Strategic Information System Analysis for Rainbow Illusion: A Report

This report provides a comprehensive analysis of Rainbow Illusion's strategic information system, focusing on its sales transaction processes, internal controls, and potential risks. It begins by outlining the company's operations, including its retail chains and sales procedures, highlighting the strengths of the existing system, such as the use of cash registers and data reconciliation. The report then identifies problems that Rainbow Illusion has successfully avoided through its system's strengths, like efficient work management and reduced training needs. It also examines situational pressures that could increase the likelihood of fraud, such as unrealistic budget pressures and financial incentives. The report concludes by explaining the reasons for implementing a distributed computer system over a centralized one, detailing the benefits of the distributed approach in terms of speed and efficiency. The report utilizes various sources to support its analysis, providing a well-rounded perspective on the company's information system.

Strategic information system for business and enterprise
8 / 2 6 / 2 0 1 9

Marketing 1
Contents
Introduction................................................................................................................................2
Case overview........................................................................................................................2
Strengths in Rainbow illusion’s system for controlling sales transactions................................3
Problems that Rainbow illusion has avoided.............................................................................5
Situational pressures that would increase likelihood of fraud...................................................8
Reason for businesses to install a distributed computer system rather than centralized one.....9
Benefits of distributed computer system over centralized one............................................10
Conclusion................................................................................................................................12
References................................................................................................................................13

Marketing 2
Introduction
The report is prepared for Chief Executive Offer of Rainbow illusion with the motive to
analyses the processes, risks as well as the internal control majorly for its revenue cycle. The
report is consists of strength of illusion system majorly for managing the sales transactions.
Considering the strength, the problems have been prevented by company for incorporating
the strength is presented in report. In addition, it consists of the situational pressures that
might contribute in enhancing the changes for the fraud within the company. The major
factors which made the company to install the distributed system instead of the centralized
one are specified.
Case overview
The case study is related to the Rainbow illusion that operates approx. 30 retail chains in the
area of Victoria and New South Wales. The company majorly sells the ready-to-wear clothes
considering the need of females. The case study of the company is related to the sales
invoices that have been prepared by the salesperson through manual recording of the total
amount of sales, calculate the discount, sales tax and also prepare the total amount. Along
with this, the transactions done through cheque are verified by cashier who takes the
responsibility. Further, it reflects that the assistance manager form a daily reconciliation
report for the store managers review. Over all it shows controlling of sales transaction within
the company.

Marketing 3
Strengths in Rainbow illusion’s system for controlling sales transactions
The sales transaction within the company includes any sales income that occurs from any
particular customer (Brealey, Myers, Allen and Mohanty, 2012). It has been found in the case
study that Rainbow illusions consider the three types of the sales transaction which include
cash sales, cheque sales and bankcard.
 Rainbow Illusion company involves cashier as well as sales personnel who are young
people and perform the work within company as part-time due to which they get the
payment based on hourly wage plus a commission as per sales volume. This sales
volume makes them to control sales transactions that took place in company and
becomes strength for company. Along with this, the company tries to get high
commission on sales due to which they try hard to get the sales from the customers.
 Unsophisticated cash register are used by the Rainbow illusions which becomes there
strength as these registers are available with four-part sales invoices that contribute
effectively for recording each and every transactions (Shoup, 2017). In addition, the
sales invoices are majorly used regardless of any type of payment type either cash,
cheque or bankcard which makes the easy and effectively control of the sales related
transactions.
 Rainbow illusion strength is that there salesperson provides the invoice related to
sales to the cashier which makes them to retaining one copy in sales book. The cashier
will review the invoice as well as inputs the sale which becomes strength as the sales
are controlled in effective manner.
 The returns that are made by the customer are handled separated in exactly the reverse
manner with the cashier who issues the return slip to the customers which is strength
for Rainbow Illusion.

Marketing 4
 The major strength of Rainbow illusion includes data reconciliation which is prepared
by the assistant manager. The data reconciliation is term as typically used to define a
verification phase during the migration data where the target data is compared with
the actual data (Gitman, Juchau and Flanagan, 2015).
 In the case study, this has been found that data processing department returns a
weekly commission and sales activity report to the manager for the review. Over here
the data processing is done by the corporate headquarters by considering the cash
register tapes, invoice of sales and return slips. Thus, this is one of the major strength
that is availed by the Rainbow illusion. The below given is the diagram of the data
processing which is followed by company: -
(Source: Hall, 2015)
Problems that
Rainbow illusion has
avoided
This section shows that
for the each identified
strengths what all
problems has been
avoided by them

Marketing 5
majorly for incorporating the strengths available in system with motive to control sales
transactions.
From the Strengths, the major problems which are avoided by the Rainbow illusions include:
-
Strength 1
 Effective work management: - The employees who are appointed by company are
young due to which they are efficient in doing the work and quickly finish their work.
The people who remained in queue for availing services can quickly get revert for
their work which enhances their satisfaction with company (Ward and Calabrese,
2018).
 Saves cost: - The cashier as well as sales personnel are appointed by company on
payment based on hourly wage plus a commission as per sales volume. This makes
company to saves the cost as they will make the payment based on number of hours
they actually do the work and leads to the health competition in which they try to
increase the volume of sales. Thus, this avoids the issue of the high cost which is
generally paid by the Rainbow illusion.
Strength 2
 Eliminate Training to new employees: - The use of the unsophisticated cash register
will help the company to avoid any sort of issues related to the training to the new
personnel. The cash register is basic due to which every employee has the knowledge
about this which makes them to easily get adjust with company in recording the sales
and this reduce the need of training and any sort of issues for Rainbow illusion related
to this strength.

Marketing 6
 Quick service: - This strength helps company to provide quick service which is
essential for company in market that is possible because of the effective cash register
that keeps the essential records (Garrison, Noreen, Brewer and McGowan, 2010).
Thus, it will take very less time to provide the details to the customers who come to
avail the services.
Strength 3
 Reduce faults: - The salesperson of the company offers the invoice to the cashier as it
helps them in reviewing the entire transactions related to the sales which can reduce
the issue of the faults that might be done by the cashier.
 Easy approval on sales amount: - The cashier of company remains responsible for
getting credit approval on charge sales as well as providing the approval on sales
which is paid through cheque (Mitra, 2016). Thus, when the cashier gets invoice they
can easily check amount of sales and approve same which reduce time.
Strength 4
 Prevents incorrect projection for revenue: - The issue of return slip supports the
company in preventing the incorrect estimation for the revenue amount (Bragg, 2016).
While calculating the revenue, Rainbow Illusion Company will consider the revenue
slip so that they can check the actual profit that will be easily possible with the
separate slips of revenue.
 Leads to transparency of operations: - The operations of Rainbow illusion will
become transparent with the issue of return slip issues by the company. The cashier,
assistant manager and manager of the company can review the returns which is
possible with different return slip.

Marketing 7
Strength 5
 Detect accounting errors: - Daily reconciliation record is essential for the company
to be maintained as this is the only way through which assistant manager of Rainbow
Illusion can detect the errors which generally occurs. These errors include issue with
double payments, subtraction errors, addition, omission of transaction and lost checks
(Ayres, 2018). Thus, this will help the Rainbow illusion to perform the operations in
effective and efficient manner.
 Prevent overdraft: - Rainbow illusion can avoid the issue of overdraft as bank
reconciliation prevents overdraft. The bank reconciliation regularly helps the
management to postpone the amount required to pay that might lead to the overdrafts
of company, bounced checks as well as insufficient fund interest and fees (Helstrom,
2019). Rainbow Illusion helps the company operating on the very low cash reserves.
Strength 6
 Resolve issue of accuracy and reliability: - Data processing is strength of the
company which deals with the issue of accuracy as well as reliability. In this
processing, the facts and figures are collected which is processed as its leads to
accuracy. This accuracy of the data makes the company to rely on the data which is
being processed (Phillips, Libby and Libby, 2015).
 Deals with issue of decision-making: - Rainbow illusion makes use of the data
processing while making the decisions. The company will not face any sort of issues
for searching the accurate data, getting summary of data in single click will avoid
delay. This means data processing helps the managers to take the right steps.
 Avoid issues in report making: - The data processing prevents issues in report
making which is essential for the operations of company. The data can be processed

Marketing 8
by the company through the electronic mode which helps them to get quick results
(Planning Tank, 2019). The processing of data helps and avoids the issues while
making report which is possible with the effective accurate and reliable.
Situational pressures that would increase likelihood of fraud
In this section, the major discussion is related to the situational pressures that might lead to
the rise in likelihood of fraud. The fraud will create the impact on the operations as well as
working of Rainbow Illusion. The situational pressures include: -
Unrealistic budget pressure: - Rainbow Illusion Company head can come with unrealistic
budget which is required to be considered by the sales person and cashier. The budget can be
prepared for sales, cash and bank which lead to pressure on salesperson and cashier. The
salesperson as well as cashier needs to work according to the budget which makes them to get
indulge in fraud. These pressures situational occur when the headquarters arbitrarily identifies
the objective related to profit and budget without considering the actual situation of company
(Lanen, Anderson and Maher, 2013). In the case of Rainbow Illusion, the top management
should consider the actual situation before making any budget.
Financial pressure resulting from bonus plans that depend on the short-term economic
performance: - This sort of pressure is majorly acute when the bonus is considered as
essential component of the individual overall amount of compensation. In company rainbow
illusion, situation can take place with the change in the bonus plans which directly affect the
work done by the young sales person as well as cashier of company. This means there is more
opportunity of the fraud from the personnel working with the company. Thus, the managers
should consider the situation before making the changes in the bonus plan for performance.

Marketing 9
Reason for businesses to install a distributed computer system rather than centralized
one
In the dynamic world, most of the companies the install distributed computer system instead
of the centralized system.
Centralized system: - The centralized systems are those systems that use server architecture
in which more than one client nodes that are straight away linked with the server of client.
This system is majorly used type of system in most of the companies where the clients send
the request to business serve and get the response (Ogrodski, 2013). The above image shows
the centralized system: -
(Source: Karmakar, et al 2011)
Distributed systems: - The distributed systems are considered as the computer system in
which the multiple computer systems are performing together effective as single unit (Ceri,
2017).

Marketing 10
(Source: Karmakar, et al 2011)
Benefits of distributed computer system over centralized one
Speed: - Implement parallel processing helps the companies to achieve the maximum speed
on the individual problem. The speed of the distributed computer system can achieve high
speed than the centralized. This high speed is effective and required for the quick decision
and also for improving the productivity that can meet the needs of company.
Inherent distribution: - The implementation of the distributed system leads to the
distribution activities which include finance, banking, operations, marketing and many others.
This makes the every department connected with each other which makes the work simple as
well as integrated (Melendez, 2018).
Reliability: - In the distributed system, if one of the systems gets crashed then the entire
system can survive which is not possible in centralized computer system. Thus, this allows
the company like Amazon, Flipkart, Woolworths, and Tesco to continue with work and try to
accomplish their goals as well as objectives. Meanwhile, the companies deal with the crash
system but by continuing the work. On the other hand, if the center system gets crashed in
centralized computer system then entire departments will get affected.

Marketing 11
Resilient: - This system can be more resilient, more powerful as well as speedier while
comparing it with the centralized computer system but they need more careful as well as
maintenance for the company and their issues might be incorrect (Wu, 2017).
The above advantages make the companies to implement the distributed computer system
over centralized one. Along with this, the system makes all the company interlinked with
each other due to which the companies can accomplish the goals and objectives.

Marketing 12
Conclusion
In the end, this can be concluded that this assessment is based on the case study of Rainbow
Illusion whose case is discussed. Initially, the report includes strengths of Rainbow Illusion
system majorly in terms of controlling sales transactions. These strengths help company to
perform operations and financial activity in effective manner. Further, it shows the major
problems that are avoided by Rainbow illusion considering the every strength of the
company. This means that strength of company helps them in avoiding any kind of issues
which contribute in accomplishing the goals. Along with this, there is discussion on the
situational pressure which might lead to the fraud. The major pressure that has been
witnessed is related to unrealistic budget pressure and financial pressure resulting from bonus
plans. It shows the reason due to which some of the companies are installing the distributed
computer system instead rather than the centralized one. There are different reasons due to
which company prefer distributed computer system which makes them to accomplish goals
and objectives.

Marketing 13
References
Ayres, C. (2018) 10 Advantages and Disadvantages of Bank Reconciliation [Online]
Available from: https://connectusfund.org/10-advantages-and-disadvantages-of-bank-
reconciliation [Accessed on 29th August 2019]
Bragg, S.M. (2016) Cost accounting fundamentals. Colorado, CO: Accounting Tools.
Brealey, R.A., Myers, S.C., Allen, F. and Mohanty, P. (2012) Principles of corporate finance.
Tata McGraw-Hill Education.
Ceri, S. (2017) Distributed databases. Tata McGraw-Hill Education.
Garrison, R.H., Noreen, E.W., Brewer, P.C. and McGowan, A. (2010) Managerial
accounting. Issues in Accounting Education, 25(4), pp.792-793.
Gitman, L.J., Juchau, R. and Flanagan, J. (2015) Principles of managerial finance. Pearson
Higher Education AU.
Hall, J.A. (2015) Information technology auditing. Cengage Learning.
Helstrom, K. (2019) Benefits of Bank Reconciliation [Online] Available from:
https://smallbusiness.chron.com/benefits-bank-reconciliation-55857.html [Accessed on 29th
August 2019]
Karmakar, S., Rogers, J.C., Vitanov, K.B., Bibr, V., Shenfield, M. and Goring, B.R.,
BlackBerry Ltd (2011) Method and system for centralized user notification and application
execution control. U.S. Patent 8,082,292.

Marketing 14
Lanen, W., Anderson, S. and Maher, M. (2013) Fundamentals of cost accounting. McGraw-
Hill Education.
Melendez, S. (2018) Advantages & Disadvantages of Distributed Systems [Online] Available
from: https://www.techwalla.com/articles/advantages-disadvantages-of-distributed-systems
[Accessed on 29th August 2019]
Mitra, A. (2016) Fundamentals of quality control and improvement. John Wiley & Sons.
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.
Planning Tank (2019) Importance of data processing [Online] Available from:
https://planningtank.com/computer-applications/importance-of-data-processing [Accessed on
29th August 2019]
Shoup, C. (2017) Public finance. Routledge.
Ward, D.M. and Calabrese, T. (2018) Accounting fundamentals for health care management.
Jones & Bartlett Learning.
Wu, J. (2017) Distributed system design. CRC press.