Case Study: Sales Transaction Analysis of Rainbow Illusion (HI5019)

This case study analyzes the Rainbow Illusion retail company, focusing on its sales transaction processes, financial reporting, and potential risks, particularly those related to fraud. The assignment explores the company's strengths in its manual transaction system, including the use of cash registers, invoice verification, and a hierarchical structure. It also identifies problems such as potential calculation errors, mishandling of cash, and situational pressures that could lead to fraud, such as the reliance on young, part-time employees. The report highlights the importance of internal controls and the benefits of a distributed computer system, comparing it to a centralized approach. The study also discusses the reasons other companies might choose a distributed system. The case study provides insights into the importance of strategic information systems, risk management, and the role of technology in enhancing business operations and preventing fraud.

Running head: RAINBOW ILLUSION CASE STUDY
SALES TRANSACTION CASE STUDY OF RAINBOW ILLUSION
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EXECUTIVE SUMMARY
The company Rainbow Illusion is associated with the clothing industry in New South
Wales and Victoria and has huge amount of part-time female employees who are
responsible for the sales and performance of the retail stores. The various strengths
and problems of the company Rainbow Illusions is described in the report and the
reasons for the adaptation of the distributed system rather than a centralized system is
also described in the report.

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Table of Contents
Introduction........................................................................................................................3
Six strength for controlling sales transactions...................................................................4
Problems avoided by Rainbow to improve sales transactions..........................................5
Two situational pressure to increase likelihood of fraud...................................................7
Reasons to use distributed computer system by other companies...................................9
Conclusion.......................................................................................................................10
References.......................................................................................................................12

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Introduction
The company Rainbow Illusion situated in New South Wales is associated as a
retail store of female clothes which is mainly controlled by young employees in the sales
ad finance departments. The representatives maintain each and every transaction that
are made in the store and these transactions are noted down manually. The
organization lacks the automated system in the field of finance and accounting and thus
it depends on its young generation employees.
The manual process of transaction has certain strengths which are highlighted in
this report which benefits the organization Rainbow Illusion. The sales invoice that are
generated after each transaction are managed and carried forward to the higher level
authorities of the company, where these slips of transaction are cross checked again.
However, there are certain risks which are associated with the manual transaction
process including calculation error, mishandling of cash and cheque books and also
different other credentials of the clients.
There might be situational pressures within the company by which Rainbow
Illusion might face the likelihood of any fraud. The managers of the company receives a
report on the sales activity from the central data processing department which analyses
the each transaction, sales invoices, sales tapes and return slips. The report also
emphasizes on the benefits of the distributed computer system rather than the
centralized system (Pearlson, Saunders and Galletta, 2016). The strengths for
controlling the sales transaction is described in this report along with the problems that
are identified in the organization.

4RAINBOW ILLUSION CASE STUDY
Six strength for controlling sales transactions
The entire sales transaction of the company Rainbow Illusion is controlled by the
managers, cashiers and sales personnel. The sales processes of the company is mainly
maintained by sales personnel and the cashiers. There are also full time managers and
part time managers who for the company.
The first strength of the company is that it maintains a cash register where all
the transactions are recorded and the cashier and the sales person gives updates of
those to the managers and assistant manager. The system of Rainbow Illusion is a
centralized one and it uses a range of hierarchy which is followed by the employees of
the company (Ingram et al. 2015). Thus the entire process is maintained by manual
hand to hand processes and not by any automated devices.
The second strength is that Rainbow Illusion has a process of checking the
sales transaction receipts over and over again in the various hierarchies of the
organization, eliminates the risk of miscalculation in the sales transaction bill.
The company Rainbow Illusion attaches a unique piece of transaction id or
number with the sales invoice that reduces the risk of loss of the sales invoice or the
mishandling of it. This can be stated as the third strength of sales transaction the
company. This is because each and every sales invoice is unique in nature because of
the presence of the number.
The company officials maintain a sales register which might also be considered
as a fourth strength of the company as because it helps in the development of a
reconciliation report for the controlling and monitoring of the sales transactions (Cassidy

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2016). The company also has the tendency of verifying the validating each and every
sales invoice by several people in the company. This is the fifth strength of the
company and this ensures that the calculations and transaction slips are justified and
appropriate.
The Rainbow Illusion also emphasizes on the company hierarchy as because the
various processes of the sales transaction are maintained and followed by the sales
representatives and other upper level managers and assistant managers. These sales
associative are the sixth strength of the company.
Thus various strengths are associated with the Rainbow Illusions Company
because of the manual transaction process it follows and also due to the operations of
the company. The company is located in the Victoria and New South Wales and almost
30 stores are associated throughout the two places. The strengths mentioned in the
above discussion helps in the enhancement of the business and also in profitability of
the each stores. However, these strengths of the company has certain benefits as
discussed but also has some limitations.
Problems avoided by Rainbow to improve sales transactions
The strengths that are discussed here have been updated by the company
Rainbow Illusions in order to avoid certain problems related to their sales transaction
and operations. The Rainbow Illusion’s revenue generation and sales profit is benefitted
by adopting the strengths mentioned here (Colovic 2014). The company Rainbow
Illusion is adapted by a centralized system which helps the individual workers of the

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company to do their work efficiently and also to meet their responsibilities. The
problems that can be analyzed in the sales transaction are stated below.
1. The maintenance of the sales register by the company official such as
assistant managers and managers helps in saving a lot of time and cost as because
without the implementation of such a sales register the checking and rechecking of the
sales invoices becomes very much difficult (Peppard and Ward 2016). The role of data
processing department in the company Rainbow Illusion also helps in the future
planning of the company and thus the adaptation of the data processing department in
the company helps in the future enhancement of the business perspective of company
Rainbow Illusion.
2. The company Rainbow Illusions is associated with the clothing of female and
thus the company can appointment of the young female employees in the company as
because they can clearly understand the latest fashion trends and also explain and
demonstrates them to the customers of the company. Thus the hiring of the young
employees is beneficial for the company rainbow Illusions.
3. Another problem that the company faced was the demotivation in the
employees and thus the centralized system was adopted by the company to mitigate
this problem (Panagopoulos, Rapp and Ogilvie 2017). The fact that the young
employees of the company lacked many experience in the respective field and this
creates a gap in the sales process, however, this problem was mitigated by developing
the centralized system in the company rainbow Illusions.

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4. The company also recruited managers and assistant managers in the
organizational framework of the company which resulted in the proper functioning of the
operational structure of the company and also helped in manual checking of the sales
invoice slips (DeLone and McLean 2016). The sales invoice slip were attached with
certain numbers which identifies and separates them from each other and with the help
of this slips and unique numbers, the company can recalculate and relocate any of its
sales invoice slip.
Thus the above mentioned strengths that have been incorporated by the
company rainbow Illusions has helped the company in avoiding various organizational
and structural problems and this has resulted in the benefit of the company and profit of
the company Rainbow Illusions. The officials of the company also maintained the
integrity of the sales invoice which helped in resolving various problems of the
company. Thus the strengths that have been incorporated by the company as
discussed above, resolved the problems and helped the company in enhancing its
business and services.
Two situational pressure to increase likelihood of fraud
The situational pressure can be described as the pressures occurring within the
company infrastructure which increases the likelihood of fraud and other problems
within the company. The company is based on the huge number of young employees
who are hired by the company in order to handle the sales, marketing and financial
sectors which plays a vital role in the enhancement and profitability of the company.

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The situational pressure might arise if the young group of employees leave the
organizations as because they are all part time employees and not permanent
employees of Rainbow Illusion (Aversa, Cabantous and Haefliger 2018). The company
operational infrastructure might collapse up to a great extend due to this fact as
because the company is depended on these young employees and their performance.
The performance of these young part-time employees effects the not only the operation
of a single store but also the operation of all the 30 stores across Victoria and New
South Wales. Thus this might be considered as one of the main situational pressure that
might occur in the company Rainbow Illusions and this definitely will affect the
performance and profitability of the company (Wu 2017). The fraud that might be
associated with this situational pressure is that the employees before leaving the
company might destroy and hamper the important credentials of the customers. This
might also create the organizational fraud from the company’s end which might affect
the future operations of the company and also the customer retention of the company.
Another situational pressure which might be responsible for the likelihood of
fraud in the company Rainbow Illusions is that if the sales invoice slips are not checked,
updated and managed in the proper way, there might be a situation of likelihood of
fraud. The sales invoice slips are checked in the various level of the company hierarchy
starting from the sales employees up to the managers and assistant managers (Hu
2017). The sales invoice slips are also numbered with a unique number however, if
these slips are mishandled by the employees, a situation of loss and fraud might occur
for the company Rainbow Illusion. The company also does the checking and rechecking
of these slips in a manual process and thus there lies the possibility of miscalculation

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and fraud as because any of the employees can mishandle the slips and this will result
in the monetary loss of the company Rainbow Illusions.
As the company is based on these young employees, the proper measures must
be taken in monitoring and controlling the sales invoice slips in the various levels of the
company infrastructure and thus the company officials must establish any monitoring
and automated checking system of the sales invoice slips. Thus the company Rainbow
Illusion might have the above two situational pressures which in terms might increase
the likelihood of fraud in the company and the company will also suffer loss because of
these two situational pressure (Parshutina and Bogatyrev 2017). The company rainbow
Illusions thus must have adequate information and control measures for handling the
situational pressure that might arise in the company.
Reasons to use distributed computer system by other companies
The distributed computer system can be termed as a group of computer systems
connected to each other which appears a single computer system to its users. The
distributed system comprises of different single computing devices which can work as
independent devices in various platforms and these individual devices is referred as
nodes and multiple nodes makes up the complete distributed computer system (Bhatkar
2017). The distributed system needs a collaboration of the various nodes which makes
up the system and this is maintained by the developing distributed systems.
The system also has the capability to work on a single project with the help of the
multiple nodes and this reduces the time of processing the works. The system also
divides a single task into multiple sub tasks which are processed by the individual nodes

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and then compiled to form the entire task (Hu et al. 2017). The individual nodes can
also communicate with each other and the ultimate computing power of the system
depends on the performance of these individual nodes. However, if any of the individual
nodes fail the entire operation of the distributed computer system is not affected.
On the other hand, the centralized system can be implemented in the company’s
working process that would ensure to attach different clients in a single node. The
centralized system helps the customers to effectively connect with the problem of the
customers and respond to them directly without the intervention of any third party
organization (Schmitt et al. 2015). The centralized system is associated with a single
unit system which helps in calibrating and operating the entire system with the other
nodes or clients in order to successfully implement the centralized computer system.
However, if the main system architecture of the centralized system fails, it results in the
failure of the entire system resulting in the huge loss of the companies. There are four
reason listed below that states the advantage of using distributed system over
centralized system.
1. The distributed system is a cost effective way in increasing the entire
performance of a company.
2. The total speed of the distributed system is much higher when compared to
that of the centralized systems.
3. The failure of one single node in the distributed system does not result in the
complete failure of the system but in the centralized system if any one of the parts fail,
the entire system will collapse.

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4. The distributed system allows a multiple number of users to access the same
information from the same database.
Conclusion
The company Rainbow Illusion situated in Victoria and New South Wales is
associated with the garments of young females and also the company has mainly part-
time young female employees in its stores situated all across the two locations. These
employees are located in the various sales and finance departments of the company
and they are responsible for the operation of the Rainbow Illusion. The various
strengths that are situated in the manual sales transaction process of the company
Rainbow Illusion is described in the above discussions and also how the various
problems of the company Rainbow Illusion can be avoided in order to maximize their
sales transactions. The entire transaction procedure of the company is depended on the
manual transaction handled by the various employees of the company and thus two
situational pressures that might arise in the company Rainbow Illusion causing the
likelihood of fraud is also discussed in the report. Thus it can concluded that the manual
process of transaction in the company has certain benefits in the company operation
and thus the various problems of the company are also mitigated in order to increase
the sales transaction. The advantages of the distributed computer system compared to
the centralized system is also emphasized in the discussion of the report.