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Financial, Operational, and Shrink Auditing

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1. What are the different types of audits that retailers use. Why is auditing necessary? What benefits can be gained to offset the costs associated with them?

2. What are five ways a retailer can determine performance. Why is it important for retailers to attempt to measure and compare their performance with competitors and internal objectives?

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The solution discusses financial, operational and shrink auditing.

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1. What are the different types of audits that retailers use? Why is auditing necessary? What benefits can be gained to offset the costs associated with them?

The types of audits are financial, operational and shrink. The financial audit is the most common audit. This type of audit is used to review the financial accounting of the company's processes and measures the company's recording and reporting of financial information to internal and external stakeholders. Auditors will test the company's financial information against standardized accounting principles, (i.e. Generally Accepted Accounting Principles (GAAP). An operational audit ensures a company's individual business departments are functioning at specific business standards. A company can use internal and/or external auditors to perform an operational audit. When a company uses its employees to conduct an audit, the audit is called an internal audit, which is used for management review (The ...

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