Rainbow Illusion Case Study: Distributed Systems and Fraud Prevention

This case study analyzes the Rainbow Illusion retail chain, focusing on its strengths, weaknesses, and the potential for fraud. The report highlights the company's commission-based wage system, involuntary sequential numbering, daily reconciliation reports, and the use of a distributed computer system. These strengths help mitigate risks such as lack of control over sales transactions, errors, and over-costing. The study also identifies situational pressures that could increase the likelihood of fraud, such as misstatements by cashiers and the vulnerabilities of a centralized computer system. The report concludes by explaining the advantages of a distributed computer system, including increased reliability, speed, and cost-effectiveness, making it a preferred choice for companies like Rainbow Illusion. The report also provides an overview of how to avoid fraud in the organization.

Case Study - Rainbow Illusion

EXACUTIVE SUMMARY
The report were highlights the strengths of the Rainbow illusion firm and provides the
problems that can be avoided by such strengths of the firm. This report were provides the detail
of situational pressures that may increase the fraud in the organisation and also presents why
firms prefers to install distributed computer system rather than a centralised system in their
companies.

TABLE OF CONTENTS
EXACUTIVE SUMMARY ............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Strengths in Rainbow illusion's system ......................................................................................4
Problems that are avoided by these strengths of the Rainbow illusion......................................5
Situational pressures in the companies like Rainbow illusion that would increase the
likelihood of fraud.......................................................................................................................6
Installation of distribution computer system rather than a centralised in the firms....................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Rainbow illusion is a retail chain store which deals in the ready to wear cloths for young
females. The firm has 30 stores in New South Wales And Victoria. In this study the report will
provides the brief discussion on the strengths of the Rainbow illusion and also explains the
problems that can be avoided by the Rainbow illusion with such strengths. The report will be
considers the situational pressures that increase the likelihood of fraud In the companies. This
report will provides the brief discussion on the reasons of choosing distributed computer system
rather than centralised system by the organisations.
MAIN BODY
Strengths in Rainbow illusion's system
Rainbow illusion's system having the variety of strengths which help to controlling the
sales transactions. Following are the list of strengths of Rainbow illusion.
Commission based wages on sales:
One of the strength of the Rainbow illusion is to providing wages on commission based
sales volumes. Through this type of wages system the company makes sure to having profit. In
normal system the company needs to pay salary or wages on monthly basis and have to pay if
there is no profit or sales on the particular time. The organisation paid fixed amount of salary or
wages to the employees (Ricketts, Riley and Shortridge, 2018). Although if the firm is applying
sales commotion based salary to their workers is making sure that if the employees are making
sales that they earn the wages on basis of specific commission.
Involuntary sequential numbering is made by the cash register:
The Rainbow illusion company uses the unsophisticated cash registers with the four parts
of sales invoices which facilitates the to record each and every transaction held in the Rainbow
illusion. This facilitates the clearness of transactions in the stores. This sales invoices are using to
regardless of the payment type like cash, cheque or bankcard (Prenzler, 2019). It helps to
Rainbow illusion to control over the sales transaction in the firm by maintaining the registers of
each and every single transaction by the stores can reduces the risk of fraud and increase the
perfection in the maintenance.
Daily reconciliation report:

At the end of each month the assistant manager of Rainbow illusion is preparing
reconciliation report of the review of store manager. In which the manager is checks sales
invoices and takes cash register tools for cash, bankcards, cheques, and credit card returns. Such
totals are reconciled by the store's assistant manager for reviewing the manager (Jermakowicz,
Chen and Donker, 2018). The Rainbow illusion' s system manages the sales invoices and return
slips for taking proper review of each transaction in the store and prepare reconciliation which
eliminates the accounting errors and keeps the business deposits correct.
Every stores are using similar system for calculating sales transaction:
One of the strength of the Rainbow illusion is all the stores are adapting same system for
calculating sales transaction in the stores. All stores are appointing the managers and assistants
managers on compensation based salary (Fisch, White and Pooch, 2017). The firm is using same
computing system in every store which is benefited to firm, it reduces the duplication of errors
and supports the firm to resolves the errors.
Bringing together of cash receipts, bank cards returns and cash register tapes is carried
out:
For the purpose of review sales invoices the manager is bring together the whole cash
receipts, bank cards, and cash register tapes to carried out the monitoring on the sales
transactions and validates deposited slips to the firm (Button, and Cross, 2017). By performing
this activity can helps the Rainbow illusion to effective monitoring and controlling over the
sales transaction of the company.
Adaptation of distribution computing system:
Rainbow illusion is adapting distributed computing system for the computation of data in
their stores. It is the one of the biggest advantage for the company (Fisch, White and Pooch,
2017). These system facilitates the Rainbow illusion to evaluates the cash sales and sales
invoices of each stores in the firm.
Problems that are avoided by these strengths of the Rainbow illusion
From the strengths of the Rainbow illusion that are mentioned above can resolves the
following problems of the company:
Resolving redundancy and resiliency:

Rainbow illusion is adapting the distribution computer system which facilitates to avoid
the problem of redundancy and resiliency in the organisation (Palaniappan, 2016). In this the
data were distributed in between multiple servers or disks which facilitates if any disk were crash
that there may not be any data loss of the organisation.
Lack of controlling over sales transaction:
Through the strength of bringing together of cash receipts, bank cards returns and cash
register tapes is carried out the Rainbow illusion firm can be avoid the problem of lack of
control over the sales transaction.
Problem of error:
Rainbow illusion is preparing reconciliation statement in the end of each months which
facilitates the rectification of errors (Schuchter and Levi, 2015). In reconciliation statement every
sales transaction may review multiple times by the manager which can helps them to rectifies the
error occurs in the organisation regarding the transactions.
Risk of fraud:
Strength of maintaining cash register on daily basis may helps the Rainbow illusion to
reduces the risk of fraud in sales transaction in the organisation (Button, and Cross, 2017).
Regular maintenance of register may helps the manager to review the transactions and compare
with day to day sales which minimize the risk of fraud in the firm.
Problem of over costing:
Strength of Rainbow illusion is they provides salary on the basis of sales commission to
their employees which helps to avoids the problem of over costing (Jermakowicz, Chen and
Donker, 2018). Commission based salary is facilitates the firm to motivates the employees to
increase the sell of the firm and earns better commission.
Situational pressures in the companies like Rainbow illusion that would increase the likelihood
of fraud
There are many situations in the company like rainbow illusions which would increase
the likelihood of fraud in the organisation. Following are the situational pressures in the firm
which increase the fraud in firm:
Misstatement by the cashier:

If only one cashier is there to handle all the cash transactions, then there is more
possibilities of doing misstatement by that only cashier. Due to the lack of on the spot inspection
of cash transactions done by the cashier, will motivate that cashier to hide some major and
important transactions and at the same time encourages him to get engage himself in fraudulent
activities (Schuchter and Levi, 2015). The cashier will send the copies of all the cash transactions
to the assistant manager but here assistant manager will verify only those receipts of cash
transactions which is given by that cashier, and the same copies are there with the cashier too,
because of which the company like Rainbow Illusion can't catch the fraudulent activities done by
the cashier. The transactions which not happened through banks have the larger chances to get
hide by the cashier. Where there is no involvement of banking institutions will helps cashier to
execute the fraudulent activities. Absence of frequent inspection of cashier will encourage or
allow him to take that cash of company like Rainbow Illusion in his pockets, without being in
highlights for the wrong doings of him.
Centralised Computer System:-
The fraud done by the employees of IT will leads the company like Rainbow illusion to
suffer the heavy losses and will further leads the breaking of trust of the clients with whom the
company like Rainbow Illusion is dealing, as a result the company have to face the loss of
interest of its clients in the company like Rainbow Illusion. The profitability of company will
also got affected by the fraudulent activities done by the cashier. Further it will increase the
production costs of the products or services which is provided by the Rainbow illusion. IT
Manager may become the competitor of the company by installing malware which results the
spreading of virus on entire systems of the company like Rainbow Illusion (Button, and Cross,
2017). By doing so on regular basis specially when he is considered and rewarded as one of the
most honest employees of the company like Rainbow Illusion. Data stealing will also the result
of centralised computer system which encourage the IT manger to get engaged in fraudulent
activities.
Installation of distribution computer system rather than a centralised in the firms
Distribution computer system:
Distribution computer system is the model which use in computation that related to
distribution system. It is refers to as computer systems located in the different places and

interlinked together over a network and use to solves the higher level of computation. In
distributed computing a single problem is is dividend into many parts and each part is solved by
the different computer (Palaniappan, 2016). It facilitates the speed with absolute performances
and saves the cost of the organisation. It can be defines as an model, software system shared
among the multiple computers to improves the efficiency and performance.
Centralised system:
Centralised computing system is done at the central location by using terminals that are
attached to the central computer. It offers the great security over the decentralised system
through controlling all process in a central location. It enables the development of all central
server's computing resources, administration and management (Fisch, White and Pooch, 2017). It
is the system where decisions for the goal are made in a central mechanism and transmitted to
the executive component. It is very easy to maintain security in the centralised computing
system.
Many companies like Rainbow illusions are using adapting distributed computing system
rather than centralise system because of the points which are discussing below:
Reliability:
Distribution computing system is more reliable in comparison to the centralised
computing system. In centralised if one machine or computer is crashes then the whole system is
get down and it cause the huge loss of data. Whereas in distribution system the if there is
situation like this the system as a whole can still survives (Sallam and Malik, 2018). It has a
higher avai8lability and improves the reliability. That is why a company like Rainbow illusion
are prefers distribution system rather than a centralised.
Speed:
Firms like Rainbow illusion are like to adapt the distribution system because a
distributed computing system may have more total computing power that centralised (Sallam
and Malik, 2018). In distribution a single problem is divided into many parts and each part were
solved by different computer. So it facilitates more speed that centralised system.
Cost or economics:

In distribution system a collection of micro processors offers a better prices and
performance in comparison to centralised (Palaniappan, 2016). It provides the low price ratio.
Distribution system is very cost effective way to increase the computing power of the firm.
CONCLUSION
From the above report it has been concluded about the strength of the Rainbow illusion
firm which are Commission based wages on sales, Involuntary sequential numbering is made by
the cash register, Daily reconciliation report, Every stores are using similar system for
calculating sales transaction, Bringing together of cash receipts, bank cards returns and cash
register tapes is carried out and Adaptation of distribution computing system. Further the file has
been provides the brief discussion on the each of the strengths and identifies the problems that
can be avoided by the rainbow illusion firm with its strengths. This report has been summarised
the Situational pressures in the companies like Rainbow illusion that would increase the
likelihood of fraud and gives the reasons of the Installation of distribution computer system
rather than a centralised in the firms.

REFERENCES
Books and Journals
Button, M. and Cross, C., 2017. Cyber frauds, scams and their victims. Routledge.
Fisch, E.A., White, G.B. and Pooch, U.W., 2017. Computer system and network security. CRC
press.
Jermakowicz, E.K., Chen, C.D. and Donker, H., 2018. Financial statement effects of adopting
IFRS: the Canadian experience. International Journal of Accounting & Information
Management. 26(4), pp.466-491.
Palaniappan, M., Adobe Inc, 2016. Secured distribution of software updates. U.S. Patent
9,280,337.
Prenzler, T., 2019. What works in fraud prevention: a review of real-world intervention
projects. Journal of Criminological Research, Policy and Practice.
Ricketts, R.C., Riley, M.E. and Shortridge, R.T., 2018. Information content of IFRS versus
GAAP financial statements. Journal of Financial Reporting and Accounting. 16(1),
pp.120-137.Lessambo, F.I., 2018.
Sallam, A.A. and Malik, O.P., 2018. Electric distribution systems. John Wiley & Sons.
Schuchter, A. and Levi, M., 2015. September. Beyond the fraud triangle: Swiss and Austrian
elite fraudsters. In Accounting Forum. (Vol. 39, No. 3, pp. 176-187). Taylor &
Francis.