AP Audits
It’s recommended that once a year an AP audit should be performed by a third party. This audit will catch the following:
• Deal pricing front and back loading
• Varying price by location
• Credits paid as bills
• Deals not offered
While you typically give up 50% of the findings, you can use the DSD Audit report to plan and train for the current year to prevent similar findings the next year. This process is a must in order measure the effectiveness of the receiver, buyer and accounting department.
Each year a goal should be set to reduce the findings by the outside auditor. You will know you are effective when the outside auditors don’t want to return because it is unprofitable for them. This is a sign of success.
Deal Pricing and Costs
While a 3rd party DSD audit will identify the issues mentioned, controls need to be established to insure that vendors are not loading in before or after the deal and costs between stores are valid. These functions can be accomplished via accounting, operations and your purchasing department.
• Proper pricing files should be maintained in the DSD system.
• Accounts payable should sort invoices by vendor (periodically if another sorting system is used) and look at pricing for the same item between stores. Sometimes different pricing is acceptable due to different distributors. However, if it is the same vendor, the lower cost between stores should be taken in all stores.
• Operations and merchandising can work together to police deliveries. Look at the ad items in advance. Are vendors loading in before the deal period? Have the store managers talk to drivers and let them know that this behavior is unacceptable. If it continues (besides deducting money from the bill) call the regional manager of the distributor and let them know what the route driver is doing. In short, let them know that you are watching.
Receiving audit
Someone who is not directly involved in the process should perform a periodic audit of receivers and vendors. Do not use your alternate receiver or receiving manager. It is a simple yes no audit and results should be reviewed for any weaknesses.
Security
The back door should be locked during all hours except hours that the door is manned by the receiver. (Please note, if this is an emergency exit, check with your local fire department or building inspector to determine if alarmed panic bars are acceptable.) The back doors should not be left unlocked for smokers or a cool breeze. Trash should be removed in clear trash bags (ideally, a locked compactor would be used with secure access from inside the store.)
SUMMARY
The above are general receiving practices and do not address the additional security required for items such as cigarette and alcohol deliveries. In addition a review of proper pricing and deal reconciliation is contained in a separate document. The above policies, coupled with a periodic operational audit and a 3rd party AP audit, will insure you are protecting your back door and your store operations and assets.