marketing expend

7/31/2019 Marketing Expend

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Contributors name withheld by request

Marketing Expenditures - Control Assessment Questionnaire

Control Risks Questions Actualcontrols/procedures

Required CorrectiveAction or alternativecontrols

Responsibility

EstimatedCompletionDate

1. Disbursements are madefor goods/ services not received

Are procedures in place related to invoiceverification and the required proof of

performance?

Are receiving documents, including those ofthird party warehouses, matched with theinvoices by an independent employee prior tothem being approved for payment?

For services is independent and appropriateproof of performance obtained? e.g. fortransportation, consultants fees

Are quality inspections performed to ensurethat quality standards and specifications aremet?

Are advertising/promotional agencies requestedto attach copies of third party supplier invoicesto their billings for subcontracted services (overdetermined value)?Are invoices for services approved for payment

by the recipient of the services by comparisonto proof of performance?

Is proof of performance obtained from the

agencies and retained for newspaper andmagazine space?

Are newspaper/magazine advertisementinvoices supported by proof of performance

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documentation, such as tear sheets and/orcopies of advertisements, prior to them being

approved for payment?

Are invoices received from the media buyerand the media production agency supported bythird party billings?

Are media placements matched to airingcertificates to verify placement?

2. Prices charged are notin accordance with contract/ costestimate/ purchase order.

Is there a written purchase order/contract/approved cost estimate in place for all

purchases?

Are all marketing invoices verified to theexisting commitment/ agreements/ contracts

prior to payment?

Is supporting documentation for pricediscrepancies forwarded to A/P for independentverification?

3. There is no assurancethat the best value for money isobtained.

Are synergies taken advantage of between PMand KF INTL. within a country?

Is there a centralized Marketing Services Group

(within a Country/region/area or category) tocoordinate purchases and use full companyvolumes to drive price reductions?

Are monetary limits requiring the Marketingdepartment to perform/ request competitive

price comparisons established?

Do Brand Managers ensure that the bidding

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process is adequately performed and properlydocumented prior to the approval of the

relevant project proposals?

Are competitive price comparisons obtained toevaluate purchasing options before a purchaseis made?

Are competitive price comparisons reviewed?Is evidence of the review retained?

Is the reason for selection of a supplier clearlydocumented?

Are competitive bidding or benchmarkinganalyses for all sole source suppliers performedon a regular basis to verify the competitivenessof these vendors?

4. Commitments are notaccurately tracked to identifythe liabilities of the Companyand marketing commitments todate

Is there a commitment system that is updatedand used by the whole department to monitorcommitted and actual expenditures?

Is access to the commitment system restrictedto only those individuals that are authorized toadd or modify commitment records?

Does the commitment system allow follow upper brand/activity and per campaign?

Is the commitment system used to monitor thestatus of open purchases for marketing servicesand promotional materials?

Are actuals per the commitment systemreconciled to the general ledger, ensuring that

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total of budgets by brand/activity agree to allthe appropriate budgets such as media

production, outdoor advertising, print media,etc.?

Are year-end accruals reconciled to thecommitment system, adequately supported and

justified, and approved by an appropriate levelof management.

5. Budgetary control is notadequate to prevent unbudgetedor unauthorized marketingexpenditure?

Is there a budgetary control system (e.g.commitment system) which is updated andused by the whole department to monitorcommitted and actual expenditures against

budget?

Are adequately detailed budgets, by brand,activity and medium (media, outdooradvertising, promotional items, etc.) preparedand used as a basis for monitoring expenditure?

Does senior marketing and financemanagement approve these budgets?

Are project IDs established for each project toprevent budget overruns in one area of budgetbeing hidden or obscured by under-runs in

another?

Are actual vs. budgeted expenditure variancespromptly investigated/approved?

Does the Marketing Controller (or equivalent)review commitments and actual expenditures

periodically (monthly) against budget?

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Are actual versus budget costs presented toManagement on a regular basis?

Are these retained and evidenced as reviewedby Management?

Are expenditure overruns against commitmentsand budgets properly approved (by BrandManagement)?

Are advertising, consumer incentives and otherpromotional expenses marketing budgetadjusted?

6. Expenditure/commitmentsoccur without adequateapproval

Are purchase orders reviewed and approved inaccordance with established approval limits

prior to the engagement of any commitment?

Are purchase orders supported by third-partybids?

Are changes to purchases documented andformally approved on purchase orders?

Are agency cost estimates/ order

confirmations, used as commitments/PO toagencies and/or suppliers for marketingexpenditures, formally approved in line withthe individuals authorization limit andreturned to the agencies/vendors?

Does the Company give written approvalbefore allowing the media agency to commit toairtime or space on our behalf?

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Do advertising agencies obtain written

approval from the Company prior to enteringinto contracts with media suppliers on behalf ofthe Company?

Are orders for media placements approved inaccordance with local policy?

Are marketing invoices always approved inaccordance with local approval limits?

7. Marketing departments within acountry are operating underdifferent rules

Are the marketing departments for allcategories within a country following the same

procedures?

Are authorization limits / commitmentsystems / competitive bidding limitsstandardized?

Are all possible synergies obtained within acountry even if different categorymanagement?

8. Promotions are unsuccessfuland sales targets are notachieved.

Do marketing and sales work together onsetting a strategy for the year?

Are other relevant departments aware of themarketing and sales objectives?

Are purchasing and production planninginformed of planned promotions on a timely

basis to ensure that the product is available?

How do we determine the timing of apromotion?

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Is there an analysis done of the goals and

results of a promotion?

Do we obtain accurate data on the success ofpromotions?

9. Media costs are notproperly controlled andauthorized.

Is a media plan developed and approved byBrand Management?

Are all revisions to the media plan approved?

Does the media plan conform with marketinggoals and strategies?

Is media procurement based on the media plan?

Are costs estimates provided by advertisingagency based on the media plan approved byBrand Management before any commitment offunds?

How do we ensure that spending levels are notexceeded?

Does Marketing Management participate inreviewing and approving big budget

productions?

Are any premiums for additional workapproved prior to the work being performed?

Do we monitor commercial ratings andperformance against agreed upon ratings?

How do we ensure that we receive

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compensation for any inferior or misplacedads?

10. Quality and serviceprovided by agency may not becompetitive.

Agency fees are excessive.

Agencies do not adhere to the KFINTL. policies

Are agencies selected based on formal &documented evaluation of commission, price,quality, service and stability?

Are formal evaluations of agency performanceperiodically performed?

How often do we compare the services of otheragencies and complete competitive biddingwith them?

Does the agency contract contain aperformance bonus clause, stipulating that anannual evaluation of the agencys performancefor each brand will be performed/graded andtied to a potential bonus incentivecompensation?

Are the fixed fee contracts with agenciesforwarded to and approved by the regional/ KFINTL. management?

Are annual volume rebates negotiated/agreedupon with the promotional print material/

marketing design supplier and included in thecontract?

How do we ensure that we receive all suchrebates?

Do we have established monetary limits foradvertising agencies internal overhead costsdocumentation? Do we request copies of the

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documentation to support the billings?

Are competitive bids performed and obtainedby the agencies/third parties for purchases(over determined value) they make on theCompanys behalf?

Are advertising/promotional agencies requestedto attach copies of the original bids to the

project summary proposal forms for allpurchases (exceeding determined limits)?

Do Brand Managers ensure that the biddingprocess is adequately performed and properlydocumented prior to the approval of therelevant project proposals?

Do we request agencies to attach relateddocumentation to their billings?

Are agency billings approved for payment onlyupon verification of the required supportingdocumentation?

Are periodical reviews of third party supportingdocumentation for all media purchases

performed if not attached to the agencybillings?

Are the amounts charged also matched with thecompetitive bids?

How do we ensure agency commissions inaccordance with the contract?

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11. Consumer and tradepromotions are not properly

approved. The Company may besubjected to unanticipatedliabilities.

Is the cost of all contests and number of prizesgiven to the winners properly approved prior to

the beginning of the contests?

Does local Legal Counsel review all consumercontests, competitions, games, and lotteries,trade promotions initiated by the Company

properly?

Are they reviewed and approved in accordancewith KF INTL. policies prior to launch?

Do contest rules/ the related forms always statethat Companys employees, their familymembers and other jury members are not

allowed to participate in the event?

Are agreements with third parties participatingwith prizes in trade/consumer contests arranged

by the Company formally documented andreviewed by Legal Counsel before signed?

Are all competitions with prizes, which areindividually worth more than US$ 5,000approved by the Regional president?

Does the Personnel department review allwinning entries to ensure no Companyemployees and/or their family members andother jury members?

Do all contest forms state the number of prizes?

12. Cash management is notmost efficient. Agency financingmay occur.

Do we pay media buyer before the media buyersettles the invoice with television and radiochannel?

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Are agency payments to third parties reviewed

for promptness with respect to the Companyspayments to agencies?

Do we know third party payment terms appliedto the agency?

Are marketing invoices sent originally to theAccounts Payable Department for pre-registration?

Are marketing invoices approved on a timelybasis and paid on due dates? Are exceptionsdocumented?

Are penalty interest invoices from marketingservice suppliers sent to the Marketingdepartment for review and approval prior tothem being paid?

Do we take all prompt payment discountsoffered?

Are advance payments minimized wheneverpossible? If they occur how do we track them?Are financial stability checks performed priorto advancing funds?

13. Marketing expenses areincorrectly classified or not

properly accounted.

Does the Accounting Manager ensure that allmarketing expenses are correctly classified inthe Companys income statement?

Are premium items expensed at the time ofpurchase?

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Are expenditures made in advance of period ofusage charged to Prepaid advertising expense?

14. The Companysinterests may not be adequately

protected in the event ofdisputes.

Do written, approved, sufficientlycomprehensive and/ or complete contracts/internal memoranda support the Company'srelationship with advertising/promotionalagencies and the media buyer?

Do contracts/internal memoranda specify theservices to be performed by the Agency andoutline areas such as a confidentiality clause,an audit clause, copyrights, entitlement torebates, competitive bidding, commissions/feestructure, payment terms, ownership ofmaterials, company/agency responsibilities,contract duration/termination, conflict ofinterest and liability, etc.?

Can terms and conditions be changed withoutnotification and approval?

Are agency agreements and modifications toagreements reviewed by legal counsel prior to

being signed?

Are talent contracts prepared and appropriatelyapproved, including legal counsel review, toensure the protection of the Companys rights?

Does the regional President responsible for theentity approve all arrangements between anentity and an advertising agency?

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Does the legal department approve allconsumer/trade promotion campaigns?

15. Segregation of duties isnot adequate to preventunauthorized transactions.

Are duties for purchasing authorization,receiving verification, invoicing verificationand supplier payment performed by differentemployees?

Is segregation of duties maintained ensuringthat one person is not responsible for ordering,approving and agreeing the prices?

Is purchasing performed from a centralizedpurchasing department?

Is Accounts Payable system access restrictedthrough system security (e.g. passwords, etc.)?

Are all services invoices approved by twopeople?

16. Inventory of promotional materials /premiumitems are not adequatelysafeguarded, distributed,efficiently utilized and/or

properly accounted for.

Are POS/promotional print materials stored atthe warehouse and not in the Marketingdepartment?

Are inventory records of all POS/ promotional

print materials established and updated on aregular basis?

Are these reconciled to the accounting records?

Are independent physical counts of POSM/premium items done periodically with theresults being reconciled to the perpetualinventory records?

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Does the Marketing Department on a regular

basis review them?

Are all inventory receipts supported by deliverynotes and a purchase order?

Does an employee other than the purchaserreceive the goods?

Do Marketing dept. employees check thequality of promotional materials received at thewarehouse prior to release of the invoice for

payment?

Do Company personnel require properlyapproved documentation prior to removing

promotional/premium materials? How do youensure that materials are allocated to the correctcampaign?

How is obsolete inventory identified? Who canauthorize its write-off? Who is responsible fordestroying such materials?

Are the receivers of premium items requestedto sign documentation confirming receipt?

Does adequate insurance covers promotionalmaterials?

17.Trademarks are not registeredresulting in the weak Companys position in theevent of disputes.

How do we ensure that all new products areregistered?

Do we register all trademarks with NationalPatent and Registration Office?

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Do we request the registration of trademarks

for export markets or foreign countries?

Do we register trademarks even if the rights areprotected under common law?

Do product/ brand managers' co-ordinate withlegal counsel?

Does the Marketing Director receive andreview reports on the export sales to ensure thatrequests for the registration are issued?

Do we know trade mark registration lead-time?

Do we review/select registered but not usedtrade marks available for new products?

Do we report imitations and counterfeits toIndustrial Property Department?

18. The C ompany cannotoperate in Year 2000.

Do we have any systems used purely bymarketing e.g. commitment system?

Have you obtained confirmation from your ISdepartment that these are Y2000 compliant?

Have you identified all your critical marketingbusiness partners? Have you contacted all ofthese business partners?

Have you investigated the systems ofmarketing business partners?

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Have you checked your spreadsheets/databasesfor dates?

Do you receive any data electronically, e.g.Market share? Has this been checked by yourIS department?

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