ASSIGNMENT
Analysing the Accounting Information System
of HARDA Fashion.
HARDA Fashion sells ready-to-wear fashion
clothes to teenagers. The company has a 20-store chain concentrated in the
north-eastern part of the United States of America. Each store has the
experienced full-time staff consist of a manager and an assistant manager. The
full-time staff is paid a fixed salary. The full-time staff is assisted with a
cashier and a sales assistant who have comparatively less experience. The
cashier and sales assistant are paid hourly wages plus the commission based on
the volume of sales. HARDA Fashion uses unsophisticated cash registered with
four-parts sales invoice to record each financial transaction. These sales
invoices for the sales transaction irrespective of the payment type. The
record-keeping starts with the sales assistant on the sales floor. The sales
assistant fills the sales invoices manually by providing the following
information:
1.
Records his or her employee number.
2. Enters the transaction details including
clothes item number, description, quantity, and the unit price.
3. Totals the sales invoice.
4. Calculates the discounts manually when
appropriate.
5. Calculates the sales tax.
6. Finalise the sales invoice after
calculating the grand total.
The sales assistant then forwards the sale
invoice to the cashier and keeps one copy in the sales book.
The cashier reviews this sales invoice and
enters in the cash register. The cash register mechanically validates the
invoice, automatically assigning a consecutive number to the transaction. The
cashier is also responsible for getting credit approval on charge sales and
approving sales paid by cheque.The cashier gives (1) one copy of the invoice to
the customer, (2) retains the second copy as a store copy, and (3) the third
for a bankcard, if a deposit is needed. Returns are handled in exactly the
reverse manner, with the cashier issuing a return slip.
At
the end of each day, the cashier sequentially orders the sales invoices and
takes cash register totals for cash, bankcard, cheque sales, and cash and
credit card return. These totals are reconciled by the assistant manager to the
cash register tapes, the total of the consecutively numbered sales invoices,
and the return slips. The assistant manager prepares a daily reconciliation
report for the store manager’s review
The manager reviews cash, cheque, and
credit card sales and then prepares the daily bank deposit (credit card sales
invoices are included in the deposit). The manager makes the deposit at the
bank and files the validated deposit slip.
The cash register tapes, sales invoices,
and return slips are forwarded daily to the central data processing department
at corporate headquarters for processing. The data processing department returns
a weekly sales and commission activity report to the manager for review.
Required:
Prepare a report to Chief Executive Officer of
HARDA Fashion to evaluate its processes, risks, and internal controls for its
revenue cycle. In your report, you need to include the following items:
1)
Identify six strengths in HARDA’s system for controlling sales
transactions.
2) For each strength identified, explain
what problem(s) HARDA Fashion has avoided by incorporating the strengths in the
system for controlling sales transactions.
3) Identify two situational pressures in a
company like HARDA Fashion that would increase the likelihood of fraud.
4) Explain why some companies would choose
to install a distributed computer system rather than a centralised one.
Assignment Structure:
The report should include the following
components:
·
A table of contents
·
Executive Summary
·
The introduction.
·
Body of the report with
sections to answer the above issues and with appropriate section headings
·
Conclusion and recommendations.
·
List of references
·
Include a minimum of ten (10)
references, at least five (5) from peer reviewed journal relevant to the unit.
The report should
be grounded on relevant literature, and all references must be cited appropriately
included in the reference list using Harvard referencing style.
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