12. Retail Audit Flashcards
Retail Audit
After a retail strategy has been developed and implemented, it should be continuously assessed. If there are any problems, the necessary adjustments should be made. A retail audit systematically examines and evaluates a rm’s total retailing effort or a specifc aspect of it. The purpose of an audit is to examine what the retailer is currently doing, appraise its performance and make the necessary recommendations if there are any problems. When conducting an audit for an organisation, you will investigate the retailer’s objectives that were set at the beginning of the year, the strategy and the implementation of the strategy.
An audit should have the following characteristics:
- It should be performed regularly.
- It involves in-depth analysis.
- Data are collected and systematically analysed.
- An open-minded perspective is adopted.
- On completion of the audit, the necessary recommendations are made.
Six steps are involved in conducting an audit.
- determine who will perform the audit.
- determine when and how often the audit will be conducted.
- determine the areas to be audited.
- develop the audit forms
- conduct the actual audit.
- report the audit findings
Six steps are involved in conducting an audit.
1. determine who will perform the audit.
Various people can conduct the audit :
- Organisation audit specialist.
- Company department manager.
- Outside auditor.
Six steps are involved in conducting an audit.
1. determine who will perform the audit.
Various people can conduct the audit :
• Organisation audit specialist.
This is an internal employee whose main responsibility is the retail audit. The advantages of having such a person include his or her auditing experience, thoroughness and level of knowledge about the firm. The disadvantages are the costs and the auditor’s limited independence.
Six steps are involved in conducting an audit.
1. determine who will perform the audit.
Various people can conduct the audit :
• Company department manager.
This is also an internal employee whose main job is operations management. He or she may be asked to participate in the retail audit. The advantage is that there are no additional personnel expenses and the fact that the manager is familiar with all the firm’s procedures. The disadvantage of using the department manager is that he or she will be away from his or her primary job, the potential lack of objectivity, time pressures and the complexity of the organisation’s audit.
Six steps are involved in conducting an audit.
1. determine who will perform the audit.
Various people can conduct the audit :
• Outside auditor.
An outside auditor is not an employee of the company. The advantage of this is that he or she would have broad experience, objectivity and thoroughness. The disadvantage would be the high daily costs, the time lag while the consultant familiarises himself or herself with the organisation and possible reluctance on the part of some employees to cooperate.
Six steps are involved in conducting an audit.
2. determine when and how often the audit will be conducted.
The second step is to determine when and how often the audit will be conducted. Normally the audit is conducted at the end of the financial year. In some instances, it can also be done at the end of the retailer’s annual reporting year or when a complete physical inventory is carried out.
Six steps are involved in conducting an audit.
3. determine the areas to be audited.
The third step is to determine the areas to be audited. An audit reviews various aspects of an organisation’s strategy and operations to identify the necessary strengths and weaknesses. There are two basic types of audits - a horizontal retail audit that analyses an organisation’s overall performance and a vertical retail audit that analyses in depth an organisation’s performance in one area of the strategy.
Six steps are involved in conducting an audit.
4. develop the audit forms
The fourth step is to develop the audit forms. There should be detailed audit forms available to systematically handle the audit. It normally consists of a questionnaire which is completed by the auditor.
Six steps are involved in conducting an audit.
5. conduct the actual audit.
The fifth step is to conduct the actual audit. Management will determine how long the audit will take. In a non-disguised audit, the employees will know that an audit is being conducted. Employees will be noticed so that they can complete some data in advance in order to save time. When a disguised audit takes place, the employees are unaware that an audit will take place. Some audits are performed when the retailer is open, and others when it is closed.
Six steps are involved in conducting an audit.
6. report the audit findings
The last step is to report the audit findings and make recommendations. Management must ensure that the findings and recommendations are made according to the audit report.
Note the following problems that may occur during an audit:
- An audit may be costly.
- It can be time-consuming.
- The performance measures may be inaccurate.
- Employees may feel threatened.
- Incorrect data may be collected.
- Management may not be responsive to the findings.
Note the following problems that may occur during an audit:
• An audit may be costly.
Retailers work on a budget to conduct an audit for the organisation, and the process sometimes takes longer than expected and results in additional unforeseen expenses. For example, the audit may take three instead of two weeks. The original budget set for the audit will not cover an extra week with regard to wages, refreshments for the auditor(s) and so forth.
Note the following problems that may occur during an audit:
• It can be time-consuming.
It may take more time to do an audit owing to circumstances beyond the auditor’s control (eg a strike for higher wages). For example, during the actual audit, the stay involved may decide to go on strike, which means that the auditor will have to wait until the end of the strike.
