud and illegal acts.
• just-in-time manufacturing, which involves unexpected risks affecting the supply
chain, including natural disasters.
Develop an audit program for a risk-
based internal audit of the
purchasing function.
A complete audit program for purchasing function.
• audit objectives
• audit criteria
• audit procedures
planning
examination
reporting and monitoring
Determine the role, main activities,
and risks of the production function
in an organization.
The role of production within the organization is to manufacture the required
quantity of a product of the required quality, within the budgeted time, at
the lowest possible cost.
• The main production activities are as follows:
 strategic positioning and evaluations
 forecasting production demand
 planning and scheduling production
 production control
Issues facing production, which are potential risks for the organization,
include the following: potential for cost overruns loss of sales due to
manufacturing of defective products, missed deadlines, and stockouts of raw
Determine the role, main activities,
and risks of the production function
in an organization.
Issues facing production, which are potential risks for the organization,
include the following:
• potential for cost overruns
• loss of sales due to manufacturing of defective products, missed deadlines,
and stockouts of raw materials or finished products
• inappropriate or ineffective production practices resulting in excessive
inventory levels
Develop an audit program for a risk-
based internal audit of the
production function.
• A complete audit program for production function
• audit objectives
• audit criteria
• audit procedures
• planning
• examination
• reporting and monitoring