Strategic Information System: Case Study of Rainbow Illusion

This report evaluates the case of Rainbow Illusion, analyzing the risk, processes, and internal control. It discusses the strengths of the company in controlling sales transactions, problems avoided, situational pressures that increase fraud likelihood, and the use of distributed computer systems.

Strategic information system
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Executive summary
The aim of the report is to evaluate the case of Rainbow Illusion, which is presented
with the motive to analyse the risk, processes, as well as the different internal control.
The findings of the report include the strengths of company towards the processes of
controlling sales transaction that contribute in avoiding the wide range of issues. In
addition, it has been found that budget commission and Unrealistic budget introduced
by company leads to the situation of fraud. Along with this, the major reasons behind
the use of distributed computer system over centralised computer system.

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Contents
Introduction.................................................................................................................................3
Rainbow Illusion strengths towards controlling sales transactions....................................4
Problems avoided by Rainbow Illusion...................................................................................4
Situational pressures that would increase likelihood of fraud.............................................6
Companies install distributed system instead of Centralized system................................7
Conclusion...................................................................................................................................9
References................................................................................................................................10

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Introduction
The aim of report is to analyse process, risk, internal control of the case that is based
on Rainbow Illusion Company and present the same to CEO. The case study of the
Rainbow Illusion retail chain has been presented on which the assignment has been
prepared. The case shows that the company is involved in controlling sales
transactions, which lead to different strengths for the company, which are discussed in
the report. For strengths, there is discussion of problems, which are majorly avoided
by the company for incorporating the strengths in the system for controlling the sales
transactions. The two situational pressures are discussed that might lead to the rise in
the chances of fraud. It has been found that some companies would like to choose to
install a well-distributed computer system instead of the centralised one.

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Rainbow Illusion strengths towards controlling sales transactions
The transactions of sales are controlled by the Rainbow Illusion, which is clearly
visible in the case. In the case, it has been found that company consider diverse types
of transaction related to sales such as bankcard, cash sales, and cheque sales.
 The major strength of company is that personnel appointed by them include
youth who are hired on part-time work basis with the commission on sales
volume (Bragg, 016). This is considered as strength as it leads to healthy
competition among the employees due to the commission that is based on
volume of sales.
 Strength of company is unsophisticated cash registers that are available in the
four-part sales invoice that contribute in the recording of every transaction. This
means that the register is used by the company for recording of the sales
irrespective of payment type that can be cash, cheque, bankcard, and other.
 The salesperson of Rainbow Illusion gives the invoice of the sales to the
cashier by retaining one of the copies with them of sales book after recording
employee number and transaction.
 Every business finds the return of goods and services like Rainbow Illusion.
The company handle the returns in the separate manner that is considered as
exactly a reverse method in which the cashier issues the return slip to their
customers which is one of the strength.
 Data reconciliation is considered as one of the strength of Rainbow Illusion,
which is formed by the assistant manager of the company with the motive to
state the phase of verification at the time of migration of data.
 Rainbow Illusion company gets the data processed from the concern
department that returns a weekly based commission as well as sales activity
report to the concern manager for the motive of review.
Problems avoided by Rainbow Illusion
It has been found that for every strength that has been determined there are issues
which has been avoided by them on the majorly for incorporating the strength. Some
of the major issues that are avoided include -

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Strength 1
 Save cost: - The personnel that are appointed have salaries based on number
of hours they work and commission as per sales they do. Thus, the company
do not have to pay the full amount to the employees that save their cost.
However, for the high commission, the employees will contact with each other.
 Improve management of work: - Employees are appointed by Rainbow
Illusion are young due to whom they can quickly finish their work and leads to
customer satisfaction.
Strength 2
 Quick service: - Unsophisticated cash registers resolve the delays in the
services as effective management of cash register can provide the easy
records and checks which leads to quick service.
Strength 3
 Eradicate mistakes and faults: - Salesperson of the company forward the
invoice registers to the cashier that helps them to avoid the major errors and
faults. The monitoring and checking has been done by the cashier that can help
the Rainbow illusion to rectify the same and all issues are ignored.
Strength 4
 Lack of transparency: - The transparency is one of the major issues that
might be faced by the Rainbow Illusion but it has been avoided with the help of
strength of return slip. The issue of the return slips is opposite which make the
cashier, manager as well as assistant manager of the company can review the
slips and leads to the transparency among the invoice.
Strength 5
 Identify and diminish inaccuracies in accounting: - The strength contributes
in identifying the errors of accounting with the help of the data reconciliation
record. In the data reconciliation record, Rainbow assistant manager contribute
effectively while making the record for detecting the errors. The assistant

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managers detect and deal with the issues that include double payments,
omission, adding the value of transaction, double payments, and many others.
Strength 6
 Avoid inaccuracy: - The strength of the Rainbow Illusion can avoid the issue
of the inaccuracy because the data processing helps in understanding and
collecting the data, which lead to the accuracy. Rainbow Illusion company
depends on the data and they make the decisions as per the information which
is gather by them with the help of data processing. The data processing
presents the accurate data, which is further used by the Rainbow Illusion.
Situational pressures that would increase likelihood of fraud
Rainbow Illusion is a company who is operating operations since long that means
there is possibility of the situational pressures that can affect the employees and might
be lead to the situation that makes likelihood of fraud. The situational pressures that
can influence the Rainbow Illusion include -
Bonus commission: - In the Rainbow Illusion, bonus is considered as one of the
major component because personnel of the company are majorly hired based on
bonus commission along with the hourly salary. The change in the bonus commission
plan leads to the situational pressure of fraud as it has been found that personnel
want more commission on the basis of sale. This will make them to make the changes
in the sale that has been recorded by them because of high bonus commission that
clearly shows the situation of the loss. This shows that the changes and manipulation
in the records of sales is considered as the fraud that is done by the employees of the
Rainbow illusion.
Unrealistic budget introduced by company: - Rainbow Illusion Company found that
unrealistic budget could be considered as one of the major situational pressure. In
case the Rainbow illusion says to the employees that they want budget of sales in
which it becomes compulsory to make particular amount of sales with the fact that
they have to prepare the invoices for it. This leads to the high likelihood for the fraud
by the employees for meeting the needs of the company they make the fraud as fake
amount in sales invoices that will affects at the initial level (Phillips, Libby and Libby,

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2015). Along with this, it will increase the workload of the cashier as well as the
assistant manager who are actually contributing effectively in reducing the errors. The
errors will be rectified by them and then they again analyse the situation that becomes
the time consuming process.
Companies install distributed system instead of Centralized system
In the business environment, many companies are likely to install the distributed
system in their businesses.
Centralised computer systems include usage of server structural design in which more
than one customer nodes are related that are straight. In this type of system,
companies get the request from the clients and according to that they provide revert to
the clients. On the other hand, it has been found that distributed system is that
particular computer system in which different computer system are working together
like a single unit. It depends on the business for the selection of the system that they
like to adopt (Ceri, 2017). It has been found that most of the companies implement the
distributed system rather than the centralised one. The below given are advantages of
distributed system that makes the company to adopt this system rather than
centralised system.
Reliability: - The operations of the business are very reliable on the computer system
that they are using. It has been found that in case companies are using the centralised
system then crash in the one system affects the entire system and leads to the
closure. However, on the other hand when it comes to the distributed system the
crash in one system will allow the company to survive in the market. This is clearly
witnessed with the working of the companies like Tesco, Qantas, Amazon and many
other who adopt this system to depend easily and to meet the goals and objectives.
This will help the departments to perform their system accordingly until and unless the
new system will be created. Once the new system is formed by Rainbow illusion, they
can easily transfer the information.
Speed: - It is another reason that is consider by the company as high speed contribute
effectively in dealing the individual issues. The distributed computer system works
faster than the centralised one that will help the company to make the quick decisions.

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Along with this, the timely decision will allow the company to enhance their productivity
towards the operations.
Resilient: - Distributed computer system remains more powerful and more resilient
while comparing it with the centralized computer system (Ogrodski, 2013). It is identify
that it is essential for the company to be more careful while implementing the
computer systems.

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Conclusion
In the end of report, it has can be said that Rainbow illusion has wide range of
strengths that are related to the controlling sales transactions. These strengths of the
business help the company to deal or avoid the different issues that are discussed
above. In addition to this, there is discussion related to the situational pressure that
might lead to rise in the consequence of being fraud that include unrealistic budget
introduced by company and budget commission. Further, in the market it has been
found that there are different companies who make use of the distributed computer
system instead of centralised computer system, which is clearly mention and the
major reason behind the same, is speed and reliability.

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References
Bragg, S.M. (2016) Cost accounting fundamentals. Colorado, CO: Accounting Tools.
Ceri, S. (2017) Distributed databases. Tata McGraw-Hill Education.
Ogrodski, A. (2013) Method and system for centralized identity and account controls.
U.S. Patent 8,447,687.
Phillips, F., Libby, R. and Libby, P. (2015) Fundamentals of Financial Accounting.
McGraw-Hill Education.