How Do CSA Programs Miss the Mark Even with Extensive Resources?
Over the years, Reckitt Benckiser has built great brands and launched disruptive innovations. The recent news on understatement of trade spends may look small to its global revenues but potentially large to the markets in question. Without speculating on this case, I would like to share my perspectives on this domain.
When it comes to trade spends, which is usually material in consumer goods industry, it’s important for internal auditors to think beyond the usual controls by doing the following:
Understand the market, category and channel-specific nuances including underlying drivers (conditional and unconditional) and sub-drivers such as primary, secondary or off-take sales.
Review the effectiveness of the closed-loop process. Pay close attention to monitoring of completeness and strength of trade execution on-ground.
Review the effectiveness of the closed-loop process. Pay close attention to monitoring of completeness and strength of trade execution on-ground.
Market visits (channel partners, retailers) provide enormous insights. When I was an auditor, I used to spend time on ground speaking to distributors/retailers to understand the pulse and improvise on audit activities.
With closed-loop and various systems in play, there is a gold mine of data to develop advanced analytics and real-time monitoring to obtain valuable insights. It could range from deal anomalies to spend leakages to reconciliations to sub-optimal ROI & growth on deals. As the journey matures, these analytics can provide predictive insights for IA and business.
While one can question why internal auditors should channel efforts, in addition to Line 1 and Line 2, following the money and complexities in trade spends are critical considerations for IA. In a dynamic landscape of trade spends, if IA is in the forefront of advising business, this would not only provide the right assurance but also deliver significant benefits to organizations.
CEO & MD at Innowave360
Experienced Chief Internal Auditor, Chief Risk Officer and Controller – Large US, Europe and Asia listed MNCs
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