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

Financial audit 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.

Holding structures of foreign groups

Polish companies as part of foreign groups must apply group policy, often different from Polish regulations – this requires precise demarcation.

Retail space leasing under IFRS 16

Retail chains with hundreds of lease agreements face the challenge of implementing and auditing IFRS 16 – right-of-use assets and lease liabilities.

Due diligence during market consolidation

Intensive M&A in the retail sector – each transaction requires thorough financial due diligence that protects the buyer from hidden risks.

Do you have a retail company requiring an audit or due diligence?

The first conversation is free. Tell me about the company and the timeline.

✉ Book a free consultation 📞 +48 502 960 170

FAQ

Frequently asked questions

Accounting questions specific to retail and FMCG – inventory, leases, revenue, and audit obligation.

Does a retail chain or FMCG distributor need a statutory audit?▾

The audit obligation depends on meeting the Polish Accounting Act thresholds for the preceding year: assets >PLN 17m, revenue >PLN 34m, or headcount >50 (at least 2 of 3). Mid-size retail chains often exceed the revenue threshold even when a large share of staff are on civil-law contracts. Companies forming part of a capital group may be subject to a group audit regardless of their own thresholds if the parent is required to prepare consolidated financial statements.

How should inventory be properly valued in retail and wholesale?▾

Inventory (goods, returnable packaging, consumables) is measured at cost or net realisable value, whichever is lower. The auditor verifies that the chosen cost-flow method (FIFO, weighted average) is consistent with the accounting policy, and that write-downs have been recognised for slow-moving, expired, or damaged goods. In companies with large SKU counts or seasonal rotation, the inventory write-down is one of the key audit areas and can materially affect the reported profit.

How does IFRS 16 affect the balance sheet of a retail company leasing store premises?▾

Companies applying IFRS recognise operating leases for retail premises as right-of-use assets and corresponding lease liabilities. For chains with dozens of locations this means a significant increase in total assets and leverage ratios. The auditor verifies the completeness of leases recognised, the discount rate applied, lease terms including extension options, and the accuracy of note disclosures. Errors in lease classification can materially affect bank covenant compliance.

What does an auditor focus on in the revenue of a trading company?▾

Revenue is a key audit area for retail and wholesale businesses. The auditor checks: the correct timing of revenue recognition (transfer of risks and rewards, delivery terms), completeness of returns and rebates, accounting for loyalty programmes and promotional schemes (deferred revenue), and the treatment of commercial bonuses and marketing allowances received from suppliers. Misstatements in these areas – particularly in FMCG with complex trading terms – regularly generate material audit adjustments.

Knowledge base