LP Cycle Counts Part 3 (Predictive Analytics for Loss Prevention Series)

In parts 1 & 2 of LP Cycle Counts we outlined the components of a robust program and the advantages of an analytic-based LP cycle counts over a cycle count for inventory adjustment program. The discipline applied to timely analysis of the LP cycle count results and follow-up for outliers is critical. The whole point of the program is to take appropriate action for the few locations that have issues, and leave the others to continue their excellent work uninterrupted. An effective program becomes a “lens” to focus your management and oversight resources on issues before they mushroom into huge losses.

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LP Cycle Counts Part 2 (Predictive Analytics for Loss Prevention Series)

In Part 1 of LP Cycle Counts I described a robust program and the related benefits. The cornerstone of the LP program is cycle counts of all units in a Product Category and comparison to the units per the perpetual inventory system. Over the years since program implementation and despite the success, several operational or financial managers have asked why we do not support making adjustments to inventory based on this program. There are many reasons why inventory adjustments cannot be recorded based on the LP program and why implementing a program with the rigor to support inventory adjustments is not operationally or cost beneficial.

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LP Cycle Counts Part 1 (Predictive Analytics for Loss Prevention Series)

Requirements of a Robust Cycle Count Program

Loss Prevention (LP) cycle counts are quick counts of all the units of a product category/class/department in a retail store. This unit count is then compared to the total units on-hand per the perpetual inventory system and a shrink (in units) percentage is calculated.

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“Show Me”

Have you gathered bits of information from certain supervisors that always stuck with you and helped you in your career? One of these that has always stuck with me is Mike Bronstein, my supervisor at Loews, saying, “I’m from Missouri, Show Me!” This had nothing to do with the “Show Me state” but a lot to do with gathering sufficient evidence to support your audit conclusions. I left Loews in 1999 but this is one of many lessons I’ve carried forth with me. Certainly there are many who have worked for me since who are familiar with that phrase.

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5 Myths About Compliance Programs (Myth #5)

The final myth in our series is the myth that compliance programs can be outsourced. While it is very true that a significant portion of compliance activities can and in many instances should be outsourced, the core leadership and direction of the program cannot. The ultimate responsibility for compliance lies with the executive management and, to a certain extent, the Board of Directors. The quarterly certification related to internal controls over financial reporting required by Section 302 of the Sarbanes-Oxley law is one of many explicit reminders that responsibility for the effectiveness of the compliance program cannot be outsourced. The recent trend of regulators like the SEC requiring that companies admit wrong-doing as well as pay fines (versus just paying fines in the past) is another indication that regulators, and indeed the public, are demanding more accountability. The recent NHTSA maximum fine levied against General Motors with likely criminal charges to follow is an example of such accountability demanded related to compliance requirements outside of those of financial reporting.

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5 Myths About Compliance Programs (Myth #4)

Those of us who have spent time in internal audit have a love/hate relationship with the Sarbanes-Oxley Law (SOX). On the one hand, managers were agreeable to implement internal controls that we felt were important all along because these now “had to be done for SOX”. On the other hand, many internal control procedures that are important but not related to financial reporting suddenly were unimportant because they were “not related to SOX”.

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5 Myths About Compliance Programs (Myth #3)

The leaders of compliance functions strive for excellence. It is proper that corporate leaders place an enormous amount of trust in these leaders. These functions can and should advise on the components of the compliance programs and program improvements over time. It is proper that compliance teams provide guidance, experience and expertise.

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