Question $1$ of XX $($Estimated time: XX minutes$)$ Sunkick Coffee Corp. $($Sunkick$)$ is a privately$-$held company that operates $100$ urban coffee houses throughout Canada. Sunkick was founded $21$ years ago in Vancouver by Ray Mack, who wanted to start a company that was concerned not only for the well$-$being of its customers, but also its employees, suppliers, and the environment. Ray is currently the CEO, and to encourage senior management to follow his example of generating high profits through socially responsible behaviour, Ray recently instituted a new bonus program. Senior management will receive a bonus based on the percentage increase in net income year over year. Ray is excited to be able to reward those employees that really deserve it$.$ Until the current fiscal year, every Sunkick outlet was a corporate$-$owned store. To finance future growth, Ray believed that he would either have to take the company public or begin selling franchises. Not wanting to lose control of the company he started, he decided to begin selling franchises. You, CPA, have recently joined the accounting department at Sunkick as assistant controller. The corporate controller, Wendy Torrence hastold you briefly about a new point$-$of$-$sale system that Sunkick is considering purchasing from Eightball Consulting Inc. $($ECI$).$ She would like you to review the information she has gathered $($Appendix I$)$ and write a report on the matter. APPENDIX IDESCRIPTION OF POINT$-$OF$-$SALE SYSTEM For many years, Sunkick had a simple cash register system in each store location. At the end of each week, the store manager would generate a report from the cash registers and fax it to Sunkicks head office. The accounting department would then enter the data into the accounting system. Since this process is time$-$consuming and error$-$prone, Sunkick management decided that it needed a point$-$of$-$sale $($POS$)$ system that would allow real$-$time communication between the locations and head office. ECI had recently redone Sunkicks website and, therefore, was approached to develop Sunkicks POS system. After interviewing several people in Sunkicks information technology department, ECI decided that custom software was necessary. Company Profile ECI has worked on Sunkicks website for several years, and management of Sunkick has always been very pleased with ECIs work. ECI has offices across Canada and has been in business since $1995.$ ECI specializes in web$-$based database solutions. According to its website, ECI recently won several design awards for websites it has created for its clients. System Description ECI recommends that new hardware be acquired for each corporate$-$owned location. Each location will require three Microsoft Windows XP$-$based personal computers $($PCs$)$ with touch screens that will be linked together using a wireless local area network $($LAN$)$ system. The wireless network will also allow these Sunkick locations to become wireless Wi$-$Fi hotspots, which will allow customers to wirelessly connect to the Internet using their laptop, without a password, while drinking their coffee. Two of the PCs will be used as the actual POS terminals, running ECIs custom$-$written POS software, to allow staff to enter customers orders and take payments. The third PC will collect the sales and payment data from the other two terminals and upload it to a new server installed at head office. Because of incompatibility issues with Sunkicks existing accounting software, the sales data from the POS system will not automatically import into the general ledger. Instead, the system will prepare a daily summary journal entry that will be entered manually into the general ledger. ECI estimates that the system will cost $$1,600,000$ for the hardware, and between $$500,000$ and $$800,000$ for the software and related consulting and training. Implementation If the proposal is accepted, ECI recommends purchasing the $300$ necessary computers immediately. ECI recommends installing the PCs at all corporate$-$owned locations within one week of their delivery. ECI will then install the server at head office to receive the data from the locations. Once the server is installed, ECI will test the system to make sure it is accurately extracting and uploading the sales data. ECI estimates that within two weeks, the system should be up and running, and collecting data from the individual locations.

Identify $4$ weaknesses for tthis sunkick case, implications for each weakness identified and a recommendation for each case identified.