Marketing Expense Control/Advertising
1. Meet with the Marketing Manager or Advertising Coordinator and
determine the following:
a. Scope of responsibilities and local advertising program.
b. Records used.
c. Methods of measurement and reports used to control funds and
evaluate the effectiveness of advertising programs.
d. Extent of cooperative advertising plans.
e. Marketing campaigns or programs currently in place.
2. Determine that payments, vouchers, credit memoranda, etc. are
approved by supervisory personnel and authorized approvers do not
perform conflicting duties.
3. For current Marketing campaigns or programs, complete the following:
a. Verify that all have been properly approved.
b. Compare plan and actual results and obtain explanations for
c. Determine that the programs were administered within their
d. Review expenses for propriety and trace selected items to source
e. Determine whether or how individual programs are evaluated.
Consider reasonableness of method; conclusions. Are results
communicated to appropriate parties?
4. Verify that accruals for deferred charge or liabilities for advertising
were appropriate at year-end and the audit date.
5. Review routines for controlling cash receipts from the sale of advertising materials.
6. Review routines for ordering, purchasing, storing and shipping
promotional material and technical publications considering the
a. What are routines for selecting vendors?
b. Are Corporate sources used?
c. Are cost estimates obtained and compared with actual billing?
Determine that purchase requests are adequately documented.
d. Is sufficient lead time allowed to avoid premium costs?
e. Is approval of billing adequate?
f. Who verifies receipt? How?
g. How are materials, particularly promotion items, safeguarded? Are
inventory records maintained? Consider a test inventory.
h. Review routines for shipping materials and verify that billing is
issued, where applicable.
i. Determine if bulk mailing rates are used, wherever possible.
j. What controls are established to ensure customers are offered
promotional materials on an equitable basis?
7. Review entertainment expenses and determine the following:
a. All are properly approved.
b. The account distribution is proper.
c. Adequate receipts are available to support the expense.
d. Expenses appear appropriate.
e. Expenses meet US IRS or Canadian regulations regarding
deduction for entertainment expense.
8. Review routines for controlling and safeguarding of entertainment items (i.e. baseball tickets).
9. If outside advertising agencies are used, perform the following work:
a. Determine how the agencies were selected.
b. Determine that a written agreement exists and includes provisions
(1) Scope of work to be performed.
(2) Requesting, scheduling and modifying work authorizations.
(3) Obtaining cost estimates prior to release of work
authorizations. Significant and consistent variances from
estimates should be documented.
(4) Documentation required to support billing (copies of billings,
tear sheets, etc.)
(5) Basis for billing and commission rates (cost plus what
percent, fixed rates, discounts including passing on of
discounts received, etc.) Media often offer special discounts
to agencies. Ensure that these discounts are passed back to
(6) Definition of ownership of materials and programs developed.
(7) Provision for audit rights by Appleton Papers Inc.
(8) Reasonable cancellation clause.
c. Review payments to advertising agencies for the following:
(1) Invoices are properly approved.
(2) Evidence of receipt of material or services is verified by
someone other than person placing the order.
(3) Payments are consistent with written agreements and
invoices are supported by details of agency costs, such as
vendor invoices, tear sheets, payroll charges, etc.
(4) Routines are in effect to prevent duplicate payments.
(5) Footings and extensions are correct.
10. Review a sample of advertising projects, including both small (less than $15,000) and large dollar projects. Verify that they are recorded
per Accounting Policy No. 523.