HI5019 Accounting Information System of HARDA Fashion Assessment 1 Answer
Accounting Information System of HARDA Fashion
HARDA fashion follows an unsophisticated system of sales register that allows the entity to manage all transaction in an efficient manner. The members allocated to handle regular sales transactions are energetic and active to handle the work pressure and to fulfill the requirement of the customers. There are six main strengths of the system that makes HARDA follow the accounting activities in an integrated manner. The recommendations are provided for HARDA to enhance its system efficiency.
A.I.S. or accounting information system plays a significant role in tracking ten regular accounting activities of a firm. The system mainly involves storage, collection and processing of the accounting data and financial transactions of a firm. It can be a computer-based method or an integration of manual and technology-based method to look after the overall accounting activities. A.I.S. mainly include data such as employee information, customer information, transaction information, expenses and revenue, and tax information. It specifically includes invoices, sales orders, financial statement, inventory, payroll, and other expenses and revenue sources of the company. The report is formed addressing the C.R.O. of HARDA fashion to provide information regarding risks, internal controls and process of A.I.S. in HARDA. In the present context, the A.I.S. of HARDA fashion is considered to show its activities related to sales transactions. Following the aim of the study, the report will reflect the strengths of HARDA's accounting system; problems occur in the sales transactions and its transparency and situational pressures that HARDA may face in future.
Identification of strengths of the sales transaction system of HARDA
The accounting system of HARDA fashion is really great because it follows several steps for secured information storage related to sales transactions. The major six strengths of its system to control sales transactions are discussed below:
1. The main strengths of the system are its unsophisticated management of cash register that includes four-part sales invoice for keeping the record of the transaction. The record-keeping of each transaction starts with recording the employee number who is first manually making the sales invoice, and it ends with finalizing the sales invoice with grand total calculation. Between the first and last step, there are other steps which are followed in a detailed manner to maintain transparency. The steps are entering details like item, the number of the product, quantity, description, and unit price, the sum of the sales invoice, calculation of discount and sales tax. Each of the steps is carried out in a step by step manner to avoid the negligence of one step. Hence, it can be said that the cash registry system of HARDA is effective to make the sales transactions valid and transparent.
2. The sales assistant and the cashier is paid on an hourly basis, and extra incentives are also provided to them based on sales volume. Both of them are less experienced compare to the other members of the store, but the incentive-based salary payment encourages them to work more dedicatedly. Both cashier and sales assistant are young, so they are able to take the pressure of cash register system. They handle the process in a better way and in an active manner.
3. The sales invoice is reviewed by the cashier after manual entry by the sales assistant. The review by the cashier ensures double verification of the sales invoice, which is a crucial thing of the sales transaction process. Double verification always considered as a safety measure for the accounting process of the firm that is present in the system of HARDA.
4. While returning the return slip to the customer, the exact same procedure is followed that was followed during the cash invoice. The return procedure can be said as the reverse thing of the previous procedure. Hence, it can be said that following the same thing while returning the slip to a customer will help the entire management of the accounting system to work within an authentic system. Following the same procedure during returning the slip will help management to keep minute detail of every sales transaction.
5. Weekly commission and sales activity report are sending to the manager every week for reviewing the report. Weekly review by the manager helps the company to track limited data on time rather than gather larger accounting data. Review of data on a weekly basis ensures data management and helps the company to avoid big losses or mismanagement.
6. The assistant manager of the store prepares the reconciliation report on regular basis and checks each sales activity happened on an entire day. Daily review of the sales transaction activities will help the entity to be assured about the regular sale activities in the stores. During the preparation of the reconciliation report, the assistant manager again reviews the entered sales invoice that is verified by the sales assistant as well as the cashier.
Problems avoided by HARDA while incorporating the strengths.
The strengths mentioned about HARDA’s system helps the entity to mitigate some problems regarding the sales transactions. The problems mitigated are shown below in accordance with the strengths of the system:
1. The problem that is avoided with marinating the unsophisticated cash register is the lack of training provided to the staffs. The sales assistant and the cashier have less experience compare to the other members in the stores, so further training is required to maintain excellent sales transactions. Till then, the stepwise method will help them to follow the exact things of cash registry. The sales assistant and cashier cannot avoid one step during the completion of a sales transaction, so the lengthy procedure helps them to avoid minor mistakes and double verify the transactions. The unsophisticated process helps the team to provide quick service to the customers with lesser mistakes (Trigo, Belfo and Estébanez, 2016).
2. The problem mitigated by allocating young sales assistant is the faster service provided to the customers. Many times, the problem of slow queue management occurs in the lengthy process of sales transactions. However, in the case of HARDA's system, appointing young sales assistant in queue management makes the work faster (Al-dmour et al., 2017). The incentive-based and hourly paid system for sales assistant and cashier promotes healthy competition in the store and encourage them to work better.
3. The review of sales invoice by the cashier distributes the workload on employees, and let them enjoy their work in a hassle-free manner. Less workload helps the employees to focus on specific works and maintain accuracy on the works they are doing. The double verification helps in rectifying the mistakes that are done by the sales assistant during sales entry.
4. The returning process of sales slip to the customers are exactly followed by the same process as sales entry. Basically, the process is followed in a systematic manner, which maintains a clear conception of the sales process by both the sides- customer and the store. The return policy helps the management to resolve the issues of the customer (Khan, 2020). Along with that, it is also helpful in terms of maintaining proper recording of sales activities.
5. The store manager reviews the sales transactions on a weekly basis, which helps to overlook all the store functions. The weekly review of the manager helps to identify potential weakness and strengths of the store operations through the sales activity. The weekly review also helps in staff and inventory management, too (Vovchenko et al., 2017).
6. The daily reconciliation report allows the assistant manager to look after all the regular sales activities. The regular review helps to identify the mismatch in sales immediately and to resolve it as soon as possible. The regular reconciliation report helps to track the stocks and inventories for upcoming days.
Two situational pressures that can increase the chances of fraud
Sometimes fraud can be happened in the organization due to the unsatisfactory condition faced by the employees, or excess pressure of workload has given to them. Two common situational pressures that may lead the employees to commit fraud are:
1. The first type of fraud that can be done by the employee due to the external pressure, in which the senior personnel of the employee will pressurize the employee to commit the fraud or to be a part of a fraud. In this type of fraud, both monetary and non-monetary fraud can be done to the entity (Said et al., 2017). In the context of this fraud, the inventory can be mismatched with the actual number of products or the sales transactions can be led in the wrong way, which can hamper the revenue of the company.
2. The second type of fraud that can be done by an employee is to take revenge from the entity because of any reason. The reasons can be bad treatment with the employee, unsatisfactory job condition, and unsatisfactory salary package in terms of work pressure (Ndurumo, 2018). These situations create external pressure in the mind of an employee and lead him or her to commit fraud.
The situational pressures force the employees or other personnel to commit fraud in the organization, so it is important to maintain proper engagement with the employees to avoid such fraud.
The reasons for installing a distributed computer system
The distributed computer system is basically the groups of computers that are linked with each other and works together. The ultimate information provides to the user is single information, which is the interpretation of the entire process. The distributed computing system involves multiple computers that work together using different software components (Open Cirrus, 2018). The computers used in a distributed computer system are basically located close to each other with the help of the local network or WAN (wide area network). Currently, most of the retail sectors and other entities use distributed computer system because it is easier to use and time-saving. It saves most o0f the time that is required in the traditional accounting system. It does not involve any human fraud, so it can provide accurate information and maintain transparency.
On the other hand, the centralized system connects the entire system with a central node and the client nodes. The main limitation of a centralized system is it has a certain limit exceeding which it cannot scale up the vertical operations. The certain limit is the main disadvantage of the system because at this point, increasing the software or hardware capability will not work to increase its performance. During the peak season, the use of the centralized system increases, which cannot be tackled by the system (Hooda, 2019). Hence, it can be said that it is failed to control excessive traffic. Although distributed system involves difficult designing and achieving consensus, it is efficient in terms of controlling heavy traffic, and it has a high geographical spread. Hence, the distributed system is efficient for retail sectors like HARDA.
The accounting system of HARDA is lengthy, but it involves a severe process to complete the sales transactions. The daily and weekly review by the assistant manager and the store manager ensures the transparency of sales volume as well as the cash transactions. The sales transaction process has followed many steps, but it does not affect the delivery time to the customers due to the fast working of the sales assistant. The strengths of the system in terms of sales transaction help the entity to maintain better management of the inventory as well as the sales volume.
The first suggestion for HARDA is to maintain good employee engagement with the workers to maintain a fair and sustainable work environment. By enhancing the work environment, the employees will feel more engaged with their workplace, which will maintain transparency, integrity and honesty in their work. It is important to make them satisfied with their work by treating them well, providing incentives on better performance, and divide the workload accordingly to reduce the work pressure (Putra and Yati, 2018). The equal environment to the employees will make them feel special from the end of the entity and will avoid the situational pressures to commit fraud.
The other suggestion is related to the system of HARDA. However, the system of the entity is better to control challenges, and its strengths ensure its success. The involvement of the distributed computer system will help the entity to maintain a more integrated system of accounting, and it will save the time that requires a sales transaction. It will be helpful, especially during peak season, when the workload is high due to the increase in sales (Lestari, Sofianty and Sukarmanto, 2018). The distributed system will better control the traffic during peak season and can provide services at a wide area.