Helecom Communications: Considering Fraud Risk on an Engagement before and after Analyzing a Key Business Process

Abstract

Helecom Communications is a fictitious public company in the cable industry, founded by its current Chairman and CEO, Jefferson Means. For this case, students assume the role of an entry-level accountant in an international accounting firm that has just acquired this client. Students are provided with background information on the company and its environment in Part I of the case and provided with information related to a critical business process, subscriber management, in Part II of the case. This case involves audit planning, considering fraud risk of an organization in a competitive, regulated, and volatile industry. For this case, the established criterion is AICPA Statement of Auditing Standards No. 99, Consideration of Fraud in a Financial Statement Audit (SAS No. 99). While many of the facts in the case are adapted from fraud risks and actions that occurred at actual organizations, the company is fictitious to enable the case to place students in the role of the auditor evaluating the organization for fraud risks both before and after analyzing a key business process. By performing the requirements in this case, students are exposed the key aspects of SAS No. 99, which should be maintained and possibly expanded pursuant to consideration by the Public Company Accounting Oversight Board (PCAOB), within the context of audit approaches being used to some extent by all international accounting firms (e.g., Lemon et al. 2000). The case illustrates the usefulness of business process analysis for assessing fraud risk as well as the iterative nature of the assessment.