Accounting Process

Israel Akhuetie

Nexford University

ACC3250 Milestone 1

Prof. Joseph Moussa

July 24, 2023

Company Background

Coca-Cola is an American multinational company founded in 1892, primarily known for

producing the iconic Coca-Cola drink. The soft drink was originally developed in 1886 by

pharmacist John Stith Pemberton, and the formula and brand were later sold to Asa Griggs

Candler. Apart from Coca-Cola, the company also produces and sells a wide range of other soft

drinks and citrus beverages. With a presence in over 200 countries and over 2,800 products

available, Coca-Cola is the largest beverage manufacturer and distributor in the world

(Wikipedia Contributors, 2019).

Accounting Processes

The financial statements that have been consolidated were created in accordance with the

generally accepted accounting principles in the United States (U.S. GAAP). To prepare these

statements, the individuals in charge were required to make assumptions and estimates that could

potentially impact the reported values of assets, liabilities, revenues, and expenses, as well as the

disclosure of contingent assets and liabilities in the accompanying notes of the consolidated

financial statements. These estimates were based on current events and actions, which means that

the final results may ultimately differ from these initial estimates and assumptions (The Coca-

Cola Company Annual Report pursuant to Sections 13 and 15(D), 2017).

Below are the accounting processes for which the Auditor would typically identify for an

audit and the reasons why they were selected:

● Revenue Recognition: This is a critical area that would be analyzed by the auditor. The

total revenue derived by the Coca Cola Company will be recorded accurately in the

financial statements. A review of the company's contracts, invoices, and other relevant
 documentation to ensure that revenue is being recognized in accordance with the

applicable accounting standards would be carried out by the Auditor.

● Trade Accounts Receivable: This is also another important accounting process that

would be audited. This is the amount owed to a business by its customers following the

sale of goods or services on credit that have been sold and delivered but have not yet

been paid for. This is an important component of a company's revenue and cash flow,

which makes it a critical aspect that would be reviewed by the auditor, who would then

make sure that it is in accordance with the standard accounting process.

● Inventory Valuation: Inventory valuation is a critical accounting process for companies

like Coca-Cola that have significant inventories. It is done to ascertain the costs

associated with goods sold. It is also done to ascertain the value of goods lying in storage

(Clear, 2022). The auditor will review the company's inventory records and processes to

ensure that the inventory is being valued correctly and that the method used is consistent

with the applicable accounting standards.

● Cash Equivalents: This involves tracking and recording the company's short-term

investments, such as U.S. government T-bills, bank CDs, bankers' acceptances, corporate

commercial paper, and other money market instruments (Chen, 2019). Cash equivalents

are very important to the company's financial health as they are used as a source to fund

the short-term investments of the company, which makes them a critical aspect that

would be reviewed by the auditor, who would then make sure that the company's records

and processes related to these accounts are being managed properly and accurately

reflected in the financial statements.

 ● Fixed Assets: This involves tracking and recording the company's long-term

investments, such as property, plant, and equipment. It is a very critical aspect of a

financial statement that would be reviewed by the auditor to ensure that it is being

managed properly and is accurately reflected in the financial statements.

Audience For The Audit

An audit report is targeted at internal staff members, the board of directors, the executive

committee, investors, lenders, creditors, shareholders, and the general public.

Auditing Plan Outline

● Planning: The auditor plans the scope, objectives, and procedures of the audit.

● Risk Assessment: The auditor assesses the risks of material misstatements in the

financial statements

● Draft Report Creation: The auditor creates a draft report based on the findings as soon

as the risk assessment is done.

● Reporting: The auditor prepares an audit report that includes their opinion on the

financial statements and any significant findings or issues identified during the audit.

● Follow-up: The auditor may follow up with the client after the audit to ensure that any

issues identified during the audit have been addressed and resolved.
 References

Chen, J. (2019). Cash Equivalents. Investopedia.

https://www.investopedia.com/terms/c/cashequivalents.asp

Clear. (2022, May 18). Inventory Valuation. Cleartax. https://www.clear.in/s/inventory-valuation

Taulia. (n.d.). What are trade receivables? | Definition & Meaning. Taulia.

https://taulia.com/glossary/what-are-trade-receivables/#:~:text=Trade%20receivables%20are

%20defined%20as

The Coca-Cola Company Annual report pursuant to Section 13 and 15(d). (2017, December 17).

Investors.coca-Colacompany.com.

https://investors.coca-colacompany.com/filings-reports/annual-filings-10-k/xbrl_doc_only/1819

Ramachandran, A. (2020, May 20). Audit Cycle (Definition, Example)| 5 Stages of Audit Cycle.

WallStreetMojo. https://www.wallstreetmojo.com/audit-cycle/

Wikipedia Contributors. (2019, March 7). The Coca-Cola Company. Wikipedia; Wikimedia

Foundation. https://en.wikipedia.org/wiki/The_Coca-Cola_Company