Retail · FMCG · Distribution

Audit in retail and distribution –
from hypermarket chains – to premium brands

I audit retail companies, distributors and purchasing centres with an understanding of sector specifics: inventory, margins, supplier contracts and holding structures of foreign groups in Poland.

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No obligation • 20 minutes • quick assessment

10+

Retail and distribution entities

20+

Years of experience

Segments: mass market, premium, luxury

100%

Experience with foreign groups

Hypermarket chains

Home appliance/electronics distributors

Luxury sector

Purchasing centres

Acquisition due diligence

IFRS for holding companies

Inventory and margin audit

Projects from the retail sector

Selected case studies – retail and distribution

Projects completed for retail entities of various scales – from distributors to shopping centres.

Statutory audit – home appliance distribution

Situation

Polish distribution subsidiary of a foreign home appliance/electronics manufacturer. Complex rebate structure from the supplier, sales seasonality and large inventory volumes in warehouses.

Action

Audit of the financial statements with particular emphasis on inventory valuation (NRV), correct accounting of retroactive rebates from the foreign headquarters and assessment of return provisions.

Result

Unqualified opinion. Recommendations on inventory valuation methodology accepted by the group management.

Unqualified opinion – long-term cooperation

Audit of shopping centre and chain headquarters

Situation

Polish purchasing centre of a large European hypermarket chain and its associated operating company. Supplier transactions worth hundreds of millions of PLN, bonus contracts and marketing services.

Action

Audit of two related entities – the purchasing centre and the operating company. Verification of revenues from marketing services provided to suppliers, assessment of bonus contracts and chain settlements.

Result

Full group audit completed on time. Accounting risks related to revenue classification from suppliers were identified – significant for presentation in the financial statements.

Multi-entity audit completed on time

Acquisition due diligence – retail company takeover

Situation

An industry investor planning to acquire a retail distribution company. They needed an independent assessment of asset quality, supplier liabilities and the historical reliability of results.

Action

Financial due diligence covering a review of 3 years of historical results, EBITDA normalisation, working capital analysis and identification of contingent liabilities not recognised in the balance sheet.

Result

DD report with quality of earnings assessment and price risk list for negotiations. The client negotiated a price adjustment based on my findings.

Transaction price adjusted based on DD findings

Industry challenges

Key accounting challenges in the retail sector

Inventory valuation and NRV write-downs

Large merchandise volumes, seasonality and rotation risk – correct inventory valuation using the NRV method is one of the key risk areas in retail.

Retroactive rebates and supplier bonuses

Complex rebate structures in supplier agreements raise questions about the timing of recognition and classification (revenue vs. purchase cost adjustment).

Supplier revenues (slotting fees, marketing)

Shelf placement fees, marketing services and supplier bonuses – their classification has a material impact on results and is an area of heightened auditor attention.