Supermarkets Expect Increased Audit Function: Survey
Supermarket audit departments and audit budgets will undergo resource expansions in keeping with the growing roles within information technology, retail operations and supply chain departments, according to the Food Retailing and Wholesaling Internal Audit Study from the Food Marketing Institute (FMI).
The study, which was released May 20 at the FMI's 2013 Annual Internal Audit conference in San Antonio, found that 42 percent of companies expect to increase the size of their internal audit function over the next five years to maintain effectiveness and efficiency of operations, reliability of financial reporting, compliance with laws and regulations, and safeguarding of assets.
Conducted by 210 Analytics LLC, the in-depth report compiles the results of a nationwide survey of 31 supermarket retailing and wholesaling companies, representing 24,688 stores and 981 internal audit professionals. The report’s findings include the following:
- Trends in Position Profile and Department Structure: Supermarket retailing and wholesaling companies predominantly employ full-time audit professionals, who account for 97.7 percent of all auditors represented in the survey. The auditors mainly come from accounting backgrounds, with 31.4 percent identified as certified public accountants (CPA). Internal audit departments most often report to the CFO or head of finance.
- Outsourcing Specific Audit Functions: Eight in 10 supermarket retailing and wholesaling companies employ third-party vendors for audit functions, although for less than 10 percent of total audits performed. The most commonly outsourced function for audits is information technology. Outsourcing is more common among companies running a greater number of outlets and/or employing a higher number of employees.
- Time Allocation to Functional Areas: The average number of days it takes to release an audit report is 18 days, from fieldwork efforts to the final report. Almost one-third of total available audit time goes to retail operations, followed by the finance and information technology areas. Companies operating fewer stores and employing fewer auditors spent more time on retail operations audits compared with their larger counterparts.
- Audit Plan Development: More than half of respondents formally assess the success/effectiveness of their internal audit department, but 96.6 percent of food retailers and wholesalers have a formal audit plan. Performance evaluations place a high priority on input from senior management, 66.7 percent of companies said.