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Mar 16 2023
Internal Control Considerations for the Retail Industry
17th March 2023
With the increasing globalization and growth of the retail industry, businesses must ensure their internal control systems are updated to meet the ever-changing needs of customers and market environments. On the other hand, disruptive technologies, such as the internet, provide the potential for tremendous innovation in the retail industry. Consequently, many retailers have been relying on a mix of technology and process, while continuing to use traditional channels of delivering goods and services. In order to compete in this rapidly changing environment and protect stakeholders’ investments, businesses need to assess their internal control systems, identify and implement effective and reliable control procedures, and monitor the long-term effectiveness of the system. This report seeks to undertake an analysis of the cu
ent internal control considerations for the retail industry and to discuss the necessary controls that should be in place, as well as the potential gaps in controls and their subsequent implications.
History of the Retail Industry
The retail industry has a long and complex history, with significant ups and downs throughout the years. The earliest form of retail can be traced back to ancient civilizations, where traders would sell goods in open-air markets. Over time, these markets evolved into more permanent structures such as bazaars and marketplaces (Cantrell et al. 2020).
The modern retail industry began to take shape in the late 19th century with the rise of department stores. These large-scale stores offered a wide range of products under one roof, making shopping more convenient for consumers. The first department store was opened by Aristide Boucicaut in Paris in 1852, followed by other notable retailers such as Macy's and Selfridges.
The mid-20th century saw the rise of discount stores such as Walmart and Kmart, which offered lower prices than traditional department stores by cutting costs on overheads. This led to a shift in consumer behavior towards price-conscious shopping (MacKenzie, 2013).
In recent years, the retail industry has been disrupted by e-commerce giants such as Amazon. Online shopping has become increasingly popular due to its convenience and competitive pricing. This has forced traditional
ick-and-mortar retailers to adapt, or risk being left behind.
The retail industry is a significant employer, and both employees and employers have different factors to consider when it comes to employment. From the employee's point of view, job satisfaction and engagement are essential factors that influence their decision to stay in a job. Employees want to feel valued and recognized for their contributions. They also seek value and purpose at work. The nature of work has changed over time, with some contingent work being precarious from the worker's perspective (Booth & Hamer, 2007).
From the employer's point of view, policies on employment and turnover are crucial in retaining employees. Employers need to identify factors that influence overall employee satisfaction and engagement in the workplace. Retail companies need to provide a human employment value proposition that recognizes the value of their employees while providing them with value on a human level (World Economic Forum, 2016).
The retail industry is evolving, and employers must adapt to these changes. The future labor market will require companies to focus on both consumers' needs as well as employees' needs. Retail companies must create an environment where employees feel valued, respected, and supported. This can be achieved by offering competitive salaries, benefits packages, training programs, career development opportunities, flexible schedules, and other incentives.
The Impact of Technology on Retail Accounting Practices
The retail industry is a vast and complex sector that requires careful accounting practices to ensure financial stability and growth. Retail accounting involves tracking sales, inventory, expenses, and profits to make informed business decisions. The retail accounting method is unique in that it relies on the...