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MAHATMA EDUCATION SOCIETYS

PILLAI COLLEGE OF ARTS COMMERCE


AND SCIENCE
NEW PANVEL
RE-ACCREDITED BY NAAC WITH A
GRADE


A PROJECT
ON
A PROJECT REPORT ON AUDIT OF COCA-COLA
CO.

In the subject AUDITING

SUBMITED TO
UNIVERSITY OF MUMBAI,
FOR SEMESTER-III
OF
MASTER OF COMMERCE (PART 2)
BY
VINAYAK GHARAT
3522
UNDER THE GUIDANCE OF
PROF.GAJANAN WADER

YEAR-2013-2014
MAHATMA EDUCATION SOCIETYS
PILLAI COLLEGE OF ARTS,
COMMERCE & SCIENCE
RE-ACCREDITED BY NAAC WITH A GRADE &
ISO 9001:2008 CERTIFIED



DECLARATION BY THE STUDENT

I, Mr. VINAYAK GHARAT student of M.Com Part-II Roll
number 3522 hereby declare that the project for the AUDITING
titled,

Submitted by me for Semester-III during the Academic year
2013-2014, is based on actual work carried out by me under the
supervision of PROF.GAJANAN WADER
I further state that this work is Original and not submitted
anywhere else for any examination.

Signature of student



MAHATMA EDUCATION SOCIETYS
PILLAI COLLEGE OF ARTS COMMERCE AND
SCIENCE
NEW PANVEL
RE- ACCREDITED BY NAAC WITH A GRADE

EVALUATION CERTIFICATE
This is to certify that the undersigned have assessed and evaluated the
project on,
A PROJECT REPORT ON AUDIT OF COCA-COLA
CO.

Submitted by VINAYAK GHARAT Student of M. Com Part-II
This project is original to the best of our knowledge and has been
accepted for Internal Assessment.



Internal Examiner: Principal:-
Prof. GAJANAN WADER Dr. DAPHNE PILLAI


M MA AH HA AT TM MA A E ED DU UC CA AT TI IO ON N S SO OC CI IE ET TY Y S S
P PI IL LL LA AI I C CO OL LL LE EG GE E O OF F A AR RT TS S C CO OM MM ME ER RC CE E A AN ND D
S SC CI IE EN NC CE E
N NE EW W P PA AN NV VE EL L
R RE E- -A AC CC CR RE ED DI IT TE ED D B BY Y N NA AA AC C W WI IT TH H A A G GR RA AD DE E
A
A
C
C
K
K
N
N
O
O
W
W
L
L
E
E
D
D
G
G
E
E
M
M
E
E
N
N
T
T


T Th he e s su uc cc ce es ss sf fu ul l c co om mp pl le et ti io on n o of f p pr ro oj je ec ct t i in nv vo ol lv ve ed d t th he e c co on nt tr ri ib bu ut ti io on n o of f
t ti im me e a an nd d e ef ff fo or rt ts s. . T Th hi is s p pr ro oj je ec ct t w wo ou ul ld d n ne ev ve er r h ha av ve e b be ee en n c co om mp pl le et te ed d w wi it th ho ou ut t
t th he e v va al lu ua ab bl le e h he el lp p e ex xt te en nd de ed d t to o u us s b by y t th he e S Su ub bj je ec ct t t te ea ac ch he er r a an nd d P Pr ro oj je ec ct t g gu ui id de e
P PR RO OF F. . GAJANAN WADER
S Se ec co on nd dl ly y w wo ou ul ld d l li ik ke e t to o t th ha an nk k o ou ur r P Pr ri in nc ci ip pa al l D DR R. . D DA AP PH HN NE E
P PI IL LL LA AI I a an nd d V Vi ic ce e P Pr ri in nc ci ip pa al l M MR R. . A A. . N N. . K KU UT TT TY Y f fo or r p pr ro ov vi id di in ng g u us s s su uc ch h a a
p pr re es st ti ig gi io ou us s I In ns st ti it tu ut ti io on n
I would also like to thank all my friends to help me in this project
work and giving their precious time to me.

L La as st t b bu ut t n no ot t t th he e l le ea as st t I I w wo ou ul ld d l li ik ke e t to o t th ha an nk k o ou ur r P Pa ar re en nt ts s f fo or r m ma ak ki in ng g
u us s c ca ap pa ab bl le e i in n d do oi in ng g t th hi is s p pr ro oj je ec ct t a an nd d g gi iv vi in ng g t th he ei ir r c co on nt ti in nu uo ou us s s su up pp po or rt t a an nd d
g gu ui id da an nc ce e. .
MAHATMA EDUCATION SOCIETYS
PILLAI COLLEGE OF ARTS, COMMERCE & SCIENCE
E-ACCREDITED BY NAAC WITH A GRADE &
ISO 9001:2008 CERTIFIED

Internal Assessment: Project 40 Marks
Name of the Student Class Division Roll No.
First Name : VINAYAK

Fathers Name : VIKAS

Surname :GHARAT

M COM
PART II

3522
Subject: AUDITING
Topic for the Project: A PROJECT REPORT ON AUDIT OF COCA-COLA
CO.

Particulars Marks Awarded Signature
DOCUMENTATION
Internal examiner
(Out of 10Marks)

External Examiner
(Out of 10 Marks)

Presentation
(Out of 10 Marks)

Viva and Interaction
(Out of 10 Marks)

TOTAL MARKS (Out of 40 Marks)

CONTENTS
SL.NO. PARTICULARS PAGE NO.

CHAPTER-1
1 INTRODUCTION 5-5
2 DEFINITION 6-6

CHAPTER -2
3 FEATURES 7-7
4 OBJECTIVES 8-8
5 TYPES OF AUDITS AND REVIEWS 9-12
6 PROCEDURE TO BE FOLLOWED TO DETECT
ERRORS.
13-13
7 DUTIES 14-14

CHAPTER 3 SUMMARY OF THE STUDY
7 LEDGER FOR AUDIT 15-16
8 IMPORTANCE & UTILITY OF LEDGER ACCOUNTS 17-17
9 CONCLUSION 18-18

APPENDICES
10 BIBLIOGRAPHY/ WEBLIOGRAPHY 19-19





INTRODUCTION -AN OVERVIEW OF AUDITING:
Economic decisions in every society must be based upon the information available at the time
the decision is made. For example, the decision of a bank to make a loan to a business is based
upon previous financial relationships with that business, the financial condition of the company
as reflected by its financial statements and other factors. If decisions are to be consistent with
the intention of the decision makers, the information used in the decision process must be
reliable. Unreliable information can cause inefficient use of resources to the detriment of the
society and to the decision makers themselves. In the lending decision example, assume that the
barfly makes the loan on the basis of misleading financial statements and the borrower Company
is ultimately unable to repay. As a result the bank has lost both the principal and the interest. In
addition, another company that could have used the funds effectively was deprived of the money.
As society become more complex, there is an increased likelihood that unreliable information
will be provided to decision makers. There are several reasons for this: remoteness of
information, voluminous data and the existence of complex exchange transactions As a means of
overcoming the problem of unreliable information, the decision-maker must develop a method of
assuring him that the information is sufficiently reliable for these decisions. In doing this he must
weigh the cost of obtaining more reliable information against the expected benefits.
A common way to obtain such reliable information is to have some type of verification (audit)
performed by independent persons. The audited information is then used in the decision making
process on the assumption that it is reasonably complete, accurate and unbiased.










DEFINITION
The term auditing has been defined by different authorities.
1. Spicer and Pegler: "Auditing is such an examination of books of accounts and vouchers of
business, as will enable the auditors to satisfy himself that the balance sheet is properly drawn
up, so as to give a true and fair view of the state of affairs of the business and that the profit and
loss account gives true and fair view of the profit/loss for the financial period, according to the
best of information and explanation given to him and as shown by the books; and if not, in what
respect he is not satisfied."
2. Prof.L.R.Dicksee. "auditing is an examination of accounting records undertaken with a view
to establish whether they correctly and completely reflect the transactions to which they relate.
3 The book "an introduction to Indian Government accounts and audit" "issued by the
Comptroller and Auditor General of India, defines audit an instrument of financial control. It
acts as a safeguard on behalf of the proprietor (whether an individual or group of persons)
against extravagance, carelessness or fraud on the part of the proprietor's agents or servants in the
realization and utilisation of the money or other assets and it ensures on the proprietor's behalf
that the accounts maintained truly represent facts and that the expenditure has been incurred with
due regularity and propriety. The agency employed for this purpose is called an auditor."













FEATURES OF AUDITING
a. Audit is a systematic and scientific examination of the books of accounts of a business;
b. Audit is undertaken by an independent person or body of persons who are duly qualified for
the job.
c Audit is a verification of the results shown by the profit and loss account and the state of
affairs as shown by the balance sheet.
d. Audit is a critical review of the system of accounting and internal control.
e. Audit is done with the help of vouchers, documents, information and explanations received
from the authorities.
f. The auditor has to satisfy himself with the authenticity of the financial statements and
report that they exhibit a true and fair view of the state of affairs of the concern.
g The auditor has to inspect, compare, check, review, scrutinize the vouchers supporting the
transactions and examine correspondence, minute books of share holders, directors,
Memorandum of Association and Articles of association etc., in order to establish correctness of
the books of accounts.













OBJECTIVES OF AUDITING
There are two main objectives of auditing. The primary objective and the secondary or incidental
objective.
a. Primary objective
as per Section 227 of the Companies Act 1956, the primary duty (objective) of the auditor is to
report to the owners whether the balance sheet gives a true and fair view of the Companys state
of affairs and the profit and loss A/c gives a correct figure of profit of loss for the financial year.
b. Secondary objective
it is also called the incidental objective as it is incidental to the satisfaction of the main objective.
The incidental objective of auditing are: i. Detection and prevention of Frauds, and ii. Detection
and prevention of Errors.
Detection of material frauds and errors as an incidental objective of independent financial
auditing flows from the main objective of determining whether or not the financial statements
give a true and fair view. As the Statement on auditing Practices issued by the Institute of
Chartered Accountants of India states, an auditor should bear in mind the possibility of the
existence of frauds or errors in the accounts under audit since they may cause the financial
position to be mis-stated. Fraud refers to intentional misrepresentation of financial information
with the intention to deceive. Frauds can take place in the form of manipulation of accounts,
misappropriation of cash and misappropriation of goods. It is of great importance for the auditor
to detect any frauds, and prevent their recurrence. Errors refer to unintentional mistake in the
financial information arising on account of ignorance of accounting principles i.e. principle
errors, or error arising out of negligence of accounting staff i.e. Clerical errors.









Types of Audits and Reviews
The Audit Process
In general, a typical audit includes the following sequential steps:
Scheduling an opening conference to discuss the audit objectives, timing, and report
format and distribution.
Assessing the soundness of the internal controls or business systems and operations.
Testing the internal controls to ensure proper operation.
Discussing with management all preliminary observations.
Discussing with management the draft audit report and their responses, if available, prior
to release of the final audit report.
Following up on critical issues raised in audit reports to determine if they have been
successfully resolved.
Internal Controls Educational Seminar
Any department or organization that would like a session on Internal Controls in the University
Environment should contact the Director of Internal Auditing Services at Ext. 5-4818 to schedule
it. The seminars are typically 1-2 hours in length and include a 20-minute video on internal
controls at colleges and universities. The presentation includes time for questions and answers
and can be tailored to address a department's specific needs or requests.










Audits
Types of Audits and Reviews:
1. Financial Audits or Reviews
2. Operational Audit
3. Department Reviews
4. Information Systems Audits
5. Integrated Audits
6. Investigative Audits or Reviews
7. Follow-up Audits

Financial Audit
A historically oriented, independent evaluation performed for the purpose of attesting to the
fairness, accuracy, and reliability of financial data. CSULB's external auditors, KPMG, perform
this type of review. CSULB's Director of Financial Reporting coordinates the work of these
auditors on our campus.
Operational Audit
A future-oriented, systematic, and independent evaluation of organizational activities. Financial
data may be used, but the primary sources of evidence are the operational policies and
achievements related to organizational objectives. Internal controls and efficiencies may be
evaluated during this type of review.
Department Review
A current period analysis of administrative functions, to evaluate the adequacy of controls,
safeguarding of assets, efficient use of resources, compliance with related laws, regulations and
University policy and integrity of financial information.





Information Systems (IS) Audit
There are three basic kinds of IS Audits that may be performed:
1. General Controls Review
A review of the controls which govern the development, operation, maintenance, and security of
application systems in a particular environment. This type of audit might involve reviewing a
data center, an operating system, a security software tool, or processes and procedures (such as
the procedure for controlling production program changes), etc.
2. Application Controls Review
A review of controls for a specific application system. This would involve an examination of the
controls over the input, processing, and output of system data. Data communications issues,
program and data security, system change control, and data quality issues are also considered.
3. System Development Review
A review of the development of a new application system. This involves an evaluation of the
development process as well as the product. Consideration is also given to the general controls
over a new application, particularly if a new operating environment or technical platform will be
used.
Integrated Audit
This is a combination of an operational audit, department review, and IS audit application
controls review. This type of review allows for a very comprehensive examination of a
functional operation within the University.
Investigative Audit
This is an audit that takes place as a result of a report of unusual or suspicious activity on the part
of an individual or a department. It is usually focused on specific aspects of the work of a
department or individual. All members of the campus community are invited to report suspicions
of improper activity to the Director of Internal Auditing Services on a confidential basis. Her
direct number is 562-985-4818.
Follow-up Audit
These are audits conducted approximately six months after an internal or external audit report
has been issued. They are designed to evaluate corrective action that has been taken on the audit
issues reported in the original report. When these follow-up audits are done on external auditors'
reports, the results of the follow-up may be reported to those external auditors.
PROCEDURE TO BE FOLLOWED TO DETECT ERRORS.
Following procedures may be adopted by the auditor to detect the errors.
1. Check the opening balances from the balance sheet of the last year.
2. Check the posting into respective ledger accounts
3. Check the total of the subsidiary books.
4. Verify all the castings and the carry forwards.
5. Ensure that the list of debtors and creditors tally with the ledger accounts.
6. Make sure that all accounts from the ledger are taken into accounts.
7. Verify the total of the trial balance.
8. Compare the various items from the trial balance with that of the previous year.
9. Find out the amount of difference and see whether an item of half or such amount is entered
wrongly.
10. Check differences involving round figures as Rs. 1,000; Rs. 100 etc .
11. See where there is misplacement or transposition of figures that is 45 for 54; or 81 for 18 etc.
12. Ultimately careful scrutiny is the only remedy for detection of errors.
13. See that no entry of the original book has remained unposted.









THE AUDITOR SHOULD PERFORM THE FOLLOWING DUTIES IN RESPECT OF
FRAUD.
1. Examine all aspects of the finance.
2. Vouch all the receipts from the counterfoils or carbon copies or cash memos, sales mart
reports etc.
3. Check thoroughly the salary and wages register.
4. Verify the methods of valuation of stocks.
5. Check up stock register, goods inwards notes, goods out wards books and delivery challansetc
6. Calculate various ratios in order to detect fraudulent manipulation of accounts
7. Go through the details of unusual items.
8. Probe into the details of the problems when there is a suspicion.
9. Exercise reasonable skill and care while performing the duty.
10. Make surprise visit to check the accounts.













INCOME STATEMENT OF COCA COLA

Income [+] in Millions of Dollars

12/2012 12/2011 12/2010 12/2009 12/2008

Operating Revenue 11,491 8,938 8,388 7,872 5,992
Adjustments to Revenue N/A N/A - - -
Cost of Revenue 6,153 4,837 4,176 3,920 2,934
Gross Operating Profit 5,338 4,101 4,212 3,952 3,058

Selling/General/Admin Expense (3,612) (2,657) (2,501) (2,450) (1,833)
Research & Development - - - - -
EBITDA (Operating Income Before Depreciation) 1,707 1,326 1,711 1,502 1,224
Depreciation & Amortization - - (326) (289) (236)
Operating Income 2,150 1,653 1,385 1,213 989
Interest Income 33 43 23 22 31
Other Income, Net (52) (161) (86) (93) (261)
Total Income Before Interest Expense (EBIT) 1,707 1,326 1,322 1,142 760
Interest Expense (152) (124) (142) (145) (159)
Income Before Tax 1,555 1,202 1,180 997 600
Income Taxes (488) (401) (345) (310) (180)
Minority Interest 44 40 (40) (34) (16)
Net Income from Continuing Operations 1,081 761 795 653 404
Net Income from Discontinued Operations - - - - -
Net Income from Total Operations 1,081 761 795 653 404

Normalized Income 1,099 761 795 653 404
Extraordinary Income/Loss - - - - -
Special Income/Charges (18) - - - -
Income from Cum. Effect of Acct Change - - - - -
Income from Tax Loss Carryforward - - - - -
Other Gains (44) - - - -
Total Net Income 1,037 761 795 653 404






BALANCE SHEET FOR COCA-COLA CO.





Assets [+] in Millions of Dollars

12/2012 12/2011 12/2010 12/2009 12/2008

Cash and Equivalents 8,442 12,803 8,517 7,021 4,701
Restrictable Cash - - - - -
Marketable Securities 8,109 1,232 2,820 2,192 278
Receivables 4,759 4,920 4,430 3,758 3,090
Inventories 3,264 3,092 2,650 2,354 2,187
Prepaid Expenses 2,781 3,450 3,162 2,226 1,920
Current Deferred Income Taxes - - - - -
Other Current Assets 2,973 - - - -
Total Current Assets 30,328 25,497 21,579 17,551 12,176
Gross Fixed Assets 23,486 23,151 21,706 16,467 14,400
Accumulated Depreciation (9,010) (8,212) (6,979) (6,906) (6,074)
Net Fixed Assets 14,476 14,939 14,727 9,561 8,326
Intangibles 15,082 15,450 15,244 8,604 8,476
Cost in Excess 12,255 12,219 11,665 4,224 4,029
Non-Current Deferred Income Taxes - - - - -
Other Non-Current Assets 14,033 11,869 9,706 8,731 7,512
Total Non-Current Assets 55,846 54,477 51,342 31,120 28,343
Total Assets 86,174 79,974 72,921 48,671 40,519

Liabilities [+] in Millions of Dollars

12/2012 12/2011 12/2010 12/2009 12/2008

Accounts Payable 1,969 2,172 1,887 1,146 1,370
Short Term Debt 1,577 2,041 1,276 51 465
Notes Payable 16,297 12,871 8,100 6,749 6,066
Accrued Expenses 6,711 - - - -
Accrued Liabilities 6,711 6,837 6,972 5,247 4,835
Deferred Revenues - - - - -
Current Deferred Income Taxes 632 - - - -
Other Current Liabilities 1,267 362 273 528 252
Total Current Liabilities 27,821 24,283 18,508 13,721 12,988
Long Term Debt 14,736 13,656 14,041 5,059 2,781
Deferred Income Tax 4,981 4,694 4,261 1,580 877
Other Non-Current Liabilities 5,468 5,420 4,794 2,965 3,011
Minority Interest 378 286 314 547 390
Capital Lease Obligations - - - - -
Preferred Securities of Subsidiary Trust - - - - -
Preferred Equity Outside Shareholders' Equity - - - - -
Total Non-Current Liabilities 25,563 24,056 23,410 10,151 7,059
Total Liabilities 53,384 48,339 41,918 23,872 20,047
Preferred Shareholder's Equity - - - - -
Common Shareholder's Equity 32,790 31,635 31,003 24,799 20,472
Total Equity 32,790 31,635 31,003 24,799 20,472
Total Liabilities & Shareholder's Equity 86,174 79,974 72,921 48,671 40,519




















Ledger Accounts
Accounting Entries are recorded in ledger accounts. Debit entries are made on the left side of the
ledger account whereas Credit entries are made to the right side. Ledger accounts are maintained
in respect of every component of the financial statements. Ledger accounts may be divided into
two main types: balance sheet ledger accounts and income statement ledger accounts.

Balance Sheet Ledger Accounts
Balance Sheet ledger accounts are maintained in respect of each asset, liability and equity
component of the statement of financial position.Following is an example of a receivable ledger
account:
Receivable Account
DEBIT Rs. Credit Rs.
Balance b/d 400 Cash 400
Sales 900 Balance c/d 900
1300 1300



Balance brought down is the opening balance is in respect of the receivable
at the start of the accounting period.
These are credit sales made during the period. Receivables account is
debited because it has the effect of increasing the receivable asset. The
corresponding credit entry is made to the Sales ledger account. The account
in which the corresponding entry is made is always shown next to the
amount, which in this case is the Sales ledger.
This is the amount of cash received from the debtor. Receiving cash has the
effect of reducing the receivable asset and is therefore shown on the credit
side. As it can seen, the corresponding debit entry is made in the cash
ledger.
This represents the balance due from the debtor at the end of the accounting
period. The figure has been arrived by subtracting the amount shown on the
credit side from the sum of amounts shown on the debit side. This
accounting period's closing balance is being carried forward as the opening

balance of the next period.
Similar ledger accounts can be made for other balance sheet components such as
payables, inventory, equity capital, non current assets and so on.
Income Statement Ledger Accounts
Income statement ledger accounts are maintained in respect of incomes and
expenditures.
Following is an example of Office expense ledger:
POSTAGE & TELEGRAM Expense Account

Debit Rs. Credit Rs.
Cash 1500 Income Statement 1500
1500 1500




This is the amount of cash paid against P & T bill. The expense ledger is being
debited to account for the increase in expense. The corresponding credit entry
has been made in the cash ledger.
This represents the amount of expense charged to the income statement. The
balance in the ledger has been recycled to the income statement which is being
debited by the same amount. Unlike balance sheet ledger accounts, there is no
balance brought down or carried forward. Instead, the income statement ledger
is closed each accounting period end with the balancing figure representing the
charge to income statement.
Similar ledger accounts can be made for other income statement components







Importance & Utility of Ledger Accounts
The following are the important utilities of ledger accounts.
1. Ledger account keeps a permanent record of all financial transactions in a
classified manner
2. Ledger account shows detailed financial information of a business regarding
debtors & creditors, assets, and incomes & expenses.
3. Ledger account helps to prepare a trail balance in order to check the arithmetical
accuracy of the recording of the financial transactions of the business.
4. Ledger account helps to prepare profit & loss account so as to ascertain the
profit or loss of the business
5. Ledger account helps to prepare the balance sheet with a view to show the
financial position of the business.















CONCLUSION
The all above information is related with Auditing of ledger. It helps to know how to audit of a
ledger or how to scrutinize it .






















BIBLIOGRAPHY

Varsha Ainapure, Mukund Ainapure AUDITING- Manan Prakashan
T.Y.B.com AUDIT- Sheth Prakashan
Google (http://www.google.co.in)
Wikipedia
Various sites.