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Running head: COCA-COLA INTERNAL CONTROL 1
Coca-Cola Internal Control
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COCA-COLA INTERNAL CONTROL 2
Abstract
The effectiveness of a company or organization in the global markets entails the use of a
well designed internal control system. The global markets will always affect the prices of the
commodities produced by individual companies. The adaptation of the variables that are used to
this end to respond to the evolution of the surrounding also has to be employed. The intangible
assets have to be put into consideration in order to have an efficient company. The success of the
enterprise will always concentrate on the management structure and the work done by the
employees. In this case, risk management, controlled activities, communication and information,
monitoring and the working environment has to be put into consideration.
Introduction
An internal control system is a strategy in which methods in a company are put together
to ensure that accounting integrity and financial information will meet the targets of a business
and employ the management policies in the enterprise [Dav142]. It includes the policies,
practices, behaviors and tasks that will facilitate the effectiveness of the organization or the
company in production through controlling the operational, financial aspects and other factors
that will enable the business to achieve its objectives. The system of an internal control of an
individual company will reflects its control environment which on the other hand will reflect the
organization structure of the company from the control activities, communication and
information processes and monitoring the effectiveness of the system.
The company’s system control is managed by a board of directors which sets the
appropriate policies on the management of the internal control. These systems are meant to
ensure that the system of internal control is effective in the company’s management risks and the
way in which it is approved.
In general, the establishment of an internal control will establish protocols and methods
in which the staffs and other managing workers of an institution will follow. It will also reduce
the cases of theft and fraud within the organization. It will also control the tasks of the employees
such that an employee who receives the accounts is not the same who will pay the accounts.
Objectives of the study
The goal of the project it help in designing tests of control and substantive tests of
transactions audit procedures for purchase (acquisition cycles) and payments and for sales, cash
receipts and other classes of operations in the sales and collection cycles. In this study, the design
of the Company of Coca-Cola will be examined. The other objective will be to understand the
fundamental concepts and the components of internal control and be able to develop and operate
efficient accounting and internal control systems for the Company of Coca-Cola.
The Company of Coca-Cola
The Company of Coca-Cola is an American beverage corporation that produces, markets
and retails the non-alcoholic beverage. The company is believed to have been invented in 1886
by John Pemberton Stith in Columbus. It produces a syrup concentrate that is sold to the other
bottlers in the entire world. These bottlers hold the Coca-cola franchise that will sell and
distribute the product to the retailers, restaurants and food shops, vending machines and other
shops. The company is known to sell its product in more than 200 nations. Reports have also
indicated that the beverages bearing the trademark of the Company of Coca-Cola are close to 50
billion. This has ended up in estimating the sale of the company to be 1.5 and 1.6 billion in 2010
every day.
The coca cola company internal control system
The Company of Coca-Cola has defined the internal control in different components. The
control environment is the first one and is said to be the core of any company since it comprises
of the people and their working environment. The risk management is the next component that is
based on the risks that the company may face from errors to management caused problems. The
other component is the control activities that are the procedures and the policies employed to
meet the internal control. Communication and information in the Company of Coca-Cola are
another components that are the systems by which people are enabled to access the information
that is relevant to the production process and the company operations. Finally, the monitoring in
the internal control is an essential element in the fact that it ensures smooth flow of operations in
the internal control process. All these components are based on the Company of Coca-Cola
management structure and make the company profitable.
Auditing Committee
The coca cola company consists of an audit committee that is used to help the board of
directors in accomplishing its responsibilities in ensuring the company activities are efficient and
of quality. This committee is formed by a group of directors who are appointed by the Board of
Directors. These committee members’ financial expertise and independence are based on
different rules and acts. For instance in the Company of Coca-Cola, they are governed by 1934
rule 10A of the Securities Exchange Act, 303A.02 of the Stock Exchange in New York Company
Manual and any other governing rule ([Sus14].
The committee is subjected to meetings that are regularly held and in most cases five
times in a year. In case of urgency or any special occurrence, the chairman or any other
committee member may call for a meeting in which a quorum is proposed and discussed. The
committee periodically meets with the management separately with the internal auditing team
and sometimes the independent auditors.
The key responsibility of the committee in the Company of Coca-Cola is to control and
manage the process of financial reporting on behalf of the directors. This will be followed by
regular reports based on the activities of the Board. It is sometimes confusing that the committee
is responsible for the accuracy of the financial reports and the completion of the statements. This
is not the duty of the Committee. In fact, these are done by the company’s independent and
management auditors of Coca-Cola Company.
Independent Auditors
The Company of Coca-Cola uses independent auditors who are mostly reliable to the
board and committee. The committee has the authority to hire, replace or even evaluate these
auditors and is therefore directly responsible for any inappropriate appointment, compensation or
oversight of the work done by these auditors [Mat13].
The committee usually discusses qualification level of the auditors and independence
from the management level hence make relevant conclusions on the work done by these auditors
in the company.
Coca-Cola Company Risk Management
The management of a company is always responsible for maintaining and establishing the
internal control and procedures to provide a sensible assurance of how the financial report is
reliable. The company has defined its strategic methods of management control of the risk that
may hit the company from the production to the last consumer. This has been done from the
perspective of the customer emphases. For the company to be competitive in the market, it
guaranteed on the quality in which the high-level management has special insight in continuing
to improve the quality. All the employees in the Company of Coca-Cola have the right to
maintain the quality.
Risks are mostly realized in the cash flow statement of a company. The cash flow will
actually provide information on the receipts and cash payments during a given period. These
flows will connect the ending balance of cash to the start of the company’s financial statement.
The Company of Coca-Cola experiences were producing and delivering operation activities. The
cash flows will, therefore, be included in the operational activities in which examples are
transactions of supplies payments, receipts and sale records.
The Company of Coca-Cola has identified the mechanisms and various steps that they
have used to understand the overall control operations. Among them are planning management,
investment and lending, operations, procurement, salary and personal mechanism, accounts and
expenditures, service management and asset mechanism. These mechanisms are delineated to
clarify the responsibilities and work of each aspect. This ended the Company of Coca-Cola’s
internal control to design forms that were used to highlight the operational and management
controls. Procedural charts are designed from the procedures to display the various mechanisms.
The aim of this is to produce the procedural risks.
A thorough analysis on the levels of risk management in the Company of Coca-Cola has
been done to support the decision made in all the levels of production. From the analysis, the
Company of Coca-Cola has the Unit of the Managing Directors who have the prime
responsibility for the management of the risks. This was done by identifying these risks and
taking the actions that alleviate these risks hence supporting the company to achieve its goals.
The sales cycle in the Company of Coca-Cola is determined by orders, account
operations, dispatchers and the invoicing. The effectiveness of the control mechanisms in this
process was determined by audit testing and allocation of appropriate coefficients. On the other
hand, the cash cycle was determined by finding the assessment on the payments, receipts, and
bank accounts.
The Company of Coca-Cola has several documents that have supported the risk
management. They are Company continuing planning policy, purchasing the policy,
environmental policy among others.
Conclusion
The use of an internal control system in the Company of Coca-Cola has added value in
different ways for the company making is meet the objectives and the goals. A governance
mechanism has been established in the company’s organization system. On the other hand, there
has been the exhibition in the sustainable operations. This has been evident due to the continued
internal and self-audits in the management structure hence building experience and widening
their usage in the company. The management of the operational cycles, for instance, the sales
and purchases cycles enables the company’s management to leverage the resources effectively.
Finally, the Company of Coca-Cola has ensured that all its employees learn all the methods that
quantify risks and come to a consensus based on the systematic considerations. The efforts of
using the internal control have been successful in the Company of Coca-Cola and thanks to the
support from the senior management to all the employees.
References
Jajodia, S., & Strous, L. (2014). Internal control management and evaluation tool. Boston :
Kluwer Academic.
Leitch, M. (2013). Intelligent internal control and risk management... by Matthew Leitch .
Aldershot: Burlington, V.
Ricchiute, D. N. (2014). Auditing and assurance services. London: Thomson Learning
Publishers.
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Running head: COCA-COLA INTERNAL CONTROL 1

Coca-Cola Internal Control

monitoring and the working environment has to be put into consideration.

information processes and monitoring the effectiveness of the system.

way in which it is approved.

Objectives of the study

The Company of Coca-Cola

The Company of Coca-Cola is an American beverage corporation that produces, markets

The coca cola company internal control system

management structure and make the company profitable.

Manual and any other governing rule ([Sus14].

and sometimes the independent auditors.

management auditors of Coca-Cola Company.

oversight of the work done by these auditors [Mat13].

Coca-Cola Company Risk Management

maintain the quality.

transactions of supplies payments, receipts and sale records.

The aim of this is to produce the procedural risks.

The sales cycle in the Company of Coca-Cola is determined by orders, account

environmental policy among others.

support from the senior management to all the employees.

Ricchiute, D. N. (2014). Auditing and assurance services. London: Thomson Learning

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