Control system weaknesses Jertsy Ltd owns a range of fashion clothing stores in Australian state capitals. Each store manager operates with a degree of autonomy with regard to the types and quantities of clothes that they buy and sell. Head office has established a standard mark-up on cost that local managers must use to arrive at selling prices. Store staff tend to be younger people who work part time and move on after a year or two; as a result there is a significant staff turnover. This high staff turnover does not affect trade and business is booming having tapped into youth fashion. Each store maintains its own accounting records and returns are sent to head office reporting purchases, sales and any sundry expenditure incurred locally. These monthly returns are consolidated by the accountant who prepares monthly management reports. The recent success of the business has allowed senior management to adopt a strategy of growth by opening new stores, but they are worried about maintaining control as the business expands.

Required

Identify the weaknesses in the existing system and suggest improvements that should be included in any new system that senior management might choose to introduce.