The purpose of this paper is to assess the current accounting and information technology issues that the CIT Group Company is experiencing and to build an innovative solution for the off-lease transaction process. The report will concentrate on the customary transaction cycle operations, such as handling orders, financing approval, shipping, payment, and revenue collection, as well as actions related to sales, marketing, and accounting. The report will also make a brief comment on the potential effects on the expenditure and inventory cycles of implementing the specified hardware and software needs. The paper will highlight these hardware technologies, the key users, and their benefits to the company. The discussion and evaluation of the proposed implementation plan and a Recommendation of Appropriate and New Internal Controls for CIT will also be discussed in this report. The objective of this report is to give the company’s board of directors a thorough review of its current systems and suggestions for a new one that would increase the efficacy and efficiency of the off-lease transaction operation.
Assessment of Current Threats and Their Effect on Management Information
The case study highlights several issues with the off-lease transaction process as well as the CIT Company’s present accounting and information technology systems. These issues have a big impact on management data and general company performance. Officials have been unable to efficiently manage operations, which has resulted in reduced morale, reduced flexibility, operational ineffectiveness, conflicts at work, and staff terminations due to poor operational systems (Lipaj and Davidaviciene, 2013). According to the case study, the CIT Company’s current systems are insufficiently integrated, which causes several problems that have an impact on accounting and transaction procedures. As a result, processing orders, sending packages, and billing may be delayed or mistaken due to data mismatches between the sales and accounting departments’ records of customers. For instance, the sales staff may need to verify the inventory levels to see if the items are still available after a consumer placed an order. The sales staff may need to get in touch with the warehouse staff to confirm the items’ availability if the records of stock are out of date. Hayley was unaware that the £82,125 payment for 565 computers for the University of East Wales was intended for 365 computers, with the remaining computers being routed to Venture Fitness Company by Kelvin due to the lack of a centralized database.
Additionally, it is challenging to check the progress of orders, shipments, and billing due to a lack of departmental system connectivity. For instance, Hayley observed unauthorized equipment returns to the remarketer when Kelvin was away from the office. She also noted mixed-up warehouse and lease business details and addresses in addition to the unapproved returns. Due to this problem, the PTG firm received a fax asking them to return the rented equipment, which they did and then gave to a gym. A decentralized approach also resulted in CIT sending orders to warehouses and other businesses that were not authorized. Hayley discovered that ERemarketing Company has been supplying their business with unauthorized office supplies.
The case study also draws attention to the problem of manual processing, which leads to ineffective and mistake-prone operations in the enterprise’s present system. The printing and mailing of agreements, billing information, and purchase requests, as well as the manual handling of credit authorization and payment receipts, are just a few examples of the manual processes used by the company in its off-lease transaction process. For example, under the existing setup, clients must physically sign a physical copy of the deal and mail it back to the business. The leased equipment must be returned, according to written and faxed instructions, according to PGT. The document must be sent through the mail system, which takes time and increases the possibility of mistakes like missing or incorrect information. Additionally, following her visits to the Fitness Centre and E-Remarketing, Hayley concluded that those businesses could not be suitable resellers for CIT’s equipment. Instead of employing automation, she went to Kevin’s office and placed the faxed copy of the return authorization on his desk. The sales staff must manually assess customer credit applications before sending them to the finance department for processing. Credit approvals are also done manually. A payment invoice is shown being passed by Harley to the accounting division for payments. Due to the numerous negotiations that were being run about the supplies of computing devices to businesses, confirmation of invoices was required. From this manual billing, Hayley discovered that CIT was being charged for shipping to the unapproved company in addition to the enormous quantities of equipment going to the unapproved company. It was observed that CIT rarely covered shipping expenses. This procedure not only takes a lot of time but also raises the possibility of mistakes, like granting a credit application even though it does not fit the business’ credit standards. The manual procedure is more cumbersome and prone to mistakes, such as wrong billing sums or inaccurate customer data than automated processing (Bataev and Davydov 2020). Additionally, because there is no instantaneous monitoring of invoices due to a lack of automation, it is challenging to keep track of unpaid invoices and follow up with unpaid clients.
A few cybersecurity vulnerabilities that exist in the business’s existing information technology system are highlighted in the case study. The absence of encryption for private consumer and financial data is a serious problem. Data is scrambled via encryption, a crucial security feature, to prevent unwanted parties from reading it. Sensitive data is susceptible to fraud, interception, and misuse in the absence of encryption (Jan et al 2020). The absence of appropriate access controls represents another cybersecurity concern. Employees have access to confidential financial details that they do not require to carry out their job responsibilities, according to the case study. As a result, there is a possibility of insider threats, in which a worker who has access to critical data mistakenly or purposely gives it to unauthorized individuals. Finally, there is a cybersecurity risk due to improper backup and recovery practices. The case study makes no mention of the company’s use of adequate backup and recovery procedures. CIT runs the risk of losing crucial data in the event of a system failure or cyberattack due to the lack of an effective backup and recovery mechanism. Without a backup procedure, the organization may not be able to restore its data in the event of an emergency, resulting in large operational and monetary losses. Additionally, the absence of a comprehensive backup procedure may make it more difficult for the business to meet legal and regulatory obligations, which could lead to fines and penalties (Smedinghoff, 2015). Finally, a lack of a good backup procedure may result in prolonged system outages for the business, which may be detrimental to output, client happiness, and the company’s reputation. Customers who are unable to complete transactions may become dissatisfied and lose faith in the business, which can also result in revenue losses.
Recommendation of Appropriate and New Internal Controls
The following measures may be taken into consideration to modify the off-lease transaction cycle process and include appropriate internal controls that comply with internal control frameworks. The current off-lease transaction cycle in CIT Group has several issues linked to a lack of automation, manual processing, and inadequate utilization of available resources. To address the above issues facing the company, the following revisions to the off-lease transaction cycle may be considered.
Order processing in CIT Company needs to be modified. The entire process requires automation. The company can achieve this by implementing an electronic order system that can capture client orders automatically. The CIT Group ordering process involves multiple manual steps like faxing and emailing to purchase and place orders. Operational issues such as misleading order information, inaccurate client details, and wrong billing emerge due to this. According to Tripathi and Gupta (2021), electronic ordering systems streamline business operations, improve client experience and increase transaction loads. Additionally, implementing the electronic ordering systems can lead to reduced abandoned orders in CIT. Finally, the automated ordering system will help reduce manual errors and improve the efficiency of the ordering process. Managers and sales teams can get real-time tracking and visibility of placed orders by their clients.
Additionally, the invoicing process in the company needs to be revised. The CIT Group invoicing process is done manually. For instance, in the case study, Hayley passes a copy of an invoice to be processed by the accounting department. As a result, invoices and payments were mixed up and the wrong company was invoiced. An automated invoicing system is ideal for CIT Group. Electronic invoicing can be designed to generate invoices automatically based on the orders placed in the ordering system (Williams 2017). The new system will help reduce manual errors and improve efficiency in the invoicing system. The revisions to the off-lease transaction cycle mostly in ordering and invoicing will improve the efficiency and effectiveness of CITs operations. The recommendations for automation of key processes will reduce errors, and improve business operations and effectiveness.
As CIT operations are examined, the upcoming internal controls should be implemented. Segregation of roles, authorization, monitoring, and physical controls are a few of the crucial internal controls. Every phase of the transaction process should be handled by a distinct CIT Group team, and no single person should be expected to finish the full transaction process by themselves. Additionally, only authorized personnel can monitor, approve transactions, and modify the system. To identify any potential errors or fraud, the company’s business and transaction cycle should be regularly examined. To guarantee that all activities and transactions inside CIT Group are appropriately documented, tracked, and secured, physical controls should also be put in place. To offer guidance on business risk oversight, fraud prevention, organization operations, and internal controls, CIT Group may also use the COBIT 5 and COSO models. The COBIT 5 framework can help CIT Group to maximize its IT expenditure and assets while coordinating its IT objectives with corporate objectives. The framework helps establish and put in place efficient IT controls including management, access, and security controls (Hanafi et al 2020). These measures are required to guarantee the accuracy, security, and privacy of customers, warehouses, organizations, and financial data. The COSO framework can also be utilized for internal control design, implementation, and evaluation. The framework can be used by CIT Group to evaluate the efficiency of their internal controls and guarantee accurate, timely, and trustworthy financial reporting. For the off-lease transaction process, such as credit approval controls, shipping controls, and cash collection controls, which are required to ensure the accuracy and comprehensiveness of financial, leasing, and sale transactions, the COSO framework is helpful in the design and execution of efficient internal procedures in business organizations (COSO 2016). By putting the frameworks into practice, CIT Group can have efficient internal controls established to safeguard it against risks relating to money and information, guarantee the precision and comprehensiveness of accounting data, and adhere to legal obligations.
Potential areas of concern for the auditors
The auditors may have several reasons to be concerned in this instance. The precision and thoroughness of financial data are the primary areas of concern. According to Ndubuisi et al (2017), manual operations may raise the likelihood of errors or inaccuracies in the fiscal data. As a result, financial reports may be inaccurate or incomplete, which could affect the auditors’ capacity to render a reliable assessment of the financial accounts. Compliance with regulations and legislation is the other topic of concern. The danger of non-compliance with pertinent laws and regulations may also increase as a result of CIT’s manual processes. This might involve problems like inaccurate tax calculations, a failure to adhere to data protection laws, as well as other challenges with legal and regulatory compliance. Information security is another consideration for auditors. The danger of data and information leaks and other security risks might also rise when manual processes are used (Hamzah et al, 2028). This can involve the possibility of unlawful access to private financial information as well as the possibility of data loss as a result of human mistakes or technical difficulties. Auditor consideration should also be given to Internal Controls. Manual procedures used by the company and a lack of system integration could be signs of lax internal controls. To reduce the risk of fraud, mistakes, and misstatements, auditors may need to evaluate the effectiveness of internal controls, spot loopholes, and make improvement suggestions (Younas and Kassim 2019). Lastly, auditors should prioritize preventing fraud. The absence of automation and effective controls in the CIT’s procedures might also make fraud more likely. Without automated safeguards, for instance, there may be a higher danger of fraudulent or unauthorized transactions getting unnoticed (Amin et al, 2012). To make sure that they are efficient at reducing risks while offering dependable financial information, auditors must carefully evaluate critical aspects of the company’s systems and controls. To resolve any issues of concern and guarantee the accuracy and dependability of the financial accounts, they might need to carry out additional testing and analysis.
Discussion and evaluation of the proposed implementation plan
A comprehensive project plan needs to be created that includes the following phases to implement the suggestions presented to CIT. The first stage is to create a project and implementation strategy that includes the subsequent steps;
- Perform a gap analysis to pinpoint the most important areas where the current system dissatisfies the suggested system.
- Emphasize the intended system’s requirements, such as internal controls, hardware, and software specifications.
- Chooses and implements the necessary hardware and software requirements, making sure they adhere to the internal control standards and are compatible with the CIT Group’s current infrastructure.
- Create and put into place new internal controls to remedy any flaws the gap analysis uncovered.
- To ensure correct use and compliance, train and educate staff members who will be using the proposed system and the internal controls.
When evaluating the new system, CIT may take into account important elements including the timeframe, training, testing, management change, monitoring, and assessment. The business must create a reasonable implementation schedule for the suggested system. The schedule is determined by the complexity of the systems, the available resources, and the urgency with which running operations must be interrupted. CIT must make sure that everyone who will use the system is properly trained. Effective user training reduces employee resistance to new changes, eliminates underlying issues and improves employee engagement (Namtek 2022). All important elements of the new system, such as its features and functionalities, should be covered during user training. Additionally, the business must carry out thorough testing on the new system before putting it to use to guarantee that all requirements are met and it operates as intended. The CIT management must also prepare for employee opposition and create a strategy to deal with it. The implementation process needs to take successful staff engagement and communication strategies into account.
Finally, CIT Group must create a monitoring and assessment strategy to evaluate the efficiency and performance of the new system. Managers and directors of CIT Group should get monthly oversight updates that include key performance indicators (KPIs) and other pertinent data to manage their areas of responsibility efficiently. The key performance indicators act as a measurable entity that helps managers access the effectiveness of their businesses towards success (Velimirovic et al 2011). Reports comprising sales data, client comments, and inventory levels, for instance, might be given to the sales department. Financial statements, comparisons of the budget and actual results, and summaries of internal control compliance could all be included in reports sent to the accounting department. To make sure the suggested implementation strategy is realistic, useful, and efficient, it must be carefully assessed. All stakeholders’ needs, including those of the staff, management, and clients, should be taken into account in the plan. The business may successfully adopt the new system and provide the intended results with a well-planned implementation.
Basic Technologies to be Integrated into the Proposed System
Some fundamental technologies, such as hardware, will be incorporated into the design of the proposed system to support its functionality. These hardware technologies include:
- Computers and laptops. The CIT Company’s employees will access, interact with, and run the new system using these essential pieces of gear. Employees who will frequently use the system will need PCs or laptops that have the bare minimum requirements for the system to function properly.
- The company’s data and the software programs required to operate the system will be stored on servers.
- Hardware for networking. All hardware devices will be connected through the use of networking tools like switches, routers, and others, enabling communication between them.
- To print billing information, shipping labels, receipts, and other essential papers, printers, and scanners will be utilized.
- Mobile technology. Some employees require mobile devices, such as smartphones and tablets, in addition to PCs and laptops to operate the system virtually outside of their workplaces.
Depending on their positions and responsibilities inside the organization, different staff members and employees will use various technologies. For instance,
- To access the system and input client orders while on the move, sales agents will need mobile devices, such as tablets or smartphones that are outfitted with the necessary software.
- To study and make business decisions based on the vast amounts of data, CIT Group managers and executives will need computers and laptops with increased functionality capabilities and storage.
- To print shipping labels and scan barcodes for efficient inventory management, warehousing, and shipping workers will need computers, scanners, and printers.
The inventory and spending cycles at CIT Group may change as a result of the introduction of updated software and hardware requirements. To avoid disrupting their operations, any modifications to the inventory system must be done after consulting the inventory management team. The company’s financial department should be consulted before making any modifications to the budget system to prevent any disruption of business operations. Before being put into use, any novel hardware or software systems must be fully tested and verified to make sure they satisfy all criteria and pose no unexpected problems for the business.
The incorporation of such innovations will assist CIT Company in several ways. The business will first have efficient communication. It will be easier to communicate with various hardware nodes, staff members, and executives thanks to the adoption of networking infrastructure devices, which will speed up data sharing and decision-making. Additionally, technology integration will promote mobility inside the business. Remote access to the system is possible for managers and employers, enhancing flexibility and efficiency (Hamingson 2023 and Buckley 2022). The security of data will also be improved. Integrating security infrastructure will improve system security by lowering the likelihood of data breaches, hacking, and other security threats. Finally, the proposed system will operate more efficiently at CIT Company due to the integration of fundamental technologies. Processing orders, credit approval, billing, and shipping are just a few of the operations that can be automated to speed up processing times and lower manual errors.
Key constraints the company needs to anticipate in implementing the proposed system.
The CIT Group ought to be mindful of some potential challenges while putting the suggested strategy into practice, such as time, money, and technological constraints as well as opposition to change. The business must make significant investments in new software, hardware, and personnel training. To make certain that it can afford the suggested method, the organization needs to take its budget into account. Additionally, the business may need to set aside space for planning, training, and data migration, which could disrupt regular business operations. Finally, workers could be resistant to change. They might feel at ease using the existing system and be reluctant to master the new procedures and technology of the replacement system. To achieve a seamless transition, CIT Company might require proper training and support.
The CIT group’s present management structure is ineffective at handling day-to-day business operations. The current system has introduced operational problems such as inadequate inventory management, inefficient order placement processes, incorrect billing, poor communication, and low productivity. Therefore, all newly developed processes and actions should be carried out by automated and computerized means. Internal controls should be created as well to protect it against hazards involving money and information, ensure the accuracy and completeness of accounting data, and comply with regulatory requirements. The recommendations made to CIT need to be put into practice, so a thorough project plan must be made that include important stages. The company must develop a feasible implementation schedule for the proposed system, incorporate cutting-edge hardware and software innovations, orient and educate staff who will use it, thoroughly test the new system before implementing it, and develop a plan to handle employee resistance. The following will help CIT Group improve decision-making processes, decrease manual errors, and improve effectiveness, productivity, and flexibility. It will also enable effective communication between important stakeholders.
Amin, M.B., Alauddin, M. and Azad, M.M. (2012) Business Transaction Processing System. Available at: https://www.researchgate.net/publication/321070736_Business_Transaction_Processing_System.
Bataev, A.V. and Davydov, I.S. (2020) “The role of automation in improving the quality of Enterprise Business Processes,” IOP Conference Series: Materials Science and Engineering, 986(1), p. 012015. Available at: https://doi.org/10.1088/1757-899x/986/1/012015.
Buckley, E. (2022) The role of technology in the rise of flexible working, WaveTrackR. Available at: https://wavetrackr.com/uk/news/the-role-of-technology-in-the-rise-of-flexible-working/ (Accessed: April 16, 2023).
COSO (2016) An IAASB Overview. Available at: https://www.ifac.org/_flysystem/azure-private/meetings/files/20160919-IAASB_Agenda_Item_4-A_COSO_Presentation.pdf (Accessed: April 16, 2023).
Hamingson, N. (2023) Current and future trends in remote work, Business News Daily. Available at: https://www.businessnewsdaily.com/8156-future-of-remote-work.html (Accessed: April 16, 2023).
Hamzah, A.A. et al. (2018) “Data capturing: Methods, issues and concern,” International Journal of Academic Research in Business and Social Sciences, 8(9). Available at: https://doi.org/10.6007/ijarbss/v8-i9/4642.
Hanafi, R., Wibowo, L.A. and Rahayu, A., 2020, October. Organization and IT Strategic Alignment, Determination of IT Process Priorities using COBIT 5. In 2020 International Conference on Advancement in Data Science, E-learning and Information Systems (ICADEIS) (pp. 1-6). IEEE.
Jan, R.H. et al. (2020) “Importance of data security in Business Management Protection of company against security threats,” Journal of critical reviews, 7(01). Available at: https://doi.org/10.31838/jcr.07.01.45.
Lipaj, D. and Davidavičienė, V. (2013) “Influence of information systems on business performance ,” Mokslas – Lietuvos ateitis, 5(1), pp. 38–45. Available at: https://doi.org/10.3846/mla.2013.06.
Namtek (2022) What’s the importance of user training during a software implementation?, Business Software Solutions & IT Services – IT Consulting Services for over 20 years. Available at: https://www.namtek.ca/the-importance-of-user-training-during-software-implementation/?lang=en (Accessed: April 16, 2023).
Ndubuisi, A.N., Chidoziem, A.M.-F. and Chinyere, O.J. (2017) “Comparative analysis of computerized accounting system and manual accounting system of quoted microfinance banks (mfbs) in Nigeria,” International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(2). Available at: https://doi.org/10.6007/ijarafms/v7-i2/2787.
Smedinghoff, T.J. (2015) “An overview of data security legal requirements for all business sectors,” SSRN Electronic Journal [Preprint]. Available at: https://doi.org/10.2139/ssrn.2671323.
Tripathi, S. and Gupta, M. (2020) “A framework for procurement process re-engineering in industry 4.0,” Business Process Management Journal, 27(2), pp. 439–458. Available at: https://doi.org/10.1108/bpmj-07-2020-0321.
Velimirović, D., Velimirović, M. and Stanković, R. (2011) “Role and importance of key performance indicators measurement,” Serbian Journal of Management, 6(1), pp. 63–72. Available at: https://doi.org/10.5937/sjm1101063v.
Williams, C.K. (2017). Available at: https://www.theseus.fi/bitstream/handle/10024/138879/williams_chukwudi.pdf?sequence=1&isAllowed=y (Accessed: April 16, 2023).
Younas, M.A. and Md Kassim, D.A. (2019) “Essentiality of internal control in audit process,” International Journal of Business and Applied Social Science, 5(11), pp. 1–6. Available at: https://doi.org/10.33642/ijbass.v5n11p1.