Strategic Information System.

Strategic Information System
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Executive Summary
This report is developed for the purpose of analyzing the sales transaction process of
Rainbow Illusion in context of the information presented within the case study. The discussion
held has illustrated that the company has maintained efficient internal control over its sales
processes. The development of effective sales system ensures that there is decreased likelihood
of fraud occurrence. However, the situation pressures when the sales volume is decreased can
cause the occurrence of fraud activities due to pressure built on senior management and the sales
person and cashier.
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Contents
Introduction................................................................................................................ 4
Strengths in Rainbow Illusion System to Control Sales Transactions..........................4
Problems or risks avoided by Rainbow Illusion through implementing various
strengths in sales transactions controlling systems...................................................6
Situational Pressures in Rainbow Illusion leading to Increase in the Probability of
Fraud Occurrence....................................................................................................... 8
Installing a Distributed Computer System in Place of Centralized Department..........9
Conclusion.................................................................................................................. 9
References............................................................................................................... 10
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Introduction
This report is prepared for analyzing the revenue cycle of Rainbow Illusion on the basis
of information presented within the case study and applying relevant concepts related with the
risks and internal controls for managing sales transactions. As presented within the case study,
Rainbow illusion is a retail chain presented within the New South Wales and Victoria that is
involved in selling of ready to wear clothes. The case study has depicted an overall analysis
regarding the sales and revenue cycle of the company. In this context, this report is directed to
the Chief Executive Officer of the company and has presented an analysis of its strengths for
control of the sales transactions. Also, it evaluates the situational pressures faced by the company
and provides an analysis for installing a distributed computer system instead of a centralized one
within businesses.
Strengths in Rainbow Illusion System to Control Sales
Transactions
There are six classes of internal control that can assist in designing and evaluation of an
effective transaction processing control within the sales process of a company. They include
authorizing the sales transactions, supervising the sales activities, proper allocation of duties,
gaining control access and independently verifying the accounting records. These internal
controls should be effectively placed within the sales processing system of a company such as
Rainbow Illusion to ensure its reliability and credibility (Becker, Uhr and Vering, 2013). In
context of these internal controls, the six strengths that have been identified within the revenue
cycle system of the company for controlling the sales transactions are discussed as follows:
 All stores have similar sales transactions processing and recording system: The retail
stores of Rainbow Illusion have adopted same structure to record, review and audit the
sales transactions. The use of such similar system enables in ensuring that there is
systematic procedure adopted within each of the company stores to records the sales and
its associated activities (Bond, 2013).
 Sequentially numbered sales invoice and linked cash receipts: The cash register is
developed by Rainbow Illusion for conducting regular review of the sales invoice and
thus recording the sales transaction. The cashier is appointed within the company for
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