Consider And Discuss The Specific Risks And Nature Of The Co

Consideranddiscussthe Specific Risks And Nature Of The Company You Wil

Consider and discuss the specific risks and nature of the company you will be auditing and create comprehensive work programs for the Acquisition, Payment, Property Plant, and Equipment (Fixed Assets), Notes Payable and Owner's Equity accounts and cycles. Submit a 700- to 1,050-word document that includes the following: · Audit steps for tests of controls, balances, transactions, analytical procedures, etc. as well as other considerations such as sample size and sample methodology. · A brief summary page should be included in this document, 525 to 700 words, for each of the audit programs. Include in this summary specific financial information gleaned from the current Form 10-K used to perform an analysis of work program steps. For example, if the team noted significant swings in the Fixed Assets balance year-over-year, identify these swings, and how you address them in your work program (this is in essence an audit procedure - analytical review). The highlighted section is my section. Please stick to the word count (Between 525 to 700 words) and section should be in own words. The team is using Coca-Cola as our company and here is the link for the annual 10K form: I have included below what the rest of the team has written so far since we will need to include any significant swings found by my other teammates.

At the end, include a References section in HTML (for example, an

References

heading followed by a list of references).

Consider and discuss the specific risks and nature of the company you will be auditing and create comprehensive work programs for the Acquisition, Payment, Property Plant, and Equipment (Fixed Assets), Notes Payable and Owner's Equity accounts and cycles. Submit a 700- to 1,050-word document that includes the following: audit steps for tests of controls, balances, transactions, analytical procedures, etc., as well as other considerations such as sample size and sample methodology. A brief summary page should be included in this document (525 to 700 words) for each of the audit programs, analyzing specific financial information from the current Form 10-K, including significant swings—such as changes in fixed assets or liabilities—and how these are addressed in the audit process.

Sample Paper For Above instruction

The audit of a large multinational corporation like The Coca-Cola Company necessitates a detailed understanding of its specific risks and operational complexities. Coca-Cola’s extensive asset base, considerable liabilities, and ownership structure present unique challenges that require tailored audit procedures. This paper discusses the audit strategies and work programs designed to evaluate the acquisition, payment, property, plant, equipment, notes payable, and owners’ equity accounts, highlighting the analytical procedures and controls necessary to ensure accurate financial statement assertions.

Risks and Nature of Coca-Cola

Coca-Cola operates globally with a complex supply chain, manufacturing, and distribution network. Risk factors include currency fluctuations, compliance with international regulations, product recalls, and the accuracy of asset valuation. The company’s significant investments in property, plant, and equipment (PP&E), totaling approximately $12.6 billion as of 2016, warrant meticulous audit procedures, especially since these assets comprise around 14% of total assets (The Coca-Cola Company, 2016). Fluctuations in these assets, perhaps due to acquisitions or disposals, could introduce misstatements. Similarly, notes payable, although a smaller account, involves periodic interest and repayment transactions that must be verified for completeness and accuracy. Ownership equity reflects shareholder interests and is subject to external market influences, requiring detailed verification of share issuances, repurchases, and retained earnings.

Audit of Acquisition and Payment Cycles

Internal controls over acquisitions and payments are vital to prevent fraud and ensure transparency. Control procedures include segregation of duties, sequential numbering of purchase orders, and verification of goods receipt against purchase requisitions and invoices. During the audit, we will review these controls and perform substantive tests such as testing a sample of purchase transactions for proper authorization, receipt verification, and correct recording. Particular attention will be paid to transactions around fiscal year-end to detect potential cut-off errors. Analytical procedures, including trend analysis of purchase costs and supplier balances, will help identify anomalies or significant swings.

For instance, if significant fluctuations are observed in purchase expenses or inventory levels, these will be scrutinized to determine their cause—like new product launches or supplier changes—and verified via supporting documentation. The audit will also assess whether accrued liabilities related to acquisitions are properly recognized at period-end, using cutoff testing and reviewing subsequent payments.

Audit of Property, Plant, and Equipment

Coca-Cola’s fixed assets require rigorous testing due to their materiality and complexity. Our procedures will include tracing recorded balances to detailed asset registers, examining vendor invoices for recent acquisitions, and physically verifying the existence and condition of assets, especially those with large balances or recent purchases. Depreciation expense will be analyzed through trend analysis, comparing current year depreciation rates with historical patterns and industry standards. Significant swings in PP&E, such as a sudden increase or decrease, will prompt detailed substantive testing. For instance, if the 2016 balance exceeds projections based on industry growth rates, the team will investigate whether acquisitions, disposals, or impairments occurred during the year.

Furthermore, we will review the company’s impairment assessments and verify disclosures related to PP&E, including any revaluation or impairment losses. Physical inspections will focus on assets involved in recent acquisitions or disposals to ensure proper recording and valuation.

Audit of Notes Payable

Notes payable are relatively low volume but still warrant detailed testing due to their impact on liquidity and interest expense. Internal controls involve authorization from senior management and verification of payment documentation. Substantive testing will include vouching a sample of payments and verifying interest calculations against contractual terms. Given Coca-Cola’s disclosures of decreasing notes payable balances ($19.1 billion in 2014 to $13.1 billion in 2015), analytical procedures will compare year-over-year trends, investigate significant decreases, and confirm with supporting documentation.

Audit of Owner’s Equity

As a publicly traded company, Coca-Cola’s owners’ equity involves scrutiny of share issuance, repurchase transactions, and retained earnings. Procedures will include confirming the authorization of new share issuance, verifying stock repurchase transactions with board minutes, and inspecting dividend payments. Since equity balances remained stable between 2014 and 2015 at approximately $1.76 billion, emphasis will be on confirming accuracy of recorded transactions and disclosures, including detailed reconciliations of share counts and classifications.

Conclusion

Auditing Coca-Cola’s financial statements necessitates careful planning to address its significant asset base, liabilities, and equity transactions. Analytical procedures, combined with substantive tests and internal control assessments, provide assurance that these accounts are free from material misstatement. Attention to significant swings observed from the 10-K disclosures, such as changes in property, notes payable, or equity accounts, ensures comprehensive coverage and reliable financial reporting.

References

• Arens, A. A., Elder, R. J., & Beasley, M. S. (2013). Auditing and Assurance Services: An Integrated Approach. Pearson.
• The Coca-Cola Company. (2016). Annual Report on Form 10-K. Retrieved from [URL].
• Glover, S. M., Prawitt, D. F., & Wood, D. (2016). Auditing & Assurance Services. McGraw-Hill Education.
• International Auditing and Assurance Standards Board. (2018). International Standards on Auditing (ISA). IFAC.
• Whittington, O. R., & Pany, K. (2016). Principles of Auditing & Other Assurance Services. McGraw-Hill Education.
• Schroeder, R. G., Clark, M. H., & Cathey, J. M. (2019). Financial Accounting Theory and Analysis. Wiley.
• Hurtt, D. N., & Mieure, W. (2019). Contemporary Auditing. Cengage Learning.
• Louwers, T. J., Ramsay, R. J., Sinason, D. H., & Strawser, J. R. (2019). Auditing & Assurance Services. McGraw-Hill Education.
• PricewaterhouseCoopers. (2017). Guide to Financial Statement Auditing. PwC Publications.
• Knechel, W. R., & Salterio, S. (2016). Auditing: Assurance and Risk. Routledge.