Digital Reporting, Dashboards Help Execute Store-Level Audits in Real Time

By Rick Childs, Managing Director
Consumer Products and Services Industry Leader

 

 

 

Retailers are under increasing pressure from all directions these days. In May, Credit Suisse estimated that a record 8,600 stores will close in 2017 and that 25 percent of U.S. shopping malls will be shuttered by 2020. At the same time, retailers are facing increasingly complex regulations on everything from public health to environmental issues. All of these pressures are creating a need to consistently and continually measure execution at the store level. Timely, accurate and actionable store-level audit data has never been more important.

In our recent report on mobile audits, we explored how internal auditors are applying web-enabled tools to engage stakeholders, automate workflows, improve decision making and drive operational efficiencies. I revisited these change drivers in a recent blog post, advocating for small but meaningful changes in retail digitalization. But with retailers having to make increasingly difficult decisions with less and less lead time in order to stay competitive, I wanted to address two even more important, and often overlooked benefits of digitalization: analytics and reporting.

Traditional paper-based store data collection is time-consuming and has always been fraught with inefficiency and error. Data collected on paper has to be compiled — via fax, scan, or physical transfer — and manually keyed into a computer before it can be analyzed. Digital data, on the other hand, is available in real time, and responses can be standardized for greater consistency to meet both operational and regulatory compliance objectives.

Web-enabled store audit tools provide accurate and actionable data, in real time. Audits performed via mobile app, for example, are updated automatically, eliminating the need to fax, transcribe or email audit results. The reduced cycle time from data entry to reporting eliminates information bottlenecks. Dashboards and other digital reporting tools allow market managers to make informed decisions on the fly, confident that they are working with the latest information, and that all users are looking at the same data — eliminating awkward spreadsheets and version control issues inherent in paper routing.

Application reporting permissions are synched to job titles — an important control given the dynamic organizational hierarchies in retail. At the same time, companies can track a store manager’s performance across multiple locations, or location performance relative to other locations.

Just-in-time feedback encourages user engagement with operational applications, remediation, electronic follow-up and reminders. By accelerating the audit cycle, management can make informed decisions about low-performing stores and implement meaningful change. Trend information can be used by asset protection and store operations to identify negative activity at the stores and potentially across districts and markets.

With this kind of instant reporting gratification, the older, slower, less accurate analog store audits seem well on their way out, and they should be. Digital store audits improve consistency, minimize interpretation, increase the number of locations that can be covered, generate action items immediately and enhance communication to the field.

The graphical interfaces of real-time reporting tools convert mind-numbing columns of numbers into color-coded dashboards for an easily read picture of performance, with drill-down capability to the store and indicator level.

At this point, the question is no longer whether retailers should adopt digital audit technology, but how quickly they can get it done, and what are the risks to their retail organizations if they don’t.

 

 

From Analog to Analytics: 2017 a Turning Point for Internal Audit

By Barbi Goldstein, Managing Director
Internal Audit and Financial Advisory

 

 

 

With increasing demands for broader, more accurate and more efficient risk assurance, internal audit departments have officially entered the age of analytics. According to Protiviti’s 2017 Internal Audit Capabilities and Needs Survey, two thirds of internal audit functions have begun using data analytics on at least a limited basis, with two-thirds of the remaining respondents indicating that they plan to begin using analytics within two years.

Respondents at organizations of all sizes reported that they have begun the transformation from labor-intensive manual processes to reliance on technology for things like sample selection and testing procedures. Most organizations are still early in the process. Only 16 percent said that they have a person dedicated full time to analytics, and only three percent indicated that they considered their audit analytics to be optimized.

I recently had the opportunity to review the survey results for participants in an April 12 webinar (available for streaming at the link). If you are interested in learning more about the survey results, I urge you to check it out. In the meantime, here are some action items for internal audit derived from the survey:

Recognize that the demand for data analytics is growing across all organizations and industries.

Internal audit organizations are under growing pressure to increase audit efficiency and coverage. Regulators across a wide array of industries are pushing for more use of data and quantitative inputs into the audit process, and auditors are finding that implementation of analytics allows them to provide broader assurance in less time than it would typically take to perform manual testing on a representative sample.

Seek opportunities to expand the internal audit function’s knowledge of sophisticated data analytics capabilities.

From peer-to-peer networking to engagement with industry groups and continuing education, it is critical for auditors to become familiar with the ways in which tools and techniques are being used across their industry.

Do not let budget and resource constraints and business-as-usual workloads limit internal audit’s ability to optimize data analytics efforts.

Look for practical applications you can showcase to gain buy-in from other auditors within your internal audit function. Understanding what peers are doing can also accelerate your organization’s analytic maturity.

Assign analytics champions to lead the effort.

Where a dedicated analytics function doesn’t exist, experience has shown that organizations that employ a champion network within their audit function benefit from broader analytics usage, more sophisticated techniques and greater adoption of analytics in the audit department. The ideal candidate for a data champion is someone with aptitude and interest in data analytics, and a person of influence whom others will follow.

Explore avenues to expand internal audit’s access to quality data.

Engage with stakeholders, such as IT and data governance, to understand how to gain access to data while following all applicable organizational policies and procedures.

Identify new data sources — both internal and external.

Internal auditors, because of their broad industry knowledge, risk focus and access to data and systems throughout the organization, are uniquely positioned to find and mine new data sources to analyze for risk assurance.

Increase use and reach of data-based continuous auditing and monitoring.

Once data sources have been identified, it is important for internal auditors to apply continuous auditing and monitoring tools to have a timely and accurate view of the state of risk in the organization. Visualization tools, such as dashboards, are useful for enabling real-time access to key risk indicators.

Use real-time risk snapshots to help focus audit efforts.

Related to the previous point, problem areas discovered through visualization tools, such as Tableau, can be flagged for additional research/root cause analysis.

Seek ways to increase stakeholder input when building/implementing data analytic capabilities.

Business owners understand and monitor the key risks in their business, as does risk management in its second-line role. It is important for internal audit to build relationships and work closely with the first and second lines of defense to continue to enhance their understanding of risk indicators in the business.

Implement steps to measure success of data analytics efforts.

Internal audit groups that can demonstrate tangible value will build a better business case for increased budgets and resources dedicated to data analysis. Metrics, such as logging requests for analytics in the audit process and number of audits that leverage analytics, are a good way to demonstrate the value of using analytics.

The overarching theme that emerged from this year’s survey results is that data analytics has reached a tipping point. Internal audit functions that lead by embracing analytics and continuous monitoring will grow in value and stature with their stakeholders, regulators and peers. Those that fail to adapt will struggle to keep up with the rate of change and the state of risk at their organizations.