Audit Plan of Cash and Summary

The objective of this audit is to ascertain that the balances presented in the Form 10K as cash in hand or deposits held by third parties as cash receivables have been completely recorded and accumulated in such underlying financial records.

To get an appropriate and true representation of the financial position, I will consider cash flow statement. Cash from operating activities has indicated an alarming reduction which calls for attention. Cash from operating activities is affected by inflows and outflows. Inflows included the consolidate income, depreciation and amortization, stock-based compensation expense, foreign currency adjustments, sale of assets, and operating charges. Cash titles that contributed to a reduction in net cash from operating activities included deferred income taxes, loss in dividends, and other unspecified items. It has can be noted that net cash from operating activities reduced from $10, 528 million, $8,796 million to $6,995 million in 2015, 2016, and 2017. This dramatic reduction in net cash from operating activities has been as a result of a reduction in net income which for instance reduced from $6,550 million to $1,283 million in 2015 to 2016, which represents an 80.4% drop in net income. Further, deferred income taxes increased from $856 million to $1,256 million showing that the company is getting in the wrong books of the tax man. The same scenario remains for the equity loss of net dividends.

The Coca-Cola Company can use the following audit steps to effectively audit the net cash from operating activities.

Analytical Procedures

This step is conducted in a stepwise fashion. The following procedures will be conducted.

1. Identify if there are significant unexplained changes or relationships in cash and cash equivalents for the period under review and other previous periods.
2. Review cash receipts as recorded in the general ledger and cash disbursements as they appear in the cash book. Compare sample transactions of both cash receipts and cash disbursements as they appear in the bank statement.
3. Confirm that cash disbursements were done in accordance to established procedures.
4. Check whether cash transactions were authorized in accordance to established protocols
5. Investigate ledger and bank accounts opened and closed in the period
6. Do a comprehensive analysis of credit balances for different accounts in the journals and confirm that these balances are similar to actual bank overdrafts
7. Compute cash ratios for the period and compare them with the same rations for different previous periods as advised by Mills & Yamamura (1998).
8. Consider all bank reconciliations and be particular about their date. The reconciling items should be traced to cutoff statements. Investigate majority of unrecorded transfers.
9. Confirm that all disbursement conforms to established cutoffs for authorizing persons.

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Reference

Mills, J., & Yamamura, J. H. (1998). The power of cash flow ratios. Journal of Accountancy, 186(4), 53.