Rainbow Illusion Case Study: Sales Transaction Strengths and Fraud

This report presents a case study analysis of Rainbow Illusion, a retail chain specializing in female clothing. The report identifies six key strengths in Rainbow Illusion's sales transaction control system, such as the separation of duties between salespersons and cashiers, sequential data entry, and the use of rewards and commissions, explaining how these strengths mitigate potential problems. It also explores two situational pressures within the company that could increase the likelihood of fraud, including employee demographics and commission-based incentives. Furthermore, the report examines the rationale behind companies like Rainbow Illusion choosing distributed computer systems over centralized ones. The analysis covers various aspects of the company's operations, providing insights into its financial processes and risk management strategies.

Rainbow Illusion

Table of Contents
INTRODUCTION...........................................................................................................................4
For each strength identified, explain what problem(s) Rainbow Illusion has avoided by
incorporating the strength in the system for controlling sales transactions............................4
Identify six strengths in Rainbow Illusion’s system for controlling sales transactions.........4
Identify two situational pressures in a company like Rainbow Illusion that would increase the
likelihood of fraud..................................................................................................................6
Explain why some companies would choose to install a distributed computer system rather
than a centralised one.............................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

EXECUTIVE SUMMARY
The present report talks about the case Study based on Rainbow Illusion, a chain 30 retail
store offering clothes for young females in New South Wales. The report has covered four main
sections. In this, six strengths of main strengths of the Rainbow illusion has been identified in
which reward and commission as well as sequential entry of data is identified as main strength. It
has also been found that human errors and competition are considered as main situation which
increases chances of fraud at workplace. In addition to this, it has also been identified that
increase in number of departments are considered as the main reason which have influenced
interest of companies to move forward towards distributed computer system instead of
centralised one.

INTRODUCTION
The present report is based on the case study of Rainbow Illusion, a retail chain store
which offers female ready made clothes in all of its 30 stores located in New South Wales and
Victoria. The store is being operated by its manager and assistant manager. The staff also
includes salesperson and cashiers who handles all over work associated with their respective
departments and also maintains records of each and every transaction manually (Groomer and
Murthy, 2018). The study clearly shows all work of this organisation is being done by its staff
members manually. Along with this, the prepared work record is further been reported to the
assistant manager and manager for further processing of work. This report will cover discussion
on evaluation of the processes followed in Rainbow Illusions. It also provides analysis on risks
and internal control towards its expenditure cycle. Identification of main key strengths of
Rainbow Illusion's system and how its helps in avoiding problems related to controlling sales
transactions. It will also provide information on situational pressures in the company which leads
to increase in chances of fraud at workplace. Along with this, it will also specify that why
companies like Rainbow Illusion are preferring to install distributed computer system instead of
centralised systems.
For each strength identified, explain what problem(s) Rainbow Illusion has avoided by
incorporating the strength in the system for controlling sales transactions.
It has been identified that there are total number of six strengths in the system of
Rainbow Illusion's towards controlling of sales transaction which provides their support in
avoiding different issues in the enterprise. All of the strengths along with the problems which are
avoided with usage of system are described as below:
 The company is using four main kind of business activities that is sales order entry,
billing, cash collection and updating ledgers and shipping which contributes in avoiding
any kind of duplication of work at workplace. Along with this, it also simplifies the work
of each employees and keeps record of each activity at workplace (Vahdati and Yasini,
2015).
 Sales person and Cashier works separately in Rainbow illusion that supports in
controlling number of sales transactions at workplace as the work was being executed
separately. This reduces chances of fraudulent within the company as both the

department works separately but they also keeps track on the work each other. There
entries are also recorded two times which avoids chances of any kind of fraud activity at
workplace.
 Rainbow Illusion provides rewards and commission to sales person so that they can push
themselves towards the work and increase sales performance of the company. This
system of company is also valuable in avoiding chances of decline of employees interest
in organisational activities (Ihlanfeldt and Mayock, 2016). This is because, when
employees gets rewards they push themselves towards the work in order to gain
maximum benefit. This directly contributes in increasing sales performance as well as
profitability of the company.
 System used in Rainbow illusion contributes in execution of each and every work
associated activity in the sequential manner. This avoids chances of duplication of work.
Along with this, it also supports in avoiding chances of missing any essential entry of
transaction within the company (Lee, Lee and Oh, 2015).
 Information associated with organisational transaction are recorded in the cash receipts,
returns, cheques, cash register, bank cards etc. This helps the company in storing data for
long term within the company and also helps in preparing their final balance sheet. As a
result, actual performance of the company can be measured with this recordings.
Identify six strengths in Rainbow Illusion’s system for controlling sales transactions
As per the stated case study, it has been analysed that business functioning of Rainbow
Illusion includes various strengths that contributes in controlling sales transaction of the
company (Ihlanfeldt and Mayock, 2016). It has also been seen that maximum number of work in
the company are done manually only as they keeps record of each and every activity in registers.
These activities are checked by the respective supervisor of the department. On the basis of
overall information stated in the case study it has identified that there are some core strengths in
the system of Rainbow Illusion which contributes in controlling sales transaction at workplace.
It has been seen that there are six core strengths of Rainbow Illusion's system for controlling
sales transaction which are described as below:
 The main strength of this system is that it is being used by maximum number of stores
belongs to retail industry for the purpose of calculating sales transaction at workplace.
This states that there are negligible chances of failure for this system at workplace. The

system includes four basic business activities such as sales order entry, billing, cash
collection and updating ledgers and shipping. It has been seen that all of these activities
are interrelated with one another and are performed in the same order. This becomes
strength of the company as it reduces chances of misshapen or wrong execution of the
work at workplace (Button and Cross, 2017). As a result, it shows that adoption of this
method is considered as the main strength of the company which means that all activities
at workplace are performed effectively without any error. Along with this, it also reduces
chances of any kind of fraudulent in the future.
 Another strength of Rainbow Illusion is bifurcation of salesperson and cashier. This
division directly helps them in executing their work separately without any interference
which ultimately reduces the work associated conflicts and errors. It has been identified
that salesperson mainly performs various roles and responsibility in the Rainbow Illusion.
There main role is to deal with the customers, involve in product exchange activity,
transactions relates to clothes, class, description, quantity, and unit price. Along with
this, they further provides all associated information that is cash invoice to cashier and
takes its one copy record it in the sales book for future. In addition to this salesperson is
also required to increase sales performance in order to gain addition incentives apart
from the hourly wages. On the other hand, work of cashier includes review of the invoice
and input of sales. Cashier of Rainbow Illusion is also responsible for taking approval for
credits on charge sales as well as also providing approval for the sales whose payments
are done by the cheque. Here cashier also takes three copies of invoice which are
provided to customers, store and bankcard respectively for safe processing (Mohamed
Yusof, 2016). This clearly depicts that both the department overall performs work at
separate level but they coordinate with one another whenever feel requirement of it.
 Rewards and commission are provided to employees on the basis of their sales volume.
These are also associated to their salaries which are being processed according to their
designation in the company (Wilding, 2017). It can be said that extra monetary income
influences employees interest towards the work as they believes that addition rewards or
commission makes employees push themselves towards the work so that they can attain
their own targets and gain additional benefits from it. These efforts not only increases

sales performance of the company it also motivates employees to harder. As a result, it
can be seen as the main strength of Rainbow Illusions.
 Another strength that is being identified in Rainbow Illusion are sequential entry of each
and every order are recorded one by one in order to keep the information safe for longer
duration (Immergluck, 2018). In addition to this, it can be said that company can easily
take it as the core strength as the sequential work avoids chances of repetition of the work
or any wrong conduct at workplace.
 The overall records includes combined information on cash receipts, returns, cheques,
cash register, bank cards etc. in systematic manner. This helps employees in keeping all
information safe at one place with required bifurcation. It also helps them in checking
out past records effectively whenever it is needed without facing any kind of trouble.
 It has also been identified that cash register keeps record of all involuntary sequential
numbering
All of the above stated strengths also contributes in controlling sales transaction in
Rainbow Illusions as they holds strong presence and its employees also uses them effectively for
the better execution of work (Lee, Lee and Oh, 2015).
Identify two situational pressures in a company like Rainbow Illusion that would increase the
likelihood of fraud.
Fraud is considered as the main issue at workplace which occurs in different
organisational situations. It has been analysed that situation of fraudulent occurs at workplace
because of employees errors (Liao, Balasinorwala and Rao, 2017). With reference to the current
given scenario, it has been seen that the company faces it has been seen that cashiers and sales
personnel of this company belongs to youngster age group. Along with this, they works for part
time in the company who are getting paid for their work on hourly basis. Therefore, it can be said
that in rush hours or excessive workload these employees might indulge into fraudulent
activities as their focus on the work is not so high. As per the young age, expenses of these
employees are also excessive which includes chances of fraud as they might prefer to into such
activity in order to acquire high amount and fulfil their needs and wants. Furthermore, it has also
been identified that Rainbow Illusion is providing commission to each sales and cashier
employee on the basis of their sales volume. This means that these employees can prefers to

execute fake sales activity in order to increase their commission and earn extra amount on their
salary. All of these situation influences chances of fraud in Rainbow Illusion.
Computer fraud
In general, computer fraud refers to controlling and managing the computer system of
others and stealing the information and personal data. Some of the fraud is done for the aim of
gaining money by stealing data from companies in an illegal manner (Vahdati and Yasini,
2015). Sometimes main purpose behind doing computer fraud is to bring down the brand image
as well as goodwill of the company at the marketplace. This is done by individuals or group of
people who are known as hackers. For instance, Rainbow Illusion is an organisation which
provides ready to wear clothes to the females. Company having 30 different stores and each
stores have full time managers in their organisation. It has been identified that there are various
situations arise within or outside the company which affect the functionality of business in both
positive as well as negative manner. One of the biggest negative situation arise which pressurise
the employees in order to adopt computer fraud is highly competitive environment. Staff
members of the company decides to collect information and data of the competitor companies in
an illegal manner so that they will be able to beat the competition. This will affect the brand
image as well as good will of the company in a negative manner (Wong, Kim and Lo, 2015). It is
an illegal method which sometimes force the staff members and the management team of
Rainbow illusion's in order to adopt this method to gain competitive advantages at the
marketplace. Apart from this, managers of the company decides to use this method as they are
under pressure to enhance their sales and market share of the organisation at the competitive
working environment (Lee, Lee and Oh, 2015). At last, it has been analysed that companies
adopt computer fraud in order to gain information, interest, trends and preferences of customers.
This as a result assist them to develop effective strategies and policies so that they will be able to
attract large number of customers towards their company.
Explain why some companies would choose to install a distributed computer system rather than a
centralised one.
Centralised computer systems are commonly used by small businesses as it is easier for
them to manage the work with one common system. In this, the company uses one common
system which is being used by employees (Mohamed Yusof, 2016). All of them are linked with
one node which provides instruction to all departments. Whereas, distributed computer system

refers to the system whose all network computers are installed at different locations. All of these
computer networks coordinate and communicate with one another at regular basis so that their
predetermined goals and objective can be attained effectively. It has been analysed that at earlier
stage business organisation were using specific centralised system in which one main network
was giving instructions and leading overall company. But with the changing it become difficult
for business managers to deal with one common system as for attaining all goals and objectives
they are required to communicate to all respective departments in order to lead the marketplace.
For this, they now prefers to use distributed computer systems so that they can easily coordinate
with other departments at workplace which makes it easier for them to execute their business
activities effectively. The distributed computer system is also helpful in managing the overall
work of company in quick manner as they are free to communicate with one another.
CONCLUSION
From the above described report, it has been analysed that business operation of the
company are mainly performed by the employees which clearly specifies that it is essential for
management team of organisation to hire skilled employees who could perform work effectively
at workplace. It has been analysed that the company has its own strengths as well as weaknesses
which support and resists them in attaining their organisational goals and objectives. Computer
based fraud are considered as the main fraud which affects company negatively as maximum
work as well as information in the company are stored in computers only. It has been further
identified that distributed computer systems are best for business as now a days every company
has various department and usage of this computer systems helps them in coordinating with one
another and managing the work effectively with mutual decisions.

REFERENCES
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