Audit Risk Analysis of the Coca-Cola Company

4897 WordsAug 16, 201320 Pages
Audit Risk Analysis Project The Coca-Cola Company Kimberly Williams Liberty University MEMORANDUM To: From: Kimberly M. Williams, CFE Subject: Audit Risk Analysis of The Coca-Cola Company Date: August 14, 2011 I have carefully used information derived from the company and the Securities and Exchange Commission (SEC) to assess the risk of accepting The Coca-Cola Company as an audit client. My research was based on careful analysis of recent developments and key items including recent financial statements and business ratios. The financial condition of the company included a comparison of the financial ratios of The Coca-Cola Company against the industry. This analysis was designed to provide a framework for assurance…show more content…
Today, the Coca-Cola Company has become a well known globalized company. Applying Audit Risk Model/Audit Procedures There are several risk factors to include in this discussion. Industry and regulatory risk factors include Obesity/Health Concern. There is a growing concern among consumers and public health officials about the public health consequences of obesity. This includes a large movement towards health conscious eating and drinking, specifically avoiding sugar-sweetened beverages. This could affect demand for some beverages and in turn affect profitability. Water availability is also a factor. Water is the main ingredient of all products. It is a limited resource and also facing unprecedented challenges from overexploitation, pollution, poor management and climate change in many parts of the world. As water scarcity and demand both increase, the system may incur increased production costs or face capacity constraints, which could adversely affect profitability. Governmental regulations and competition are also major risk factors. The Coca Cola Company complies with applicable laws in numerous countries throughout the world. In the USA, this includes the Federal Food, Drug and Cosmetic Act; the Federal Trade Commission Act; the Lanham Act, etc. The Company may face some pressure to perform above their many competitors, namely PepsiCo, Inc.; Nestle; Dr Pepper Snapple Group,

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