Skip to content

Strategic Information System

Case Study- Rainbow Illusion

Executive Summary

In this report, the discussion is made on the Company Rainbow Illusion concentrated in South Wales & Victoria. The evaluation of the processes, risks & internal controls for its transaction cycles has been examined. Firstly, the six strengths of Rainbow Illusions have been identified for controlling sales transactions. Secondly, the problems keep away from by including the strength in the system for calculating sales transaction. Thirdly, the situational pressures has been discussed which increases the likelihood of fraud. Fourthly, the discussion is done on the companies for choosing distributed system to install instead of centralized system. The company uses simple cash registers by four-part sales invoice to confirmation each deal. These sales invoices are used despite of the payment type. The distributed system & centralized system has been investigated as many companies used distributed system instead of centralized system. The sales of the company can be manages by the manger & the assistant manger which can deal with all the sales transaction done in the company & paid on their daily wages. They report all these happenings to the CEO of the company for better & secured growth of company.

Introduction

Rainbow Illusion is the 30 store retail chain packed in New South Wales & Victoria that offers prepared to wear garments for youthful females. Each store has a permanent chief & an associate trough that both are paid on compensation. The clerks & deals faculty are regularly youngsters working low maintenance who are paid a time-based compensation in addition to a commission dependent on deals volume. The organization utilizes unsophisticated money registers with four-section deals solicitations to record every exchange. These business solicitations are utilized paying little respect to the installment type. On the business level, the sales agent physically records his or her worker amount & the exchange, adds up to the business receipt, ascertains the rebate when fitting, computes the business charge, & pre-pares the great aggregate. The salesman at that point gives the business receipt to the clerk, holding one duplicate in the business book. The clerk surveys the receipt & information sources the deal. The money register precisely approves the receipt, consequently doling out a successive number to the exchange. The clerk is additionally in charge of getting credit endorsement on charge deals & affirming deals paid with a money order. The clerk gives one duplicate of the receipt to the client & holds the next duplicate as a store duplicate & third for a bankcard, if a store is required. Returns are taken care of in precisely the invert way, with the clerk issuing an arrival slip. Toward finish of every day, the clerk consecutively arranges business records & takes money record aggregates for money, bankcard, check deals, & money & charge card income. These aggregates are accommodated by the associate director to money register tapes, the aggregate of the sequentially numeral deals records, & arrival slips. The associate administrator readies a day by day compromise report for the store director’s audit. The supervisor audits money, check, & MasterCard deals & afterward readies the day by day bank store .The chief makes the store at the bank & records the approved store slip. The information handling office restores a week after week deals & commission action report to the administrator for survey.

Strengths in Rainbow Illusion’s System from controlling sales transactions. 

The strengths in Rainbow Illusion’s System from controlling sales transactions are:

The sale people are young & are on part time basis with incentive based on sales volume: 

Their manager & the assistant manger are compensated on the salary based on the hourly basis for controlling & managing the retail company sales transactions.

Every 30 Stores make use of similar system for calculating sales transactions: To control sales transaction the retailer physically report his or her worker quantity & the transaction (class, type, description, quantity & unit price), total the sales invoice, estimates the appropriate reduction, sales tax & prepares the grand total & then provides the sales statement to the cashier, keeping one copy in sales book which are paid on the hourly basis (Katsikeas, et. al., 2018). 

The parting of sales people & cashiers: The salesman at that point gives the business receipt to the clerk, holding one duplicate in business book. The banker then reviews the statement & inputs the sale. Mechanically, the cash register validates the invoice & automatically assigns a successive number to transaction. The cashier is also accountable for receiving credit support on charge sales & favorable sales compensated by cheque. The cashier then gives one copy of invoice to the client & keeping second copy as the store copy & third for the bankcard, if the deposit is required.

Company uses unsophisticated cash registers with four part sales invoice to record each transaction: At the end of the day, the cashier manages the sales invoices sequentially & takes the cash register totals for cash, bankcard, cheque sales & cash & credit card returns. These total are reconciled by the associate executive to the cash register tapes, the total of the serially amount sales invoices & the return slips (Hansen, et. al., 2018). The assistant manager prepares a daily settlement report for the review of store manager.

The combined bills of one after the other ordered: The managers finally reviews the cash, cheque & credit card sales & then organize the daily bank deposit (including the credit card sales invoices). The manager makes deposit at bank & files validated deposit slip.

The bringing together of cash receipts & checks, bank cards, returns & cash register tapes is carried out: The cash register tapes, sales invoices & return slips are daily promoted to the Central data processing department at the corporate head office for processing  (Poole, et. al., 2015).  The processing division returns a daily sales & expenses movement inform to manager for evaluation.

Hence through such processing Rainbow Illusion’s sales transactions are being controlled.

Problems that Rainbow Illusion has avoided by incorporating the strength in the system for controlling sales transactions. 

Strength 1: The sale people are young & are on part time basis with incentive based on sales volume.

Problem Avoided: This avoids the problem of slow queue management i.e., the people in queue are serviced very fast as the sales person are young (Ceri, 2017).  Also paying them hourly basis with incentive helps to save cost & also promotes healthy competition.

Strength 2: Every 25 Stores make use of similar arrangement for calculating sales dealings.

Problem Avoided: This avoids the problem of the wrong transactions & relieves the agent which physically records his or her worker number & the exchange, adds up to the business receipt, ascertains the rebate when fitting, computes the business charge, & pre-pares the great aggregate.

Strength 3: The parting of sales people & cashiers.

Problem Avoided: This avoids the problem of the salesperson & cashier. They have loads of burden to manage accounts, make invoices, calculate sales & many more (Hwang & Kim, 2016).  The work has been distributed among them for the good management practices.

Strength 4: Company uses unsophisticated cash registers with four part sales invoice to record each transaction.

Problem Avoided: This avoids any sort of problem associated with training the new staffs. It also helps in delivering quick service to the customers.

Strength 5: The combined bills of one after the other ordered.

Problem Avoided: This avoids the problem of mismanagement. The manger reviews all the bills accordingly & prepares the daily bank deposit for each & every transaction.

Strength 6: The bringing together of cash receipts & checks, bank cards, returns & cash register tapes is carried out.

Problem Avoided: This avoids the problem associated with processing department. As they returns a daily sales & commission activity statement to manager for evaluation (Whaley & McJohn, 2017). 

Situational pressures in a company like Rainbow Illusion that would increase the likelihood of fraud.

While stealing company funds is the most usually thought of type of fraud, it’s not the only way workers can hurt business. Ana employee permanent enough demands can be ambitious to banned activities, whether it’s thefting money or exploitation other domestic arrangement (Katsikeas, et. al., 2018).  In the Rainbow Illusion Company, the two situational pressures that would increase the likelihood of fraud are: 

When the employee has a sudden sickness & need a large amount of cash for the treatment.

When an employee has been blackmailed or threatened (Personally/ professionally) the employee may be forced to commit a fraud.

Here are some examples of these situational pressures are:

  • Sudden terminate in income piece of the overall industry. 
  • Financial weight from extra plans that rely upon momentary monetary execution (Abeyratne & Monfared, 2016).
  • Intense strain to meet or surpass income desires or improve detailed execution. 
  • Significant income issues, strange trouble gathering receivables or paying payables. 
  • Heavy misfortunes, high or undiversified hazard, high reliance on obligation, or unduly prohibitive obligation pledges. 
  • Heavy reliance on new or problematic product offerings. 
  • Severe stock outdated nature or unreasonable stock development. 
  • Highly horrible monetary conditions (Inflation, retreat). 
  • Litigation, particularly the executive’s v/s investors. Looming business disappointments or insolvency. 
  • Problems with administrative offices. 
  • Unusual spikes in loan fees (Steinmeier, 2016).  
  • Poor or weakening money related issues. 

Situational pressure occurs because of decrement in market share. A single entity can experience these types of decreases. Pressure of impracticable budget is also cause of situational pressure. . This pressure is rapid when the bonus is sufficient part of the individual’s total redress. Situational pressure arises due to weak internal accounting control system and this situation occurs when an organization receipt system is overcharge from an acute spread of sales.

Reasons for companies would choose to install a distributed system rather than a centralized one. 

A few organizations would choose a distributed framework instead of a centralized one as centralized framework has low inactivity at that point brought together framework. In the Rainbow Illusion Company, as the distributed frameworks have low inactivity in light of high physical spread, consequently prompting less time to get a reaction. A group of ten machines crosswise over two server companies in essentially more lack tolerant than a private machine. Regardless of whether one server farm bursts into flames, reason would in any case work. Center applies accord conventions to concede to same qualities & exchanges (Hess & Cottrell Jr, 2016). The size of the appropriated framework may vary from a bunch of gadgets, to a great many PC. The interconnection system might be wired, remote or a mix of both. All hubs keep up their very own clock. In a distributed framework, centers collapse freely without significantly affecting the whole framework. In the result that one center comes up small, the whole framework without the explode center keeps on working. As in centralized framework, framework can come up short if the center loses availability as there is just a single central center. The unexpected disappointment must happen of the whole framework. On the off chance that the server centers discharge & there is no support, the straight away information will be lost. (Chapman, et. al., 2017).There is just a single server hub & because of accessibility reasons, it is wasteful & unprofessional to bring the server down for upkeep.

There are many benefits to install a distributed system rather than a centralize:

  • Inventory control – In distributed system company can control inventory with the help of inventory management. Inventory is minimum material orders based on the requirement of all other parties. 
  • Cost reduction – by adopt to centralize there would be need to charge on contigental expenditure. The need to spend more on new technologies and equipment is also eliminated. With these cost reduction company can set pricing strategies.
  • Better service of customer – by adopting a distribution system, a company will focus on its resources, it means facility will have highly skilled worker and the better quality of services will be offer to customers.

Conclusion

After the discussion based on the Rainbow Illusion Company, the processes, risks & internal controls. It has been realized that the strengths of the controlling sales transactions is necessary. As the problems avoided by the strength of company to control sales transactions has been discussed. The conditional pressures also been examined to analyze the increased likelihood fraud in the Rainbow Illusion Company. The distributed system & centralized system has been investigated as many companies used distributed system instead of centralized system. The sales of the company can be manages by the manger & the assistant manger which can deal with all the sales transaction done in the company & paid on their daily wages. They report all these happenings to the CEO of the company for better & secured growth of company.

References
  • Abeyratne, S.A. and Monfared, R.P., 2016. Blockchain ready manufacturing supply chain using distributed ledger.
  • Ceri, S., 2017. Distributed databases. Tata McGraw-Hill Education.
  • Chapman, J., Garratt, R., Hendry, S., McCormack, A. and McMahon, W., 2017. Project Jasper: Are distributed wholesale payment systems feasible yet. Financial System59.
  • Hansen, J.M., Saridakis, G. and Benson, V., 2018. Risk, trust, and the interaction of perceived ease of use and behavioral control in predicting consumers’ use of social media for transactions. Computers in Human Behavior80, pp.197-206.
  • Hess, M.F. and Cottrell Jr, J.H., 2016. Fraud risk management: A small business perspective. Business Horizons59(1), pp.13-18.
  • Hwang, S. and Kim, W., 2016. When heirs become major shareholders: Evidence on pyramiding financed by related-party sales. Journal of Corporate Finance41, pp.23-42.
  • Katsikeas, C.S., Auh, S., Spyropoulou, S. and Menguc, B., 2018. Unpacking the relationship between sales control and salesperson performance: a regulatory fit perspective. Journal of Marketing82(3), pp.45-69.
  • Katsikeas, C.S., Auh, S., Spyropoulou, S. and Menguc, B., 2018. Unpacking the relationship between sales control and salesperson performance: a regulatory fit perspective. Journal of Marketing82(3), pp.45-69.
  • Poole, T.S., Douglas, L. and Brolund, M.R., Capital One Financial Corp, 2015. System and method for fraud control. U.S. Patent Application 14/322,954.
  • Steinmeier, M., 2016. Fraud in sustainability departments? An exploratory study. Journal of business ethics138(3), pp.477-492.
  • Whaley, D.J. and McJohn, S.M., 2017. Problems and materials on secured transactions. Wolters Kluwer Law & Business.