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Smith's Market Case Study
Smith's Market Case Study
Background
In 1989, Robert Smith’s opened a small fruit and vegetable market in Bethlehem,
Pennsylvania. Originally Smith sold only produce grown on his family farm and orchard.
As the market’s popularity grew, however, he added bread, canned goods, fresh meats,
and a limited supply of frozen goods. Today Smith’s Market is a full range range
farmers’ market with a strong local customer base. Indeed, the market’s reputation for
low prices and high quality draws customers from other Pennsylvania cities and even
from the neighboring state of New Jersey. Currently Smith’s Market has 40 employees.
These include sales staff, shelf stockers, farm laborers, shift supervisors, and clerical
staff.
Viewed in this way his market is a well-known of all in the city of Bethlehem. With
this strategy it enables the company to become a global leader in the electronics
distribution industry. However, Smith has noticed a decline in profits and sales, while his
purchases of products from resale have continued to rise. Although the company does
not prepare audited firm to assess his company’s sales procedures and controls, Smith
noticed that he must create a solution for his market. A revenue cycle procedures
which described in Part V Alternative Causes in internal controls with Data Flow
Diagram and System Flow Chart is one of the solution in this scenario.
deal with these pressures (Gapenski, Vogel, and Langland-Orban 1993). Due to the
complex interrelations among purchaser, supplier and payers, which characterize the
Smith’s Market Accounting System, the way Robert Smith manage revenues and
accounts receivable differs substantially from that in firms in most other industries.
In this study it shows that the mode of payment by the cash, check or credit card
to the clerk is having a deficiency for the clerk has many roles in a market and he must
submit his collection every end of the day in to the main branch. Smith remained
unaffected in response to the incident. Smith’s Market need to maintain and stabilize revenue
streams and improve collections has thus sparked the creation of a new industry of
consultancies that specialize in helping their clients improve their performance at managing the
revenue cycle. Examples include Hourly Pay, CareerBuilder and Payscale to name but a few of
Take down electronic channels, basically these are services related to the Accounting
One of the biggest problems faced by Smith today is a huge range of products
which includes bread, canned goods, fresh meats, and a limited supply of frozen
goods, which make it difficult to maintain inventory and even it complicates the
Having this market deficiency we can here the different point of view of
Smith’s Market. It includes Robert Smith, consumer and the staff and clerk.
RELEVANT FACTS
that, even if the control operates as designed, the control objective would not be
met.
operate as designed or when the person performing the control does not possess
combination of deficiencies, in internal control over financial reporting, such that there is
financial statements will not be prevented or detected on a timely basis. The Smith’s
Market in Bethlehem, it was clear that his internal control was not in place. They must
pay attention of what happen in a market in order to find solution in there Accounting
Department.
new provisions related to internal control over financial reporting. Section 404 of the Act requires
company management to assess and report on the effectiveness of the company's internal control. It
also requires a company's independent auditor, registered with the Public Company Accounting
Segregation of duties is a basic, key internal control and one of the most
difficult to achieve. At the most basic level, it means that no single individual
requires collusion of two or more persons, and 2) make it much more likely that
innocent errors will be found. If a single person can carry out and conceal errors
responsibilities.
Correct Errors Promptly
detected at any stage of a process should receive prompt corrective action and
Credit
Check Affix
Signature
File
Cash Receipt
Cash or Card Receipt
Check Check Receipt
Process Sales Log, Tally, Record
& Deposit
Cash Receipt
Credit Card Receipt
Check Receipt,
Deposit Slip
Cash Receipt or
Credit Card Total
Receipt Sales
Bank
Customer
General Ledger
General Ledger