There are different levels of inherent risk in the different business process in Helecom. Inherent risk that could be caused as a result of the organizations’ management structure are low. The structure is well defined with the normal managerial positions of a telecommunications company. No added questionable positions that could be a means of carrying out fraudulent activities are added upon the organizational structure. The possibility of inherent risk is average when it comes to the financial analysis. The financial statements have been prepared according to the normal accounting standards and there is a good chance they were done by a professional. This further reduces the level of control risk in the preparation of the financial statements. However, the financial statements are very generalized or summarized leaving some room for unscrupulous transactions.
The level of inherent risk is also average when it comes to the subscriber management. Retaining of the already in subscribers may have a relatively lower level of inherent risk since likely hood of fraudulent transactions is low and there management process is quite straight forward leaving little room for doubt. The process of acquisition of new subscribers is also well defined and considering Helecom is a well-established company it may not need to use fraud to acquire subscribers. The alliances that Helecom has formed are the questionable processes. It is not detailed how the agreement between them were made and the share of the market income between them is not accurately defined in the financial statements leaving loop holes for behind the door transactions between them. It leaves room for omissions.
An auditor need to have a low level of detection fraud when it comes to auditing cash flow between Helecom and its alliances. It is also required for Helecom to issue more detailed documents regarding how it financially deals with its alliances. Financial statements of Helecom are rather generalized. Accounts of individual ledgers ought to be provided instead of the summaries in order to reduce the chance of detection fraud.
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