HLB HAMT professionals are eager to assist internal audit divisions in studying any of these issues in order to adopt new risks in retail and distribution industry in UAE.

1. INTERNAL AUDIT IN
RETAIL INDUSTRY UAE
https://hlbhamt.com/

2. The retail and distribution sector faces an unexpected and rough landscape, as well as
risks related in providing an adequate customer engagement across physical, internet,
and social channels. Retailers are still adjusting to these and other variables that have
resulted in the creation of new thought processes and strategies. Despite the fact that
consumers are investing again after the pandemic, their behaviour has completely
altered.
Internal audit (IA) is understandably concerned about the multiple risks, and the IA
function will be responsible for ensuring that their businesses are safe. HLB HAMT
professionals are eager to assist internal audit divisions in studying any of these issues
in order to adopt new risks and find new possibilities.

3. KEY RISKS IN RETAIL & DISTRIBUTION
SECTORS
General Internal Controls
Internal control risks have an effect on the overall performance and efficiency of
internal controls and, consequently, on the company’s ability to fulfil its goals. Certain
risks that need to be addressed are the absence of properly specified qualification
standards with flaws in the division of responsibilities; insufficient standard operating
procedures in different departments also make a big impact. A risk analysis that is
sufficiently thorough and completed on a regular basis should influence internal
control systems.

4. Finance, Accounting & Reporting
Improper tracking of cash management and control practices, absence of an evaluation
of daily purchases/validation of vendor comparative prices, slowdowns or factual errors
in bank reconciliation statements, delays in books of accounts finalization, and
insufficiency of backup documentation and many more are all finance-related issues
that need to be addressed in the retail sector.
Fixed Assets
The risk component of fixed assets is compounded by the lack of fixed asset registries,
as well as insufficient asset movement regulations and gaps in asset warranty tracking.
Any business must keep a record of fixed assets throughout their existence. A company
with a high number of fixed assets must identify, monitor, record, and reconcile its
assets, which is critical for asset management.

5. Inventory
Inventory control is vital in the retail and distribution industries for maintaining
accurate records and preventing fraudulent activities. Inventory management systems
help to eliminate risks such as the failure to record inventory ageing, poor system
controls, delays in completing frequent inventory counts and material receiving
storage, failure of immediate follow-up activities, FIFO controls, and supervisory
control, and finally, loose procedures in material transfer with inaccurate
physical/system inventory records.

6. Retail Operations
Owning a business of any kind has risks, and running a retail business is no
exception. You can avoid many operational risks with a retail risk management
strategy in place, such as inadequate internal controls on retail stock storage, security,
staff tracking, and housekeeping practices, shortfalls in external protection measures,
cash management, deposit controls, and non-adherence with staff grooming and
presentation standards with poor display hygiene, merchandising, and detailing of
products.

7. Marketing
Many firms strive to make the UAE one of their key markets for their products in this
fast-paced business environment. The marketing department is one of the most efficient
operating structures accessible to trade companies. Poor marketing strategy, website
administration and promotional budget monitoring, as well as a failure to measure ROI
on advertising campaigns and market visits, deficiencies in advertising and marketing
integration with a lack of due process in marketing vendor selection.
Distribution / Trading
Adverse conditions and occurrences in the retail sector have wreaked issues on the
distribution process across the area, exposing it to hazards such as inadequate
customer paperwork and credit insurance coverage, insufficient management over
projections for material and sales returns, absence of oversight with loopholes in
administration of customer programmes, rewards, booking of sales, dispatches, and
returns.

8. IT Systems
The retail business has seen substantial transitions over the last decade, and it
continues to adapt with the newest innovations in information technology. Technology
will be the foundation that attracts new players to the sector, but it will also expose
them to risks such as an absence of clearly documented and communicated IT policies,
insufficiency of IT systems with flawed access controls, hacking and data loss, and
shortfalls in workflows with no data protection controls and use of manual interfaces
between multiple systems used (such as): POS systems, Finance and Accounting
systems and HR & Payroll systems

9. HR / Payroll / Administration
Managing HR/payroll activities in any company is a difficult process that necessitates
a significant commitment of time and money. Companies can get into difficulties if
they are not managed by qualified experts because of hazards including poor controls
in employee management, lack of controls over HR visa documentation, inappropriate
practices for employee entitlements, gaps in recruiting processes and procedures for
promotions and salary calculation with design and implementation of training
programmes that aren’t up to par.

10. Procurement
Strategic procurement is an important aspect of the retail and distribution sector for
any organization that wants to stay profitable. A well-developed procurement process
immediately converts into enhanced company performance by focusing on eliminating
risks such as a lack of control over price comparisons and purchase lead times,
loopholes in purchase order processing, vendor selection, periodic monitoring, and
agreements with third parties.

11. INTERNAL AUDIT IN RETAIL INDUSTRY:
CONCLUSION
Considering the prevailing challenging business environment, it’s no surprise that many
retailers are shifting their paradigm to characterize their major strategic activities.
Internal audit practices face additional hurdles as a result of these initiatives and the
significant changes being implemented. During moments of rapid transition, new and
established risks tend to grow, creating new chances for fraudulent crimes.
The demands of internal auditing continue to rise in the context of the challenges
currently happening. Internal audit functions must be flexible in all aspects of their audit
methodology in order to respond to an evolving risk situation. HLB HAMT’s audit teams
are efficient, time-bound, and audit procedures are also tailored to a virtual work
environment.

12. CONTACT US
HLB HAMT
Level 18, City Tower-2,
Sheikh Zayed Road
PO Box 32665
Dubai – United Arab Emirates.
Tel: +971 4 327 7775
E-mail: dubai@hlbhamt.com