An audit can be an extremely valuable tool to indicate whether or not a store is operating according to expected standard guidelines and may indicate a potential shrink problem. One would think it’s easy to start auditing; create it, schedule it and gather results. There is more to audit implementation than you think. Here are 5 areas that you should be considering.
Before we provide the 5 areas, this is actually the 3rd installment of what has become a 3-part series on audit creation and implementation. If you are interested in reading the first two blog installments, here is where they can be found:
Now that you can tell I am intrigued by the number five, here are the 5 Areas to Consider when Implementing an Audit Program. How you handle these areas could significantly affect your results.
Scheduling audits for all stores can be challenging when resources (i.e. travel budget, auditors, distance, duration, etc.) are limited or time consuming. How should you determine which stores are to be scheduled and how often?
Should the focus be placed on stores with a poor track record for shrink performance, sales, turnover, etc.; where one store may receive multiple audits and another store may receive none from Loss Prevention or should each location be assigned an even number of audits throughout the year?
Could a partnership with the Operations team assist with incorporating critical portions of the audit into an existing audit or creating a “mini” version of an audit to be executed during each visit?
What other resources are available to provide some additional visibility of the store’s performance and allow Loss Prevention audits to be focused where needed?
Notification: Unannounced vs. Announced
Audits are completed to monitor the compliance of your locations. Ideally you want to know how they are running that location on a day to day basis.
Do you notify Store Management of a planned audit or the number of audits assigned for the year? Is this a good or bad practice?
What are the benefits of the store being aware of an upcoming audit?
Should the store manager be available with appropriate time and resources available when the audit is conducted or does a surprise audit show the location’s true representation?
What are the drawbacks of an announced audit versus unannounced?
Could the store be “prepped” for audit, which provides an environment that does not represent how the store functions on a day to day basis and the increased chance the Store Manager could be off duty? To announce or not announce, that is the question.
The purpose of an audit is to teach as well as to review compliance. Should store locations be provided with audit materials?
What is to be gained or lost by withholding audit materials (i.e. audit form and instructional guidelines) from the stores upon the start of the Audit Program?
If an audit is essentially an “open book” test for the stores, where the questions and answers can be found within established policies and procedures, what’s the problem?
If stores are asking questions about an Audit Program, should it be viewed as positive or negative? What do you think?
At what point are findings or “opportunities” reviewed during an audit?
Should this discussion occur at the point when non-compliance is discovered or summarized at the conclusion of the audit?
What are the advantages and disadvantages of discussing each item when discovered versus the end of the audit?
How do you present findings if management is not available or present? (this one goes back to unannounced or announced audits)
If we are looking for agreement on content of audit findings and recommendations, as well as an understanding of the role of an auditor, which method is better? This answer depends upon what you want to gain from the visit and the interaction with store management and associates.
What if you do not have sufficient resources to properly implement an audit program?
What are some additional means of resources?
What other options are available to promote the Audit Program within internal and external sources?
How can these options be used to assist with greater exposure to evaluating controls that limit losses?
Could any of these options be a substitute for an audit (see bullet #1)?
Any options that continue to reinforce established policies and procedures and deterring potential loss should be considered an essential part of the program’s success.
Written by Donald Sutherland, Executive Director of Audit Development and Training