An internal auditing team for a chain of supermarkets was assigned to examine the sales performance at one store location. One audit objective was to determine whether sales performance met company standards. Preliminary analytical tests showed the store sales per square foot at about 75 percent of the company standard of \($130\) per year. A study of the store’s layout and customer traffic patterns along display aisles and checkout counters revealed exceptionally wide aisles measuring about 10 feet.

Standards prescribe a maximum of eight feet. The average inventory for a store of that size was \($1\) million; the store. being audited had an average inventory of about \($800,000\) for the period under audit. The wide aisles left less space for shelves, and the store tended to have less inventory on hand. Management concentrated mostly on basic staples. There also were frequent stockouts of goods.

The average sale per customer was about \($20.\) Other stores in the chain averaged more than \($25\) per customer. An analysis of sales led the auditors to conclude that too many customers were using the supermarket primarily as a quick-stop convenience store rather than as a supermarket, resulting in poor profitability. The store was barely breaking even.

The auditors attributed this trend to the concentration on basic staple goods and failure to provide the variety of products customers typically expect from supermarkets. The wide aisles and smaller purchases did, however, allow customers to move about easily in the store and to check out more quickly, on the average, than at any other store location.

Required:

Prepare an internal control matrix for the items, showing five columns — audit objectives, preliminary results, risks, appropriate controls, and auditor evaluation. You will need to determine your own evaluations for the last column.