Supermarket audit departments and audit budgets will witness resource expansions congruent to the expanding roles within information technology, retail operations and supply chain departments, according to the Food Retailing and Wholesaling Internal Audit Study published by the Food Marketing Institute (FMI). Forty-two percent of companies expect to grow the size of the internal audit function over the next five years in order to maintain effectiveness and efficiency of operations, reliability of financial reporting, compliance with laws and regulation and safeguarding of assets.
The in-depth report, conducted by 210 Analytics, details the findings of a national survey of 31 supermarket retailing and wholesaling companies, representing 24,688 stores and 981 internal audit professionals. The study was released today at the 2013 Annual Internal Audit conference in San Antonio, Texas. The report’s findings include:
Trends in Position Profile and Department Structure
Supermarket retailing and wholesaling companies predominantly employ full-time audit professionals, who make up 97.7% of all auditors represented in the survey. These auditors come from primarily accounting backgrounds and 31.4% are Certified Public Accountants (CPA). Internal audit departments most often report to the Chief Financial Officer or Head of Finance.
Outsourcing Specific Audit Functions
Eight in 10 supermarket retailing and wholesaling companies use third-party vendors for audit functions, albeit for less than 10 percent of total audits performed. The most commonly outsourced function for audits pertains to informational technology. Outsourcing is more common among companies operating a greater number of outlets and/or employing a greater number of employees.
Time Allocation to Functional Areas
The average number of days to issue an audit report is 18 days, inclusive of fieldwork efforts to the final report. Nearly one-third of total available audit time is allocated to retail operations, followed by the areas of finance and information technology. Companies operating fewer stores and employing fewer auditors spent more time on retail operations audits compared with their larger counterparts.
Development of the Audit Plan
More than half of respondents formally assess the success/effectiveness of their internal audit department, but 96.6% of food retailers and wholesalers have a formal audit plan. Performance evaluations prioritize input from senior management, according to 66.7% of companies.