The objectives of external audit firms today are heavily skewed towards providing assurance toward the reliability of a company's external financial reporting, whereas internal auditors tend to delve further into assurance directed at the effectiveness and efficiency of a company's processes and/or its compliance with applicable laws and regulations. This division of labor may be entirely appropriate in terms of optimizing audit resources, given the respect and expectations typically accorded these assurance providers, but the enterprise-wide control objectives and risk framework should be commonly understood and periodically agreed upon with the audit committee. In fact, this common understanding can lead to effective and efficient integration of assurance plans and delivery of integrated audit reporting to an audit committee.

There are several factors which must be taken into consideration when determining the appropriate deployment of assurance resources. For instance, the degree of independence sought to evaluate the internal control issue at hand must be considered.

Often there are timing and staffing constraints that come into play as the demands on available resources are great and continue to grow. Similarly, cost is a factor that must be weighed in determining the resources most appropriate to use.

Continuity and ownership must also be carefully considered. Certain acute transaction activities warrant close, ongoing assurance delivered by the initiators of such activities. In other highly complex areas, continuity of assurance is critical due to the challenges associated with achieving effective knowledge transfers.

Finally, the level of expertise available must be assessed. Certain issues naturally lend themselves to utilizing resources where specific subject matter knowledge is needed.

Auditing Retail
A surprise to many is the fact that while VF Corporation manufactures and markets to the retailing community, we also operate retail operations, VF Outlets, Nautica, The North Face, Vans, Kipling, Napapirji, Lee, Seven For All Mankind, lucy, etc. located around the world.

The retailing process connotes homogeneous, repetitive activities. Such an environment lends itself to a systemic assurance solution. Rather than employing battalions of auditors to "conquer" each and every retail site, we have found it possible to embed assurance within the retailing environment. If one designs a retail internal control model, management and staff may obtain much of their own assurance by performing self-reviews against the "model." The main areas reviewed to gain assurance as to the adequacy of internal controls over VF's retail operations are: store compliance with established polices and procedures, revenue, cash management, inventory management, risk management, operations, and human resources.

Achieving Balanced Assurance

The third category that we monitor is comprised of input received from our own associates in VF Internal Audit. Two times per year an anonymous survey is conducted with all associates in VF Internal Audit to assess their views on our achievement of Value, Speed and Professionalism. The input from our own associates serves as very meaningful input toward shaping our annual objectives.