Auditing a

Department Store
 Pre-Audit Research

• Audit working papers and

audit reports of previous
year.
• Conducting meeting with
management and clearly
stating the assistance
required.
• Discuss areas of concern
which may require
additional research and time.
• Conduct necessary follow us
on exceptions disclosed by
management.
 Pre-Audit Research
• Check internal check and
control

• Take notes of average sales

turnover.

• Analyse previous years

policies.

• Check for any

discrepancies in company
policies.
 Contract Review
• Make a list of contracts
entered into with third
parties.

• Whether ever product

dealership has a valid
contract and agreement.

• The contract terms are

not extraordinary.
 Contract Review
• Contract requirements
are adequately defined
and documented.

• Are there established

procedures for new
product introduction /
transfer?
 Purchases
1.Check the companies purchase
procedure
2.Check if the order was auth. By
stores dept.
3.Check if purchases are being
made from genuine dealers.
4.Check if purchase was required.
5.Departments must submit a
roster of employees in the
department who are authorized
to purchase goods and services
using delegated purchasing
authority.
 purchases
1.Check quotations and tenders
called for.
2.Check delivery was in time and in
the right quantity (delivery
challan)
3.Compare the proforma invoice
with actual invoice and goods
recvd. Note the discrepancies if
any.
4.Check credit period granted,
method of payment, scale of
discount given.
5.Warrantee period given by
creditors.
 Storage and Inventory Management

All items received at the Store are

examined and/or tested by Store
personnel to determine usable
condition.

All items received at the Store are

examined and/or
tested by Store personnel to
determine usable condition

Are the materials issued according

FIFO?
 Storage and Inventory Management
• Develop procedures to ensure
that disposals are
appropriately documented
and approved.

• Check that the inventory is

frequently updated on the
intranet website available and
it is secured with a valid
password username
combination known only to
the concerned people.
Storage and Inventory Management
• Check the control
packing, preservation and
marking processes to
ensure conformance to
specified requirements.
• A complete inventory
listing is maintained by
the Store for items
received, transferred, sold
and/or disposed
otherwise.
-store
nsfer
nsfer

• Procedural
compliance and
documentation

• Transfer rates

• Same quantity sent

and received
-store
nsfer
nsfer

Inter store transfers

• No intermediary

• Authorization

• Frequent transfers on
year end

• Preference to a
department
les
les

Sales

•Identify the various

Departments

•Sales records for

different departments

•Sales tax provided

•Valid discounts
les
les

Sales
• Bar code system

• Bill verification
before exit

• Shop lifting
les
les

• Connections of the
person at billing
counter

• Merchant copy of
bills

• Preferential
treatments
urns,
ments &
ments &
anges
anges

Returns, replacements and refunds

• Failure analysis

• Corrective actions

• Status of corrective
actions

• Products disposition

• Separate storage
urns,
ments &
ments &
anges
anges

• Future occurrences

• Details of corrective
actions

• Credit notes

• Uniform terms and

conditions
ash
dling
dling

Cash Handling
• Proper Segregation
of Duties

• Handling,
transporting and
storing cash

• Prompt deposits

• Details of the bills

ash
dling
dling

• Cash register

• Voided transactions

• Refunds and
expenditures

• Safe storage

• Connections to billing
department.
ash
dling
dling

• Independent
reconciliation

• Management
oversight and review

• Access to one cashier

per shift

• Tax returns
 HR management
• Are the workers rotated on a
regular basis?
• Check workers working on
temporary basis for a long time.
• Untimely incentives given to
workers.
• Excessive conveyance allowances
given.
• Frequent leaves granted.
• New appointments and their
requirements.
• Check if there is a proper procedure
of appointment and recruitment.
• Check the salary slips
 Customer Service
• Review most recent Help
Line calls and follow-up.
Note exceptions of less than
timely or lack of follow-up.
• Verify that the service desk
procedures are being
complied with.
• Verify that customer service
standards are being complied
with and conform to
Customer Service Standards.
 Audit Finalization
• Prepare a draft audit report
which includes all identified
significant control
deficiencies and operations
problems

• Conduct an exit conference

and discuss the draft audit
report with the manager and
make revisions thereafter.

• Prepare the final audit report

and supporting work papers.
 Presented By:-
Naushad Ali Rangoonwala (36)
Sachin Agarwal (51)
Anuj Gupta (56) Sankruti
Mehta (29)
Kunal Bhandare (06) Yuvraj
Chedda (11)
Sejal Mehta (57) Bhakti Doshi
(12)