annual report 2009
Group Audit Services
The Group Audit Services (GAS) division’s primary responsibility is to support the group’s commitment to strong corporate governance and sound internal control. While management at group level is responsible for the development, implementation and monitoring of effective control systems, the internal audit division assists management in fulfilling this commitment. This is done by evaluating the adequacy and effectiveness of controls to support management in its pursuit of sustainable achievement of business objectives. The division’s function includes the appraisal of performance measures, the reliability of management information, operational controls and the safeguarding of assets.
The 18 staff members of GAS are responsible for the audits of all group operations.
An internal audit charter, approved by the audit committee of the board, determines the scope and mission of GAS’ activities. The charter conforms to the International Standards for the Professional Practice of Internal Auditing as defined by the Institute of Internal Auditors (IIA). Although GAS is responsible to the Financial Director for administrative matters, GAS reports to the audit committee.
HEAD OFFICE AND INFORMATION SYSTEM
The head office and information system (IS) audit teams co-operate closely to provide internal audit services for the group’s head office operations. This includes financial areas, such as accounts payable and the credit operations, as well as non-financial areas, including shopfitting, risk management and distribution centres.
In addition, the IS audit team conducts technical reviews covering Foschinidata areas such as database administration and networks. The audit teams make extensive use of technology such as automated scanning and data interrogation tools to improve assurance reporting to management. A stand-alone facility has been established to support the testing of sophisticated audit tools in a controlled environment. Auditors also often become involved when new computer systems are developed in order to ensure that cost-effective controls are considered at both the system design stage, prior to implementation, and during system implementation. In this way the risk of business interruption is reduced.
STORE AUDITS
Store audit coverage for the past year was 19% of group stores (approximately 34% of all stores’ turnover). As usual, leverage was maximised by ensuring that at least 85% of all the areas experienced a minimum of one audit during the year.
The store audit team has developed a scoring system that enables management to evaluate the administrative health of stores both within and across trading divisions, i.e. the audited store’s administrative performance can be benchmarked against that of other stores. Given the geographic spread of stores, as far afield as Namibia and Botswana, the planning of visits is crucial in ensuring that the planned coverage is met. The experience and professionalism of the store auditors has contributed significantly to the success of the store audit team.
GOALS
GAS is committed to providing high-quality internal audit services at a competitive cost. This is done by measuring and monitoring audit productivity and other performance factors, and keeping abreast of international trends. Specific action plans are developed for key strategic objectives.
Divisional projects to increase the automation of audit processes by implementing an electronic working papers (EWP) system and to provide internal auditors with a mobile work environment are well advanced. As was noted in last year’s report, the implementation of the EWP software for the head office audit teams has been completed. As planned, EWP software for store audits was successfully tested during a recent store audit. Minor modifications are in progress and an extended pilot project will have commenced by mid-2009.
Key areas will be reviewed to assess the feasibility of implementing continuous monitoring and auditing tools. The objective is also to provide independent assurance on selected key controls throughout the year.
The head office audit team has been restructured to ensure that the internal audit coverage of the RCS Group financial services division is appropriately focused and adequately resourced. Specific development targets have been set to enhance internal audit capacity in this area.
