TFG INTERNAL AUDIT DIVISION
The primary responsibility of TFG Internal Audit 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 assessment of the reliability of management information and operational controls, and the safeguarding of assets.
The 23 staff members in the department 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 the division’s activities. The charter conforms to the International Standards for the Professional Practice of Internal Auditing as defined by the Institute of Internal Auditors. The internal audit division reports to the audit committee.
HEAD OFFICE AND INFORMATION SYSTEM
The head office and information system audit teams co-operate closely to provide internal audit services for the group’s head office operations. These include financial areas, such as accounts payable and credit operations, as well as non-financial areas, including shopfitting, risk management and distribution centres.
In addition, the information system audit team conducts technical reviews of key IT infrastructure areas, such as operating system configuration, 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 standalone facility is used to support the testing of sophisticated audit tools in a controlled environment. Auditors also often become involved when new computer systems are developed 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 20% of group stores, representing approximately 23% of the turnover of all stores. As usual, leverage was maximised by ensuring that at least 85% of all area managers experienced a minimum of one audit during the year. Stores spread across 136 areas were subject to an audit. An area represents a cluster of (typically) 10 to 15 stores.
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. This means that an audited store’s administrative performance can be benchmarked against that of other stores. Given the geographic spread of stores, as far afield as Zambia, 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
The internal audit division 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 were successfully completed. As a result, all audits are now conducted using EWP.
In addition, key areas were reviewed to assess the feasibility of implementing continuous monitoring and auditing tools. More frequent tests were implemented in selected areas in the finance division, thereby providing independent assurance on these selected key controls throughout the year. It is planned to apply a similar approach to other areas in the group.
The store audit team, in conjunction with divisional operations management, is reviewing the metrics used to evaluate the administrative health of stores. This is to ensure that the scoring system is still focused on key risk areas.
The increased use of data analytics is also being investigated. It is anticipated that this will provide a cost-effective way to increase assurance coverage, utilising existing group data sources.