Analysing the Accounting Information

REPORT FOR THE EVALUATION OF PROCESSES,RISKS AND INTERNAL CONTROL FOR REVENUR CYCLE

TO THE CHIEF EXECUTIVE OFFICER

HARDA FASHION

Strengths in HARDA’S system for controlling sales transactions

1. Each 20-store chain of HARDA fashion has experienced full time staff members.

2. Full time staffs are assisted with a cashier and sales assistant.

3. Cashier and sales assistant are paid incentives on hourly basis and given commission based on volume of sales.

4. The sales assistant prepared and forwards sales invoice to the cashier who reviews the same and enters in the cash register. Returns are handled exactly in the opposite manner.

5. The cash register mechanically validates the sales invoice and automatically assigns a consecutive number and the cashier sequentially orders the sales invoices.

6. Assistant manager prepares a daily reconciliation report for the managers review and there after the manager forwards this to processing department. Returns a weekly sales and commission activity report to the manger for the review.

Problems avoided by HARDA fashion by in controlling the strengths in the system for controlling sales transactions:

1. Each and every store of the HARDA fashion has the experienced full-time staffs, which makes the activities of the store to be controlled and well maintained in professional manner. Because the staffs are experienced and also, they are in full time employment, the possibility of making any errors are eliminated and their attention will be available at all times.

2. Cashier and the sales assistant who are under the full-time staffs have an opportunity to learn and seek information and work practices ,techniques from the staffs. They can also get their work evaluated by the staffs.

3. As the cashier and salesperson are paid on hourly basis and given commission based on volume of sales, these people will be more active and hard working so as to increase the sales volume. This helps the store to achieve high turnover of sales and also, they will be willing to work overtime as they get paid.

4. Work done by the sales assistant are reviewed by the cashier and this eliminates the possibility of not detecting any errors because an error done by one will be identified by the others. Also, this is a case of delegation of work which is very helpful in eliminating the burden of work on one person.

5. The cash register is validated mechanically which makes it more reliable and accurate. The automatic assigning of consecutive number for the invoices are helpful to identify any omission of invoices.

6. Preparation of daily reconciliation report helps to identify if there is any mismatch in the sales, cash and bank balances. The weekly sales and commission activity reports helps the manager to overlook the functioning of the store.

Situational pressures in a company like HARDA fashion that would increase the likelihood of fraud:

1. Unrealistic goals and performance biased compensation tempt the workers to artificially boost revenue like dependency up on the is more as compared to other people which might be risky if the cashier wants to commit fraudulent activities.

2. There might be the conflict between the staffs because of opinion taken by one may not be accepted by the others. This can create a weak relationship between the staffs. Competition with rivals are good but competition within the business or between staff can often be a threat for company.

Distributed computer system v/s centralized system.

Many companies are trying to find the application of distributed computer system because:

· Every node makes its own decision and are independent of each other.

· The final behaviour of the system is the aggregate of the decisions of the individual nodes.

· There is more than one central unit which can listen for connections from other nodes.

· One central node failure does not cause the whole system to failure ,while in centralised system, if one node fails the whole system fails.

In centralized system , all the calculations are done on one particular computer system, however the calculation is distributed to multiple computers in a decentralized computer system which join forces to solve the task.