Internal Auditor

INTERNAL AUDITOR RETAIL TEXTILE GROUP
1. Job Purpose
Primary Objective:
Company branches, Head Office, warehouse, purchase, sales, inventory, accounts, HR, payroll :

• Financial loss
• Fraud & theft prevent/detect
• Stock shortage
• Cash leakage
• Billing irregularities
• Company policies £ •
• Internal controls
• Operational efficiency ®
• Management- independent audit report

£ • •.
Internal audit fault finding department management- risk, control, efficiency objective assurance function £.
2. Main Job Responsibilities
A. Branch Audit
showroom- regular audit .

• £:

• Daily sales

• Cash collection

• Card sales

• UPI sales

• Credit sales

• Sales return

• Discount

• Cancellation

• Exchange

• Complimentary bills

• Void bills

• Manual bills

• POS transactions

• Cash deposit

• Bank reconciliation

• Expenses

• Stock movement

• Staff attendance

• Staff discount

• Customer complaints

• Damage stock

• Transfer stock

3. Cash Audit
Cash leakage retail business- risk £.
Auditor •£:
Daily Cash

• Opening cash
• Cash sales
• Cash expenses
• Cash deposit
• Closing cash

System Cash vs Physical Cash
match £.
•£

• Cash shortage
• Cash excess
• Delayed deposit
• Personal use of company cash
• Unauthorized expenses
• Cash withdrawal
• Cash refund
• Fake refund
• Duplicate refund

4. Billing Audit
Textile retail- • audit area.
Auditor •£:

• Bill sale ?
• Cancelled bills £?
• Discount authorization £?
• Manual bill ?
• Price override ?
• Wrong barcode ?
• Duplicate bill £?
• Sales return genuine £?
• Exchange genuine £?
• Employee billing irregularity £?
• Customer payment ®» collect ?

Special Fraud Test:
POS sales + physical stock movement + cash/card/UPI collection ®® cross-check £.
Auditor •£:

• Opening stock
• Purchase
• GRN
• Stock transfer
• Sales
• Sales return
• Purchase return
• Damage
• Missing stock
• Closing stock

Physical Stock
System stock:
10,000 pieces
Physical stock:
9,850 pieces
Difference:
150 pieces shortage
£ ££.
5. Surprise Stock Audit
audit- branch manager- ®» £.
Example:
®:

• 2 planned stock audits
• 1 surprise stock audit

.
High-risk branches- frequency £.
Risk-based audit approach high-risk areas- audit coverage £ practice.

6. Purchase Audit
Purchase department- leakage £ • £.
Auditor •£:

• Purchase requisition
• Purchase order
• Supplier quotation
• Purchase approval
• GRN
• Invoice
• Rate comparison
• Supplier selection
• Purchase return
• Credit note
• Freight
• Discount
• Scheme
• Supplier outstanding

® •£
Supplier rate vs market rate
Purchase rate vs previous purchase rate
Purchase quantity vs actual requirement
Supplier relationship / conflict of interest
7. Supplier Audit
Supplier ledger •£.
£:
Supplier invoice:
5,00,000

GRN:
4,50,000
Invoice:
5,00,000
Difference:
50,000
» investigate £.
:

• Duplicate invoice
• Duplicate payment
• Wrong bank account
• Unauthorized supplier
• Fake supplier
• Excess payment
• Credit notes not recorded •£.

10. Sales Audit
branch-:

• Daily sales

• Monthly sales

• Category-wise sales

• Staff-wise sales

• Bill count

• Average bill value

• Conversion

• Discount %

• Return %

• Exchange %

• Gross margin

• £.
  Example:
  Branch A:
  Sales = 20 lakh
  Gross Margin = 32%
  Branch B:
  Sales = 22 lakh
  Gross Margin = 24%
  Sales £ margin leakage £.
  Internal Auditor £ ££.
  8. Discount Audit
  Textile retail- discount sensitive £.
  Auditor •£:

• Who approved discount?

• Maximum discount limit?

• Staff discount?

• Festival discount?

• Manager discount?

• Unauthorized discount?

• Customer-specific discount?

Example
Company policy:
Manager maximum 10%
Actual:
18%
Audit Observation
9. Sales Return & Exchange Audit
fraud risk area £.

• £:

• Original bill £?

• Product same £?

• Barcode match £?

• Return reason genuine £?

• Refund £ approved ?

• Cash refund £?

• Bank/UPI refund £?

• Product £ stock- ?

10. HR & Payroll Audit
Internal Auditor HR- day-to-day work £.

• control •£.
  Audit Areas

• Employee master

• New joining

• Resignation

• Attendance

• Overtime

• Salary

• Incentive

• Advance

• Loan

• Leave

• Full & final settlement

• Duplicate employee

• Ghost employee

• Unauthorized salary changes

Special Test
HR Master Attendance Payroll Bank Payment match £.
11. Expense Audit
Branch expenses •£:

• Electricity
• Rent
• Maintenance
• Transport
• Travel
• Tea/food
• Stationery
• Repairs
• Advertisement
• Petty cash

Auditor £:
Expense genuine £?
Company policy ®£?
Approval £?
Supporting document £?
Duplicate claim £?
12. Bank & Reconciliation Audit

• £:

• Bank reconciliation

• Cash deposit

• UPI settlement

• Card settlement

• Payment gateway

• Outstanding cheques

• Unidentified credits

• Unidentified debits

Important
POS sales:
10,00,000
Bank/Card/UPI settlement:
9,75,000
Difference:
25,000
Investigation.
13. Fraud & Theft Investigation
Internal Auditor- fraud detection capability •®£.
Possible fraud:

• No-bill sales
• Cash theft
• Stock theft
• Fake returns
• Fake discounts
• Fake expenses
• Supplier fraud
• Payroll fraud
• Purchase manipulation
• Barcode manipulation
• Unauthorized transfers
• Customer payment diversion

Fraud suspicion auditor evidence-based investigation £; allegation ® report .
14. CCTV Audit
Retail textile business- CCTV useful £.
Auditor sample basis-:
CCTV + POS + Cash + Stock
cross-check .
£:
CCTV:
Customer product .
POS:
Bill .
Stock:
Product shortage.
significant audit finding .
15. IT / POS Audit

• £:

• POS user access

• Manager login

• Billing staff login

• Password sharing

• Price override

• Discount override

• Bill cancellation

• Return authorization

• User deletion

• System modification

• Backdated entries

• Audit trail

16. Branch Manager Audit
Branch Manager- control effectiveness •£.
Manager KPIs

• Sales
• Gross margin
• Stock loss
• Cash shortage
• Discount
• Returns
• Customer complaints
• Staff productivity
• Attendance
• Expense control

Manager target achieves stock loss £ audit observation £.
17. Head Office Audit
HO departments:
Purchase

• Purchase controls
• Supplier controls
• Rate
• Approval

Inventory

• Stock transfer
• GRN
• Warehouse
• Stock reconciliation

Accounts

• Ledger
• Payments
• Bank
• Receivables
• Payables

HR

• Payroll
• Attendance
• Employee master

Marketing

• Campaign expenses
• Vendor bills
• Agency payments

IT

• System access
• POS
• ERP controls

18. Monthly Audit Pattern
Week 1
Branch Operations Audit

• Cash
• Billing
• Sales
• Discounts
• Returns

Week 2
Inventory Audit

• Physical stock
• Transfers
• Shortage
• Damage
• Warehouse

Week 3
Purchase + Supplier Audit

• PO
• GRN
• Invoice
• Rate
• Supplier ledger

Week 4
Accounts + HR + Compliance Audit

• Bank
• Expenses
• Payroll
• Statutory
• Reconciliation

19. Monthly Reporting
Internal Auditor Monthly Internal Audit Report £.
Report structure:
1. Executive Summary
2. Branch-wise Findings
3. Financial Loss
4. Stock Shortage
5. Cash Variance
6. Billing Irregularities
7. Purchase Issues
8. Fraud Risk
9. Control Weakness
10. Corrective Action
11. Responsible Person
12. Deadline
13. Previous Finding Status
20. Audit Finding Classification
findings- level .
Critical

• Theft
• Major fraud
• Significant financial loss
• Intentional manipulation

Immediate MD escalation
High

• Major stock shortage
• Repeated cash shortage
• Unauthorized discount
• Serious control failure

7 days action
Medium

• Documentation failure
• Approval gap
• Process deviation

1530 days
¢ Low

• Minor procedural issue
• Small documentation error

Routine correction
21. Corrective Action Tracking
Audit report .
Auditor maintain £:

FindingBranchAmountResponsibleDue DateStatusStock shortageBranch A35,000Manager7 daysOpenDiscount issueBranch B12,000Sales Manager10 daysClosedCash shortageBranch C8,500Cashier3 daysOpenOpen audit points MD- monthly report £.

Qualification
Minimum Qualification
B. Com / M. Com
preferred.
Strongly Preferred

• CA Inter
• CMA Inter
• CIA
• ACCA
• CISA IT audit exposure £
• Diploma/Certification in Internal Audit

Professional certification •® internal audit methodology, risk assessment, evidence, controls competency •®£. IIA India Internal Audit Practitioner framework- engagement planning, risk assessment, evidence, workpapers competencies •® .

Experience
Internal Auditor
35 years experience
Senior Internal Auditor
58 years
Internal Audit Manager
812 years
Head of Internal Audit
1015+ years
Retail/textile experience strong advantage £.

Technical Skills
Auditor- skills •® £:
Accounting

• Journal
• Ledger
• Trial Balance
• P&L
• Balance Sheet
• Bank Reconciliation

Audit

• Internal control
• Risk assessment
• Audit sampling
• Audit evidence
• Fraud detection
• Audit reporting

Retail

• POS
• Billing
• Stock
• GRN
• Stock transfer
• Sales return
• Exchange
• Discount
• Cash management

Excel
Advanced Excel strongly recommended
£:

• Pivot Table
• XLOOKUP / VLOOKUP
• SUMIFS
• COUNTIFS
• IF
• Conditional formatting
• Duplicate detection
• Data reconciliation
• Basic dashboards

Personal Qualities
Internal Auditor- • qualities:

1. Integrity
2. Confidentiality
3. Independence
4. Attention to detail
5. Analytical thinking
6. Fraud detection ability
7. Communication skill
8. Courage to report
9. Problem solving
10. Professional scepticism

Auditor branch manager- senior staff- observation » . IIA Code of Ethics objective, ethical conduct- • .

Internal Auditor- £ Powers
role effective £® authority ® £.
Auditor-:

• branches authority
• Records • authority
• POS data access
• Stock verification
• Cash verification
• CCTV review
• ERP reports access
• Supplier records review
• Employee records review need-to-know basis
• Surprise audit
• Management- clarification authority
• Audit evidence collects authority

££.
Auditor »

• ®£.
  Internal Auditor:
  Cashier
  Purchase approve
  Bills enter
  Supplier select
  Branch manager- operational work
  audit finding close
  £ auditor control • £; control owner .

Performance KPI of Internal Auditor
Internal Auditor- mistakes £? £ ® evaluate .
Recommended KPI

• Audit plan completion 100%
• Branch audit coverage
• Stock audit coverage
• Cash audit coverage
• High-risk issue detection
• Repeat finding reduction
• Audit report turnaround time
• Corrective action closure %
• Fraud prevention/detection
• Control improvement
• Financial leakage identified/recovered
• Management satisfaction