How Majid Al Futtaim is developing internal audit in its retail business

15 March 2023 Consultancy-me.com 9 min. read
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Senior executive Ali Hamdan is responsible for overseeing the internal audit function of Majid Al Futtaim’s Retail business. In discussion with Protiviti, Hamdan discusses how the function has transformed and professionalised since his arrival three-plus years ago.

Majid Al Futtaim is a leading shopping mall, retail and leisure conglomerate across the Middle East, Africa and Asia.

Founded in 1992, the company has since grown into one of the most respected and successful businesses in the United Arab Emirates (UAE), spanning 17 international markets, employing more than 46,000 people and obtaining the highest credit rating (BBB) among privately held corporations in the region.

Ali Hamdan, Majid Al Futtaim

Majid Al Futtaim is also the exclusive franchisee for French consumer goods retailer Carrefour, which operates supermarkets, convenience stores, hypermarkets and other store formats. Majid Al Futtaim owns the rights to operate the Carrefour brand in 30 countries across the Middle East, Africa and Asia.

The company began its journey with Carrefour by opening one hypermarket franchise in Dubai in 1995. Today, through its Majid Al Futtaim Retail subsidiary, the company operates more than 465 Carrefour stores in 16 countries that serve more than 770,000 customers daily and employ over 38,000 people.

Ali Hamdan joined Majid Al Futtaim early 2019, and is currently Senior Vice President of Audit and Advisory Services of the Majid Al Futtaim Retail subsidiary. Reflecting on his journey so far, he says that when he first joined the organisation, the internal audit function was “at the beginning of a big transformation.” Under Hamdan's leadership, that effort has gathered pace and materialised.

Delivering on the AAA brand promise for internal audit

Hamdan’s starting point for pushing internal audit transformation forward at Majid Al Futtaim Retail was to set the function’s brand promise. That promise is internally known as the “AAA brand” – with the three A’s representing assure, advise and anticipate. “We want to translate what we do as a function into language that auditees can digest,” explains Hamdan. “Because the moment we take them through our technical jargon, we will lose them.”

Hamdan describes how his team approaches delivering on the AAA brand promise through the function’s overall audit strategy and vision:

Assure
Internal audit is capable of providing “deep knowledge of the needs of the business,” Hamdan says. That includes understanding the firm’s key trends and value drivers and investing sufficient time to build productive, long-term relationships with the business owners.

Advise
Internal audit helps to steer the business in its decision-making without “jeopardising the function's independence and objectivity,” according to Hamdan. He explains that the function uses “stakeholders’ actions as the ultimate truth” and provides support for effective decision-making “based on facts, context and risks.”

Anticipate
Internal audit engages in “risk assessment and risk-sensing types of activities,” says Hamdan. And, by having “the back of the business, he says his team helps to support and encourage innovation and constantly pushes for fresh perspectives.

These are only a few highlights from Hamdan's formal brand definition for internal audit that he shares with business owners. To describe the purpose of internal audit at Majid Al Futtaim Retail, he refers to the function’s comprehensive ‘Value Charter’: “Our purpose is to enable the firm's business outcomes by assuring effective governance, accountability and internal control. This is fostered by a transformed internal audit function that keeps pace with change, creates value, remains relevant, and enhances impact and influence.”

Hiring subject matter experts and promoting ‘Purple Talentism’

According to Hamdan, the internal audit team at Majid Al Futtaim Retail views relevance as “a guiding principle” in their purpose. It is also core to their values as a function. He explains, “We derive our relevance from continuous learning. It is something that we practice. It isn't just talk.”

Through focused efforts to be relevant, Hamdan says the internal audit team strives to:

  • Be recognised as business-savvy and bring the right expertise and best practices to their work.
  • Invest in their skill sets to improve interactions with stakeholders and better meet their needs.
  • Attract the best talent to the function and be seen as a key step in long-term career progression.

On the latter front, Hamdan has been focused on recruiting specialised talent for his team and expanding the function’s capabilities since he joined Majid Al Futtaim Retail. However, not everyone he has hired has an auditing background and that was his intent.

Hamdan points to the organisational chart for his internal audit function. It shows the leaders of six different pillars within the department who report to him – individuals who have various titles, including vice president, director and head of department. The six pillars represent core capabilities for the function: internal audit, food safety and hygiene, real estate and construction, fraud and forensics, technology and analytics, and the quality assurance and improvement program.

“The person leading the food safety and hygiene team? She’s a biochemical engineer. She’s not an auditor by background,” says Hamdan. “The person leading the real estate and construction team? She has a PhD in construction project management and architecture. Fraud and forensics? I hired a specialist in this area. You get the idea.”

“These talented people aren’t auditors they're subject matter experts. They are being trained to become auditors. Meanwhile, they are transferring their knowledge to the ‘Purple’ audit talent pool in our organisation.”

The layer of talent Hamdan refers to as ‘Purple’ includes internal audit senior managers, assistant managers, junior auditors and others. He says the concept of ‘Purple Talentism’ – which is based on an advanced teaming framework for red and blue teams in the cybersecurity world – is a way to “open the horizon for every single talent on the team,” allowing them to take advantage of opportunities for “cross- fertilisation and the ability to work on different sectors.”

This approach, Hamdan says, helps his auditors to avoid getting stuck in a routine. Instead, they can “maximise their learning and their exposure within the business and stay relevant.”

Addressing capabilities gaps

To help determine what capabilities to build in internal audit at Majid Al Futtaim Retail, Hamdan says he works with a leading analyst research firm. “We have a strategic partnership, and they help us with benchmarking,” he explains. “One resource we access is a business alignment diagnostic survey. We reach out to key stakeholders in the business to understand which matters are important to them, and how they evaluate the effectiveness of internal audit in relation to those issues.”

“If we identify any gaps through this process, it highlights a need for me to build capabilities and skill sets within the team. Our last survey in 2020 helped us determine that we needed to build our capabilities in fraud assurance, project management and food safety, for example.”

Also, in 2020, the internal audit team at Majid Al Futtaim Retail adopted a hub-and- spoke model for the function. Now, about 75% of the team's resources are based in the Dubai ‘hub’ and the other 25% are distributed across the ‘spokes’ in four different geographies. “One of the spokes is India, for example, and this is where we have our technology capabilities, and where our cybersecurity and data specialists are based.”

A planned initiative for the function, according to Hamdan, is to build a centre of excellence that will transcend across all six pillars in the organisation. The purpose of the centre of excellence, he says, is to help increase the function’s technology maturity and continue advancing the team's use of data analytics. He says they are already working with process mining and predictive analytics, and they also plan to adopt continuous monitoring and continuous auditing tools.

Increasing data literacy across the function is another high priority for Hamdan. “Data literacy has become a key skill for every single member of the team. Part of the three-year development road map for our people includes upskilling and reskilling on data literacy.”

Hamdan says he also has a dream to transform internal audit into an accelerated leadership program for Majid Al Futtaim Retail. “I want audit to become a body that exports talent to the organisation,” he says. “I don't want audit to be a final destination. This is how we show our relevance to the business. We export change agents to turn around the business with the right discipline, and the right controllership mindset.”

Creating a diverse mix of talent

Hamdan is also focused on building a diverse and inclusive team, and notes that gender diversity in his organisation is at nearly 40%. Ten nationalities are also represented in the function. “Diversity and inclusion are very close to my heart,” Hamdan says, adding that the “other hat” he wears in the organisation is as the co-chair of Majid Al Futtaim Retail’s Diversity and Inclusion Council.

When asked how creating a diverse and inclusive team helps internal audit to be more effective and relevant, Hamdan shares a story: “When I joined the firm, I had an internal audit team capable of doing operational, financial and compliance audits. But we had risk exposure in several areas, like food safety and quality, and technology and digital. I wanted to build these capabilities in the team and it didn’t matter to me where these skills came from, or what a person’s gender, background or nationality is.”

He adds, “I have since worked to create a mix of talent that strengthens a sense of belonging for everyone in the function and helps to drive better business performance. And look at the ROI of our function today. We have exceeded 500% for three consecutive years.”

“So, that's my story when it comes to diversity and inclusion. It's about not only having the mix, but also making sure that the mix is working very well.”

Hamdan also has some advice for auditors wondering how they can stay relevant in a profession that is evolving rapidly. “This is something that I keep sharing with my team: Disrupt yourself before being disrupted. It’s very simple. If you want to stick with the status quo, then you will end up being unnoticed.”

Update: In April 2023 Ali Hamdan was promoted to Group Chief Audit Officer of Majid Al Futtaim.