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IMRAD
IMRAD
As of December 31, 2016, the company owned or licensed and marketed over 500
non-alcoholic beverage brands. The Company's non-alcoholic beverage brands including
Minute Maid, Diet Coke/Coca-Cola Light, Coca-Cola Zero, Sprite, and others. The
company also face challenge/s for they have a wide competition around them such as
PepsiCo, Inc., Citrus World, Inc., Dole Food Company and many more. Currently, the
company’s financial performances according to their annual sales and profits have been
trending lower over the past several years as traditional soft drink sales have fallen
because of customer’s change of tastes in developed markets. Now, they are dealing with
headwinds in two primary areas; a shift in customer tastes toward healthier beverages
and product saturation in mature markets. They’ve been focusing on waters, juices, teas,
and low- or no-sugar drinks.
In a company interview that will be conducted by the researchers, they are seeking
to analyze and find out thoroughly how far the Coca Cola Company’s decision making
and auditing process have carried out to meet its efficiency and effectiveness. With this
notion, the researchers are eagerly finding out the effectiveness and efficiency of the
auditing process that Coca-Cola Company employs, more specifically, the Internal
Auditing process.
This chapter provides an overview on literature relating to the topic pursued by the
researchers, as well as past researches that will serve as a guide in the analysis and
interpretation of data to be collected. Furthermore, this chapter also presents the
theoretical and conceptual frameworks, and the synthesis of the related literature and
related studies.
LITERATURE
Local
Internal control, including internal audit, provides the foundation for stronger
accountability and good governance in public service organizations. Specifically, internal
control refers to an organization’s plan and all the coordinated methods and measures
adopted within an organization or agency to safeguard its assets, check the accuracy and
reliability of accounting data, and encourage adherence to prescribed managerial
policies. Moreover, the existence of a strong and responsive internal control system in an
agency can significantly enhance the integrity of its operations, as well as improve its
organizational outcomes to achieve the sectorial goals. In addition, it can lead to the
attainment of the following:
Stronger accountability;
Ethical, economical, efficient, and effective operations;
Improved ability to address risks to achieve general control objectives;
Better systems of responding to the needs of citizens; and
Quality outputs and outcomes and effective governance.
To achieve these objectives, the agencies need to set in place the five interrelated
components of internal control: (1) control environment, which is the scope and coverage
of an organization’s internal control system that impacts on its structural and operational
framework; (2) assessment of risks that an organization faces as it seeks to achieve its
mission; (3) control activities, or strategies to mitigate such risks; (4) information and
communication, which are vital to managing and controlling the agency’s operations; and
(5) continuous monitoring and improvement of the effectiveness of controls in ensuring
that internal control remains attuned to the changed objectives, environment, resources
and risks (INTOSAI, 2004).
Under the Philippine Government Internal Auditing Manual, the Internal Audit
Process in the Philippines requires four stages, namely; Engagement Planning, Audit
Execution, Audit Reporting, and Audit Follow-up. Also, there are three types of audit
under PGIAM as well. Compliance Audit evaluates the degree in which laws, regulation,
policies, and operating procedures are being followed. Next is Management Audit, it
evaluates how well or how much did the organization achieved its goal by adopting
internal controls. Lastly, Operations Audit deals with the outcomes. How much input and
output has been done in order to measure the effectiveness and efficiency of said controls
being implemented.
Internal auditors are not, and cannot be, responsible for implementing or
maintaining an organization’s risk management and control processes. This is
management’s key responsibility. But internal auditors, acting in a consulting capacity,
can assist management by challenging or supporting their decisions on risk. Internal
auditors, though, should never make risk management decisions. Internal audit should
also assist management, the board, and/or the audit committee by monitoring the entire
risk management framework, evaluating controls, examining compliance, reporting
findings, and recommending improvements (Sarmenta, 2010).
According to the Article “Internal Audit, What?” by Grace Pulido-Tan (2017), Audit
is generally associated with the Commission o Audit and its constitutional mandate to
“examine, audit and settle all accounts”. Internal Audit is important in promoting public
accountability and stewardship. The functions and duties of the Internal Audit Services
are to review and evaluate agency’s systems and procedures to ensure compliance with
policies and laws; the agencies performance of its operations and programs and to the
extent to which its assets are properly accounted for and safeguarded (Administrative
Order No. 278, 1992). Clearly, if the facts regarding the Internal Audit is fully undertaken,
it would have tremendous value to the organization; providing good governance,
prevention of mismanagement and wastages and precluding corruption of public funds
and property to happen.
According to the Annual report of Audit committee of Coca Cola Company (2017),
Hernando says that in order to maintain its independence and objectivity, the Internal
Audit area reports to the Audit Committee therefore they reviewed and approved the
annual work program and budget, in order to comply with the requirements of Sarbanes-
Oxley Act. For its preparation, the Internal Audit area participated in the risk assessment
process and the validation of the internal control system. They also received periodic
reports regarding the progress of the approved work program, any deviations and the
causes thereof.
With the implemented internal control of the company they verified the compliance
by management of its responsibilities regarding internal control, and the establishment of
general guidelines and the procedures necessary for their application and compliance.
This process included presentations to the Audit Committee by the area responsible of
the most important subsidiaries. Additionally, the company followed the comments and
remarks made in this regard by External Auditors as a result of their findings; verifying the
actions taken by the Company in order to comply with section 404 of Sarbanes-Oxley Act
regarding the self-assessment of internal controls. During this process, a follow up on
main preventive and corrective actions implemented concerning internal control issues
that require improvement, and the submission to the authorities of the requested
information.
The standard also states the responsibility for the prevention and detection of
fraud. The primary responsibility for the prevention and detection of fraud rests with both
those charged with governance of the entity and management. It’s important that
management will pace a strong emphasis on fraud prevention that may reduce
opportunities for fraud to take place and fraud deterrence, which could persuade
individuals not to commit fraud because of the likelihood of detection and punishment
(PSA 240 paragraph 4)
According to an online article from the website of SGV Philippines, The traditional
role of internal audit is undergoing a transformation. Integration involves reconsidering
the scope of internal audit’s role and responsibility, and the staffing of the internal audit
function to ensure that it has the right skills and resources to execute its new role. In the
integration, the functions and responsibilities of internal audit and Enterprise Risk
Manager should remain separate.
According to the Institute of Internal Auditors (IIA), “internal auditing’s core role
with regard to ERM is to provide objective assurance to the Board on the effectiveness of
the organization’s ERM activities to help ensure that key business risks are being
managed appropriately, and that the system of internal control is operating effectively.”
According to the Article “Coca Cola FEMSA workers: “Union busting real reason
for lay-off” by Aika Rey (2018), Coca Cola FEMSA Philippines Inc said that, deciding to
lay-off almost 600 employees was a very difficult decision for them to make, due to the
fact that they adhere and abide the Workplace Rights provided by the Philippine Laws.
They respect the rights and opinions voiced out by the unions as they have encouraged
them to lawfully express their suggestions and opinions. According to Coca Cola Co.
Earlier this February, they announced to the public that it will be down-sizing its employee
workforce due to an organizational restructuring assessment. The union leaders and
workers who were laid-off are complaining that they have been union busted by the Coca
Cola FEMSA Philippines. “The mass layoff is a gross violation of rights. Those who were
removed are many officers and union presidents. This is union busting,” Said by the union
leaders. According to Marañon, a leader of a union who was issued a termination paper
by the company said that the reasons for the lay-off were not discussed to them properly
together with other union leaders. They only knew about it when Coca Cola sent them
termination papers regarding to the lay-offing of employees.
Marañon also added, “This is an injustice on the part of the Coca Cola
management, because there were no proper explanation and consultation regarding the
massive lay-off that was implemented with the unions. There was no transparency. They
only told us that they were doing an organizational restructuring and changing business
models. Also, those who were laid off were ‘redundant employees.”
Lastly, Union leaders said that, there will be no organizational restructuring and lay
off implemented without further negotiation with the unions. They demand to reach an
agreement with Coca Cola. Because they want to understand what is the real concrete
reason behind the unexpected massive lay-off.
With this information and knowledge a proper internal control and system of a
company must be needed to help on assessing the company’s performance.
Foreign
Attracting and retaining talent is the leading risk concern of manufacturers in their
operations, with a 63 percent rating. Increasing skills gap for jobs requiring high technical
skills due to the automation, globalization, and changing workforce being a positive trend
to keep manufacturing companies thriving. Additionally, complementary to the concern
in workforce, 47 percent of manufacturing companies worry about injuries that occur
during work. The impact of the costs to be incurred in case of injuries intensely impacts
the operational profit, piling up expenses because of increased medical costs and having
a blow in the productivity. Also, necessary equipment damaged, specifically uninsured
ones are possible challenges to manufacturers as well. It results into idle time that
decreases the production of companies that turn into lesser profitability and additional
replacement costs are also some of the things that manufacturers keep in mind
(Travelers.com).
For the past years, society’s modification and adaptation have affected the ways
of improving company’s performance. The use of management techniques and principles
are known to enhance the company and its condition. Many existing management
techniques and principles were all used to improve company’s performance.
Alphonce Hussein Muro in his article “Quick wins for public sector internal auditors
in Tanzania,” it is believed that Internal Auditing is an indispensable tool in improving
productivity in an organization. It is an independent, objective assurance and consulting
activity designed to add value and improve an organization's operations. It helps an
organization accomplish its objectives by bringing a systematic, disciplined approach to
evaluate and improve the effectiveness of risk management, control, and governance
processes.
According to Woolf, internal audit is an element of the internal control system set
up by the management of an enterprise to examine, evaluate and report on accounting
and other controls on operation. It exists either voluntarily or in certain circumstance
because of statutory requirements. Internal Auditing also provides means of uplifting
company’s performance and determines company’s weaknesses effectively. Since many
companies encountered problems like fraud, misappropriation of funds and lack of
effective management and others that made people asking if Internal Auditing plays its
roles towards efficiency that improves company’s performance. It has been also believed
that the root cause of many companies’ poor performance is the efficiency in discovering
the management’s inefficiency.
Ahmad (2007) in the article entitled, “Auditors’ Compliance with International
Standards in Audit” examined the degree of compliance of Jordanian auditors with ISA.
It was found that Jordanian auditors complied with all audit standards due to strict
conditions and requirement of Jordanian Laws wherein the audit profession should be
assigned to a Certified Public Accountant (CPA) as well as imposing strict legal liabilities.
The study recommended that there should be more attention by auditors and institutions
regulating the audit profession in Jordan towards compliance with audit standards,
especially those concerning internal audit and imposing on auditor’s responsibility to
detect fraud in financial transactions and statements at the appropriate stage.
As Okezie (2008), defined the main objective of internal auditing, that is “to assist
management in the effective discharge of their responsibility by furnishing them with
analysis, appraisal, recommendations and pertinent comments concerning activities
reviewed.
According to the President and CEO of Coca Cola Company, James Quincey, “the
world has a packaging problem – and like all companies, we have a responsibility to help
solve it.” Through our World without Waste vision, we are investing in our planet and our
packaging to help make this problem turn into a thing in the past.” Thus, Coca Cola
Company seeks to be successful in its vision by 2030. In an internal audit sense, it is a
good control for the improvement of its “organization performance” because it is like
hitting two birds with one stone, not only they are helping the planet, they are also
improving their performance overall. Internal auditing helps companies assess and
identify things like this whether there is an operation that may need overhauling and
remodeling. It identifies its weaknesses and turning it to a strength. Its problems are
countered with solutions that will benefit the company’s performance in the market. Coca
Cola Company encourages everyone to recycle as part of a circular economy towards a
better environment, and a better life.
According to the Coca Cola Company (2018), ‘The Company’s start to 2018 built
on prior momentum, with strong financial performance in the first quarter.’ They’ve
reported that increases in Earnings per Share from Continuing Operations grew 13%,
while Comparable Earnings per Share from Continuing Operations (Non-GAAP) Grew
8%. They are continuing its good performance and hopefully, be consistent throughout
the end of the year.
STUDIES
Local
In 2011, Cortez found out that the internal control systems of cooperatives in
Region I adopt internal controls in relation to the organization’s human resources, its
productions/operations, and marketing/finance. He suggested that the cooperatives
should always follow, implement, and monitor internal control system on control points
that are lacking, and relate to the VMGO of the company in accordance to the fulfillment
of its goals.
Sabio, DPA (2013), determines the State of Internal Audit Practice in Selected
Philippine Government Agencies: Basis for Policy Advocacy. Descriptive survey method
of research was used. The correlational study was utilized to estimate the extent to which
different variables are related; level of performance and knowledge elements. The
respondents were the heads of internal auditing units of government agencies. It was
from the Association of Government Internal Auditors (AGIA), Internal Auditing Units
(IAU), National Government Agencies (NGAs), Government Owned and Controlled
Corporations (GOCC), Legislative Bodies, Constitutional Commissions and Judicial
Service. Applying Sloven’s Formula, the sample size that the researchers generated were
forty (40) respondents.
The findings states the current state of internal audit practice in Philippine
Bureaucracy is characterized by performing the essential internal auditor roles.
Specifically, the practice includes: (1) usual compliance with Institute of Internal Auditors
attribute standards, (2) often perform risk-based planning, (3) plan engagement, (4) follow
appropriate procedure in conducting internal audit engagement outcomes, (5) conduct
specific engagement sometimes, (6) monitor internal audit engagement outcomes, (7)
utilization of internal audit engagement tools frequently, (8) understands the internal audit
activity’s role in organization governance and (9) perform other internal auditor roles and
responsibilities.
Most of the respondents suggested ways to solve the identified problems that is to
uniformly institutionalize internal audit units according to the way it should be developed,
to hire more competent internal auditors, and to provide more trainings and professional
developments.
Mallari and Santiago (2013), studied about the Status, Problems and Prospects on
Internal Audit Services (IAS) of State Universities and Colleges (SUCs) in the Philippine
towards Strengthening Internal Control System. The main tool used for gathering needed
information was questionnaire. It was designed and focused on collecting data on the
status, problems and prospects IAS among SUCs in the Philippines. Questionnaires were
answered by head of the IAS of the SUCs or/and by representatives during the annual
conference of the Association of Government Auditors (AGIA). It was clearly stated the
functions of IAS is stipulated in DBM Circular 2004-4 and DBM-5. The said provisions are
the basis for all the internal audit activities. Therefore, it is deemed relevant to find the
internal audit activities conducted by the SUC-respondents.
Insufficient personal or staff is the problem that affects the conduction of internal
audit because regarding to the respondents interviewed, internal auditing need people to
thoroughly look into the systems and procedures of internal control of the SUC. It was
stated that it is unavailability of items or permanent position for both IAS staff and head
of the unit.
Obert & Munyunguma (2014) in the research paper titled, “Internal audit
perceptions and their impact on the performance of the internal audit function” examined
the factors causing negative perceptions of internal audit and the impact on the
performance of the internal audit function. Data was collected through questionnaires
which were distributed to managers, section heads, supervisors and clerical staff. The
research used exploratory and qualitative techniques. The causes of negative
perceptions were; auditors failure to meet expectation gap, the bad reputation of an
auditor, the quality of audit staff, level of professional competence and the absence of
independence and objectivity in internal audits. However, the research suggested that
internal audit needs to adopt a new mindset in view of the changes taking place in the
business environment, to correct the errors of financial scandals, intense focus on
corporate governance. The study revealed that internal audit can be improved by getting
adequate support from management, recruiting qualified and professional auditors.
Foreign
Prasad and Rao (2000), through their observation that the internal auditor protects
the organization from unethical practices and irregularities due to their nature of acting as
watch dogs. This ensures high levels of profitability and productivity which are actually
the organizational objectives. The study findings however disputes the position stated
earlier. The researcher found that the relationship between the existence of an internal
audit function and financial performance at the Kenya Meat Commission was insignificant.
This means, existence of internal auditing does not influence the profitability of an
organization.
In this related study, it focuses on the relationship between the internal auditing
and organizational financial performance which is closely related to this study being
pursued. Since this study being pursued by the researchers is about the improvement of
company’s performance, the related study that evaluated the effect of internal auditing to
financial performance is helpful for the researchers to assess the financial performance
of the company chosen.
Hermanson and Rittenberg (2003) perceives that, internal audit function existence
leads to increased organizational performance. According to Bejide (2006), internal audit
service results to reduction in overheads, efficiency improvement ways and uncovering
of possible losses due to insufficiently safeguarded company assets all of which lead to
reduced profitability.
Hung & Han (2010) in the research paper entitled, “An Empirical Study on
Effectiveness of Internal Audit for Listed Firms in Taiwan” tried to identify the factors that
affect the effectiveness of internal audit for listed firms in Taiwan. The authors use a
sample of 210 listed manufacturing firms. Data was collected through a questionnaire
which was mailed to the management, the head of the audited department, and the head
of the internal audit department of each company. The findings revealed that
management’s attitude, controller’s attitude, the probability of internal auditors’ promotion,
the implementation of performance evaluation, the establishment of the job description,
and the training and professional abilities of the internal auditor were the factors that affect
management’s perceiving effectiveness. Moreover, the research highlighted the factors
that affect the effectiveness of the head of the audit department. These include internal
auditor professional abilities, and the combination of organization formalization and
professional abilities. Besides, the study further investigated factors that affect the
progress of annual audit plan. These were: management’s attitude, controller’s attitude,
the organization position of internal audit department in a company, the probability of
internal auditor’s promotion, the implementation of performance evaluation, the
establishment of job description, the training and professional abilities of internal auditor,
and the combination of organization formalization and the professional abilities.
The research study revealed a high interest of the unification of audit functions,
private external/internal audit and public external/internal audit. The set of standards
harmonization or convergence contributes to the major changes in the context of the
global economy and many more activities. Thus, in achieving effective and efficient
corporate governance it should have four defining elements; internal control, risk
management, the board and financial reporting. Saud and Marchand (2012) found in their
study that different companies have different cultures, not only in their audit department,
but the organization as well. Audit staff volume also affects the efficiency. Fewer members
with more jobs are prone to make more inefficient analyses. Also, top management
support is very important in the auditing of an organization. Not only does it improve the
auditor’s efficiency, it gives encouragement as well to be involved in achieving the goals
of the company itself. It does not approach as a job to just audit, but as a goal being a
part of the company as well.
Dahir & Omar (2016) in the research paper entitled, “Effects Of Internal Audit
Practice On Organizational Performance Of Remittance Companies in Modadishu,
Somalia” evaluated the effect of internal audit practice on organizational performance of
remittance companies located in Modadishu, Somalia. The target population of the study
was remittance companies located in Bakara market. The sample size was 200
respondents selected by using Slog van’s formula. Data was collected through
questionnaires set on Likert scale and analyzed using SPSS version 22. Internal audit
independence, internal audit quality, internal control system and audit risk were the
variables of internal audit used in the study. The findings indicated that there was a
significant positive relationship between internal audit practice drivers and organizational
performance of remittance companies in Mogadishu, Somalia.
Nowadays, businesses operate in a fast and competitive approach in the ever-
changing environment. Their success is based on the ability to adapt and absorb the
environmental changes, to be able to fulfill organizational objectives, and to manage
business risks every day. “It is easy to conclude that internal control influences operations
on a daily basis”, says Bubilek (2017). Her study indicated that internal control, which is
a part of internal auditing, positively affects the overall performance of a company. In
Bubilek’s study, he aims to present internal audit and internal control concepts based on
a real life example. She found out in his study that, internal control influences an
organization’s operations on an everyday basis. He says that ‘a properly developed
internal control can positively influence business operations, risk management, and
decision making on all levels of the organization.’ Internal controls, when used daily,
improve and allows for efficient operations, effective risk management, and accurate
decision making. Internal audit increases the assurance of fulfillment of the business’
objectives and goals, which leads to a conclusion that both internal control and internal
audit affects an organization positively and its operations. This supports the results that
were found out by Saud and Marchand that culture affects the organization more than
anything.
This is related to the study being pursued with a difference on a focus which is the
local government. Unlike in this study, the researchers will focus on a chosen
manufacturing company which is the Coca-Cola Company.
Theoretical Framework
Conceptual Framework
Using the Electrolux Control System as a basis, the researchers aim to know how
the internal auditing will be efficient tool on a
manufacturing’s company performance. This
model have replaced old five components into
four components:
o Risk Management
o Audit Experience
o Performance Measurement
o Effective Audit Committee
These will enable to determine if the internal audit in the organization is efficiently
conducted. The foundation is still the control environment providing policies, procedures,
manuals and codes enforced.
Through the review of related literature and studies, the researchers find out that
the efficiency and effectivity of internal auditing is one factor to assess the company’s
performance. It gives prior information to obtain and conceptualize controls and systems
that will help the company to achieve its goals and objectives. Certain factors will affect
the efficiency of the Internal auditing, if this factors or qualifications are not be considered
it will affect the performance of the company. That is why internal Audit department is
very important inside a company where the internal audit regarded as the key element in
the application of accounting system and this in turn, helps in evaluating the work of the
department. Internal auditing is considered as the backbone of the business, the
efficiency of those helps develop the work of the company because the financial reports
reflect the internal audit’s department quality.
There is a lack of research and development regarding the direct relations about
the efficiency of internal auditing and company’s performance here in the Philippines that
is why the researchers are initiated on conducting this research study for a further
understanding about their relationship and able to find out if Internal Auditing is truly a
tool for improving company’s performance.
Consequently, the related literature and studies discussed and reviewed above
provided ideas, provisions and necessary guides for the researchers to meet its
objectives. The scope of this study is to ascertain the perceptions of the internal auditors
of Coca Cola Company FEMSA.
Statement of the Problem
Cola-Cola Company’s revenue has fallen more than 25% over the past five years
and net income has fallen at about the same level. The soft-drink maker's sales fell 15% to
$35.4 billion in 2017 as the refranchising of North American bottling territories previously
managed by Coca-Cola Refreshments and the refranchising of bottling operations in
China resulted in a significant drop in sales from the Bottling Investments segment. Their
2017 net income fell some 80% to about $1.3 billion because of a $3.6 billion expense
related to an estimate of the one-time transition tax resulting from the Tax Reform Act
signed into law in late 2017.
Hypothesis
For the purpose of the study, the researchers will emphasize the attention within
the organization (internal) and will focus on the risk management, governance and control
process; determining the efficiency of internal auditing as a tool for improving the
manufacturing company’s performance (Coca-Cola Company). Basically, every area that
the Auditing Committee of Coca-Cola Company deems necessary will be included in the
scope of the study. This will be conducted in the Philippines with the help and guidance
of College of Accountancy in New Era University, academic year 2018-2019.
Students and Professors. They will gain additional knowledge on how well the
company is managed and to make this a reference for research studies that are
related.
The Public. The general public who can cross check this work and may find this
more valuable.
Companies: Efficiency in auditing serves as a tool for improving performance of a
company. Therefore, it will be valuable and efficient to the company that are facing
problem pertaining to the poor performance.
Definition of Terms
This section consists of key terms and concepts on this research. These are
thoroughly and operationally defined for better understanding of readers.
Auditing Process – It is the process inside a company that mainly deals with the
evaluation and inspection of certain operations focused on finding weaknesses
and risks.
Control process – refers to the process in which the company collects information
about its operations and implements an effective decision that will lessen its risks
and losses.
Decision Making – this is the process of planning, choosing a solution to a problem
given that at least two alternative solutions exist.
Efficiency – can be define as the degree to which in puts are used in relation to a
given level of output.
Effectiveness – can be define as the degree to which a goal or target is met. It
entails doing the right things.
Financial Constraint – means the situation where the company experiences lack
of money and resources to accomplish tasks and restricts them from doing
something.
Governance process – it is the way in which the company combines the processes,
standards and framework to manage and monitor the achievement of the
company’s goals and objectives.
Headwinds – implies to situation wherein the business is tackled by problems and
difficulties.
Internal Auditing – pertains to the monitoring, assessment, and analysis of
activities conducted inside the company’s operations designed to add value and
improve the company’s over-all performance.
Internal Audit Charter – it’s a document that explains the internal auditing’s
purpose, its authority, responsibility and position inside the organization.
Mitigation – denotes the act of lessening the risks or losses of a certain operation
or activity that generates revenue.
Net income – refers to the profit earned by the company minus its cost of goods
sold, expenses, and taxes.
Net revenue – means the total amount of profit the company earned
Periodic Assessment – denotes the regular evaluation of a certain
operation/segment line in a company.
Quality Control System – means a system wherein the product manufactured is
tested whether or not it passed the quality standards of the product.
Risk Management – expresses the evaluation and assessment of financial and
business risks that enables them to avoid or minimize the risks and losses.
METHODS
This chapter deals with methods and procedures employed by the researchers in
completing the study. It includes the research design, respondents, and sampling
techniques, instruments of the study along with the administration and retrieval, and the
analysis used in treating the data gathered by the researchers.
Research Design
The approach of the study is in the perspective of a qualitative research. The study
required the researchers to gather non-quantitative data in majority to find out the
efficiency of internal auditing as a tool in improving a company’s performance, the Coca-
Cola Company. It is also descriptive as the researchers described the data gathered
answering the questions “how”, “what”, “where”, and “when” (Bubilek, 2017). A case study
focuses on “one single unit for analysis, one person, one group, and one organization”
and “is valued as a unit that permits in depth examination” (Saldana et. al 2011).
Additionally, Bubilek also stated that a case study does not develop an argument for how
a single case or situation represents comparable individuals. Through this method, the
researchers were able to gather the needed data and were able to apply supplementary
analysis that would market it significant to future uses of the result.
Population and Sampling
For this study, the purposive sampling was used. Purposive sampling is a non-
probability or non-random sampling technique where subjects are selected according to
the purpose of the study. In this research study, we, the researchers, performed an
interview to a group of people, particularly the auditing department, in the Coca-Cola
Company located at Taguig, Philippines. Non-probability sampling focuses on sampling
techniques where the units that will be investigated are based on the judgment of the
researcher and “does not need underlying theories or number of participants” (Etikan et.
al 2016). The researchers used purposive sampling because it was anticipated that it is
the most suitable for this study.
Source of Data
The collection of data was done through both primary and secondary sources. The
primary source of data is the semi-structured interview and survey, while the secondary
source of data is the Coca-Cola Company’s public financial statements publications and
articles.
The articles, publications and especially financial statements related solely to Coca
Cola Company were used by the researchers; these are helpful in tracking and comparing
the annual financial performance. Also, cross-checking the company’s information and
analyzing the impact of internal auditing and control processes to their over-all
performance.
Pre-planned guide for the semi-structured interview was prepared and we, the
researchers asked necessary questions to obtain the sufficient information or data. Semi-
structured interview is chosen for this will not limit exploration of related topics that could
be necessary to the study. The interview is in a formal manner to further enhance the
extraction of data from the respondents.
After the pilot testing and all necessary modification, the semi-structure interview
guide questions were administered directly to the respondents. The principal instrument
in gathering data was made by the researchers with the aid of their professor and some
recommendations resulted to the needed data and interpretation of this study. Before
starting the data-collection, a formal letter was presented first to the respondents. The
researchers had interview scheduled. There was an allotted time for the convenience of
the respondents to avoid any distractions. Moreover, the pre-planned interview was also
recorded and the information needed was noted by the researchers. Any information that
is not necessary was controlled and kept confidential. The articles, publications and public
financial statements of Coca Cola Company gave the researchers additional useful
information for their company’s financial performance through the years.
By having the other information and interviewing the respondents, we were able to
gather necessary data concerning the analysis of our research and its completion. It gave
us the data needed that is in line with our research design as exploratory and analytical.
In addition to these, the researchers explored for the missing information that is significant
to prove the efficiency of internal auditing as a tool in improving the company’s
performance.
Data Analysis
All of the data and information obtained were used in the analysis through the
conceptual framework that focuses on four components; (1) Risk Management, (2) Audit
Experience, (3) Performance Measurement, and lastly (4) Effective Audit Committee. It
determines if the internal controls are effectively applied. Together with the financial
statements’ information, the expected analysis is to find out the efficiency of internal
auditing as tool in improving the company’s performance.