Audit Readiness and Internal Controls for Retail Companies in UAE

What slows down a retail company year-end

• POS to ledger gaps. Daily sales reports should reconcile to cash banked, card settlements and VAT.
• Stock shrinkage. Theft, damage and counting error need to be measured by store.
• Supplier rebates and terms. Rebates and returns to suppliers affect cost of goods sold and must be accrued.
• Multi-store reporting. Performance by store requires consistent coding of sales and expenses.

Point-of-sale controls that make the numbers reliable

A retailer's accounts begin at the till. Each day, the cashier should close the shift, print the sales report and count cash, then a supervisor signs the count. The daily summary should show cash, card and other payment methods. The amounts should match the bank deposit and the card acquirer settlement, allowing for the settlement delay.

Voids, refunds, price overrides and no-sale openings are the usual places where leakage appears. Ask the POS system for an exception report and have a manager review it weekly, with names and reasons recorded.

Stock, shrinkage and supplier terms

Retail stock is a large share of the balance sheet. Count each store on a rolling schedule and compare the count to the system. Track shrinkage as a percentage of sales by store and category. A store whose shrinkage is much higher than the others deserves a closer look at receiving, discounting and staff access.

Supplier terms matter as much as price. Record rebates, returns allowances, sale-or-return arrangements and payment terms in a supplier file. Make sure rebates earned are accrued rather than booked only when the supplier sends a credit note.

Branches, leases and gift vouchers

Multi-branch retailers should produce a profit statement per store so rent, staff cost and stock loss can be compared. Lease documents, rent schedules, service charges and security deposits should be filed by location, with cheque or transfer evidence.

Gift vouchers and loyalty points sold to customers are obligations until redeemed. Keep a register by issue date and compare it to the system balance at each month-end.

Concession arrangements, where the landlord takes a share of sales, need monthly turnover declarations. These should agree with the POS reports and with the rent invoices received. Seasonal staff and promoter payments should be supported by schedules signed by the store manager.

Paperwork that answers questions

• Daily POS summaries linked to bank deposits
• Card settlement reconciliations
• Stock count sheets by store
• Supplier agreements covering rebates and returns
• Lease agreements and rent schedules
• Gift card and loyalty liabilities

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