Internal Audit, Risk, Business & Technology Consulting

Store Audit Technology Update: The Move to Mobile

Store Audit Technology Update: The Move to Mobile · 1protiviti.com

As retailers cut costs and drive efficiencies

across their organizations, internal audit

functions are turning to technology to

streamline processes, increase analytic

capabilities, and supplement traditional

store audits with continuous monitoring and

standardized store self-audits. Solutions vary,

but the common technology enabling this

“do more with less” trend is low-cost mobile

devices with cloud connectivity.

Protiviti forecasted this trend a decade ago when we

documented the need for more comprehensive and

agile store audit coverage in our white paper, The

Retail Store Audit: Using Technology to Optimize the Audit

Process.1 Our 2012 Internal Audit Capabilities and Needs

Survey included a breakdown of retailer responses

showing that store audit technology had become a

top priority.2 Our experience in the field since then

suggests that the adoption rate and maturity of mobile

audit technology have increased to the point where

retailers not actively pursuing mobile store audit

technology initiatives risk falling behind regulatory

and shareholder control expectations.

This paper revisits the recommendations from our

2006 study, updating them to reflect the emergence of

big data analytics, cloud connectivity, and smartphone

and tablet technology.

Introduction

1 The Retail Store Audit: Using Technology to Optimize the Audit Process, 2006, Protiviti: www.protiviti.com/SG-en/node/12031.

2 Top Priorities for Internal Audit in Retail, 2012, Protiviti: www.protiviti.com.

2 · Protiviti

Benefits of Audit Technology

Technology changes the dynamics of both formal

audits and store self-assessments by enhancing audit

productivity, increasing operational effectiveness and

improving reporting capabilities.

Technology enhances productivity by:

Improving consistency

Uniform data collection from standardized electronic

survey questions provides the most useful information

for analysis. Audit technology can enhance consistency

through customized scoring models and predetermined

response selections for specific questions. Advanced

collection rules can pose questions in sequence to elicit

accurate and relevant responses.

Minimizing the impact of interpretation

Everyone interprets audit questions from their own

unique perspective, which can cause problems with

accuracy and render subjective questions all but

useless. Audit software is designed to keep audits on

track, with downloadable support documentation,

context-sensitive hints and “help text” to clarify

management expectations.

Eliminating data re-entry

Paper-based processes can be slow and cumbersome.

The response time is further delayed as data is sent

to corporate headquarters for manual collation and

synthesis before any further analysis. In an automated

mobile solution, data is entered only once at the store

into a web-based reporting system for real-time results,

with no keying errors, no delays and no paperwork.

Increasing location coverage

In a large population of stores spread over a wide area,

sheer volume demands audits targeted at specific

stores, and some important locations may be lost in

the rush. Self-assessment, coupled with improved

productivity from a mobile reporting solution, not only

allows auditors to physically audit more stores, but

also effectively increases audit reach to all locations

by providing a convenient and easy-to-use means of

comprehensive store-level data collection and analysis.

Technology increases operational effectiveness by:

Generating action items automatically

Mobile audit technology allows retailers to implement

proactive remediation solutions for survey responses

that fall outside of a prescribed range. For all questions

where an unsuitable response is recorded, the user

can be prompted immediately to assign an action

item. Email reminders and action reports are effective

management tools to ensure timely follow-up.

Facilitating shifts in responsibility

A fundamental capability in most automated solutions

allows administrators to set and manage security

privileges and user functionality and oversee changes

to the organizational hierarchy by adding and moving

stores from one jurisdiction to another, as needed, in

the company’s structure.

Enhancing communications

A news bulletin board and in-app messaging can

provide management with a way to create and distribute

relevant updates to users. Automated action item

notification ensures that tasks are assigned consistently

to the appropriate users, improving productivity and

communication among all team members.

Store Audit Technology Update: The Move to Mobile · 3protiviti.com

Technology improves reporting by:

Reducing cycle time from data entry to reporting

Without timely data, leaders are left to make decisions

with an insufficient understanding of performance.

Audits that are completed via mobile app update

automatically, eliminating the need to efax, transcribe

or email audit data. By accelerating the audit cycle,

management can make informed decisions about

targeting low-performing stores and implement

meaningful change.

Improving visibility of key performance metrics

With mobile audit technology, management can assess

key performance metrics in real time. Armed with this

intelligence, management can identify operational

issues and respond with swift, corrective action.

Eliminating data redundancy and enhancing security

In a traditional paper-based system, audits are

distributed via efax or email, which places data

in multiple locations. This creates opportunities

for redundant data to be stored on disparate, and

sometimes unprotected, systems. With mobile audit

technology, data is synchronized upon completion

and saved on a secure, centralized server. This process

optimizes storage requirements, creates a single source

of truth and limits the proliferation of erroneous data.

Tracking store manager performance trends

High-performing store managers are moved often

to help remediate lower-performing store locations.

Mobile audit technology allows retailers to track a

store manager’s performance over time across multiple

locations.

Tracking store performance trends

Audit technology not only can provide management

instantaneous feedback on current store performance, it

also can deliver insight into performance and compliance

trends in real time. Organizations can use that insight to

detect and resolve ongoing problem areas and improve

the overall performance of the organization.

Additionally, the data allows management to rank

stores and districts based on audit performance and,

if desired, to create a competition for the best level of

ongoing compliance.

4 · Protiviti

Key Questions to Ask Before Implementing Mobile Audit Technology

Retail companies should consider the following questions before designing and implementing the self-assessment program and

related mobile audit technology:

Management

Who will own the store audit process: internal audit, loss prevention or store operations?

How frequently will the self-assessment occur? What will be the scope of the follow-up? Who will monitor remediation efforts?

Is management willing to review current practices to identify and prioritize company objectives, risks and controls to be

addressed at the store level?

Will the use of mobile technology in the audit process be a shift in corporate culture? If so, is executive management willing to

take a top-down approach and be the driver behind the new process? And is the leadership team prepared to do what it takes

to establish a strong “tone in the middle,” by getting the buy-in of line-level managers who have significant direct influence on

store-level priorities?

Information Technology

What does the business want to solve by automating the store audit process?

Will the audit software seamlessly integrate into the company’s technology infrastructure while adapting to the idiosyncrasies

of its audit process, or would a cloud-based solution serve the business better?

What is the anticipated budget for implementing the audit technology? What is the time frame for implementing a solution?

Has a return on investment (ROI) analysis been completed to estimate the potential savings and benefits resulting from using

the audit technology?

Store Audit Technology Update: The Move to Mobile · 5protiviti.com

Creating Conditions for Change

The change from paper-based audits to mobile

technology can result in a cultural shift in any

organization. Careful and conscientious creation of

the conditions required to facilitate the change are

necessary for a successful implementation. Like all

corporate change, the tone of any project starts with

executive management. Executive management

will need to establish efficient and effective lines of

communication and proper training. Most important,

leadership must involve all affected levels of the

organization in the implementation process.

Perhaps even more critical will be the ability of

executive management to vest middle managers

and store-level managers in the process. This “tone

in the middle” has been shown to be critical to

employee adoption, because workers tend to be more

responsive to their immediate supervisors than to

executive management.

Once mobile technology has been implemented,

executive management will need to make a concerted

effort to reinforce the necessity of the program’s

ongoing use. From the scope of the audit and scoring

model to accountability and follow-up, each element

of the program must work in unison to reinforce

the program. It will be executive management’s

responsibility to create the conditions that will

allow the acculturation necessary to make the

implementation a success.

ABOUT PROTIVITI

Protiviti is a global consulting firm that delivers deep expertise, objective insights, a tailored approach and unparalleled collaboration to help leaders confidently face the future. Protiviti and our independently owned Member Firms provide consulting solutions in finance, technology, operations, data, analytics, governance, risk and internal audit to our clients through our network of more than 70 offices in over 20 countries.

We have served more than 60 percent of Fortune 1000® and 35 percent of Fortune Global 500® companies. We also work with smaller, growing companies, including those looking to go public, as well as with government agencies. Protiviti is a wholly owned subsidiary of Robert Half (NYSE: RHI). Founded in 1948, Robert Half is a member of the S&P 500 index.

Rick ChildsManaging Director – Leader, Consumer Products and Services Industry Practice+1.916.830.0107richard.childs@protiviti.com

CONTACT

6 · Protiviti

© 2016 Protiviti Inc. An Equal Opportunity Employer M/F/Disability/Veterans. PRO-1116-103074 Protiviti is not licensed or registered as a public accounting firm and does not issue opinions on financial statements or offer attestation services.

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