7. Bait ’n Reel Superstore (Combination of
Networked Computers and Manual System)
(Prepared by Matt Wisser, Lehigh University)
Bait ’n Reel was established in 1983 by Jamie Roberts,
an avid fisherman and environmentalist. Growing up
in Pennsylvania’s Pocono Mountains region, Roberts
was lucky enough to have a large lake right down the
road, where he found himself fishing throughout
the year. Unfortunately, he had to drive more than
15 miles to purchase his fishing supplies, such as lines,
hooks, and bait. Throughout his early adulthood,
Jamie frequently overheard other fishermen expressing
their displeasure at not having a local fishing store to
serve their needs. Roberts vowed to himself that he
would open his own store if he could ever save up
enough money.
By 1983, he had sufficient funds and the opportunity
arose when a local grocery store went up for
sale. He bought the building and converted it into
the “Bait ’n Reel” fishing store. His early business involved
cash-only transactions with local fishermen. By
the mid-1990s, however, the building had expanded
into a superstore that sold a wide range of sporting
products and camping gear. People from all over the
county shopped at Bait ’n Reel as Roberts increased his
advertising efforts, emphasizing his ability to provide
excellent service and a wide range of products. Roberts
moved away from a cash-only business and began offering
store credit cards to consumers. He also became
a regional wholesaler to many smaller sporting goods
stores.
With the help of a friend, Roberts installed a
computer network. Although these computers helped
automate the company’s business processes and facilitated
the sharing of data between departments, much
interdepartmental communication continued to be via
hard-copy documents.
Revenue increased sharply during the four
years after the implementation of the computer system.
In spite of this, Roberts had some questions
about the quality of processes, as many of the subsidiary
accounts did not match the general ledger
control accounts. This didn’t prove to be a material
problem, however, until recently, when the computers
began listing supplies on hand that were not
actually on the shelves. This created problems as
customers became frustrated by stock-outs. Roberts
knew something was wrong, but he couldn’t put his
finger on it.
You have been hired by Roberts to evaluate Bait ’n
Reel’s processes and internal controls and make recommendations
for improvement. Bait ’n Reel’s expenditure
cycle is described in the following paragraphs.