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| Alison Cannon | Assurance Manager | Baltimore |
RSM: What types of companies are considered consumer products clients?
Alison: Consumer products encompasses anything the end-user consumes. Think about things you buy everyday—food in grocery stores, clothes online, furniture in a store. All of the companies that sell those products to you are considered consumer products.
What challenges do you face working in the consumer products space?
The products consumers want and how they want to get those products is always changing. Think about how you shop today versus how we shopped 10 years ago. We want companies to be “omnichannel”—meaning we want different ways to buy things—online, in the store, on an app, etc. Companies really have to innovate to be able to keep up with today’s consumer. As auditors, we have to keep up with how companies are changing their business and making sure we know how to audit and account for any changes.
What’s the make-up of a typical client team?
This all depends on the size of the client. Our small to mid-sized companies will typically have 4-5 core team members consisting of 1-2 associates, 1 senior associate (the “in-charge”), 1 manager, and 1 partner. This team is usually on site for about 2-3 weeks. Larger clients could have more team members and will be on site for a longer period of time. Depending on the client, there could also be a RSM tax team or IT team that helps that audit team.
Can you describe a typical consumer product client engagement?
Typically the team will go to a client a few months before the client’s year-end. During this time, the team is focused on planning the audit. They will calculate materiality, determine what accounts need to be tested, identify any risks (including fraud risks) at the client, and may even start some testing. They will also obtain an understanding of all of the key processes at the business. For consumer products, this usually consists of cash, accounts payable, accounts receivable, inventory, fixed assets, sales, and payroll. After an understanding has been obtained from those in the accounting department, the associate or senior associate will sit down with all of the process owners (accounts payable clerk, assistant controller, controller, CFO, etc.) and will perform a “walkthrough” of the process. This is where we pick an example and have the client show us exactly how the transaction works from beginning to end. This is a great way for us to interact with the client and to make sure we really understand the business. It can also help us identify any other risks that may exist in the business, especially around internal controls.
Right around year-end the team usually performs inventory observations. Most consumer products clients have inventory on their balance sheet since this is what they sell to the end user. To make sure that inventory exists as stated, we will go out and count a sample of the inventory. Sometimes this is the most interesting part of the audit—imagine going to count clothes at your favorite clothing store, or counting frozen food in a huge freezer!
After year-end, the team will go back out to the client to begin testing. During this time we get schedules from the client, select samples, and have the client pull information for us. We spend a lot of time testing the samples, performing analytics, talking to the client, and obtaining additional documents to support what the client is saying.
What experience do you need to work on consumer product engagements?
Ensuring the team has experience in the consumer products industry is very important. Normally, that industry expertise come from the manager and partner on the client team. But new associates can jump right in to this type of audit with appropriate guidance from the manager and partner and begin to develop their own industry knowledge All of our employees, including new associates, take continuing professional education classes throughout the year, including industry-specific courses, so everyone gets the training they need to work on these audits.
Alison: Consumer products encompasses anything the end-user consumes. Think about things you buy everyday—food in grocery stores, clothes online, furniture in a store. All of the companies that sell those products to you are considered consumer products.
What challenges do you face working in the consumer products space?
The products consumers want and how they want to get those products is always changing. Think about how you shop today versus how we shopped 10 years ago. We want companies to be “omnichannel”—meaning we want different ways to buy things—online, in the store, on an app, etc. Companies really have to innovate to be able to keep up with today’s consumer. As auditors, we have to keep up with how companies are changing their business and making sure we know how to audit and account for any changes.
What’s the make-up of a typical client team?
This all depends on the size of the client. Our small to mid-sized companies will typically have 4-5 core team members consisting of 1-2 associates, 1 senior associate (the “in-charge”), 1 manager, and 1 partner. This team is usually on site for about 2-3 weeks. Larger clients could have more team members and will be on site for a longer period of time. Depending on the client, there could also be a RSM tax team or IT team that helps that audit team.
Can you describe a typical consumer product client engagement?
Typically the team will go to a client a few months before the client’s year-end. During this time, the team is focused on planning the audit. They will calculate materiality, determine what accounts need to be tested, identify any risks (including fraud risks) at the client, and may even start some testing. They will also obtain an understanding of all of the key processes at the business. For consumer products, this usually consists of cash, accounts payable, accounts receivable, inventory, fixed assets, sales, and payroll. After an understanding has been obtained from those in the accounting department, the associate or senior associate will sit down with all of the process owners (accounts payable clerk, assistant controller, controller, CFO, etc.) and will perform a “walkthrough” of the process. This is where we pick an example and have the client show us exactly how the transaction works from beginning to end. This is a great way for us to interact with the client and to make sure we really understand the business. It can also help us identify any other risks that may exist in the business, especially around internal controls.
Right around year-end the team usually performs inventory observations. Most consumer products clients have inventory on their balance sheet since this is what they sell to the end user. To make sure that inventory exists as stated, we will go out and count a sample of the inventory. Sometimes this is the most interesting part of the audit—imagine going to count clothes at your favorite clothing store, or counting frozen food in a huge freezer!
After year-end, the team will go back out to the client to begin testing. During this time we get schedules from the client, select samples, and have the client pull information for us. We spend a lot of time testing the samples, performing analytics, talking to the client, and obtaining additional documents to support what the client is saying.
What experience do you need to work on consumer product engagements?
Ensuring the team has experience in the consumer products industry is very important. Normally, that industry expertise come from the manager and partner on the client team. But new associates can jump right in to this type of audit with appropriate guidance from the manager and partner and begin to develop their own industry knowledge All of our employees, including new associates, take continuing professional education classes throughout the year, including industry-specific courses, so everyone gets the training they need to work on these audits.
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