Prepare a broad audit plan: COCA-COLA Co. a. What material types of transactions
ID: 451233 • Letter: P
Question
Prepare a broad audit plan: COCA-COLA Co.
a. What material types of transactions and transaction cycles are involved?
b. What are the high-risk areas?
c. What are the low-risk areas?
d. If management faced tremendous pressure regarding the entity's financial performance, what opportunities might exist for them to engage in fraudulent financial reporting?
e. To what extent do you believe it will be appropriate to reduce assessed control risk?
f. How will the audit effort be allocated among geographical areas?
g. Will any areas of the audit require outside expertise?
h. Will there be reliance on an internal auditor(s)? If so, why? If not, why not?
i. What form of auditor's report do you expect will be issued? What does it mean?
Explanation / Answer
Ans:
The objective of the internal audit is to improve the effectiveness of supervising obligation of the Board of Directors. Internal audit aims at ensuring that the Group’s operations are efficient, information is adequate and reliable and that set policies and procedures are properly followed by the organization.
The Group has an internal audit function and internal audits have been managed in the previous year in cooperation. The Code of Ethics and other standards and guidelines issued by the internal auditors are complied with in internal audit activities. Internal audits have been conducted in the year 2015 on a monthly basis according to approved annual internal audit plan in various Group and segment level processes as well as in business units.
Group internal audit function evaluates independently and systematically Group’s management and governance systems as well as the effectiveness, efficiency and appropriateness of the Group’s business processes and risk management. The internal audit function provides in the internal audit reports development recommendations for the aforementioned systems and processes. Main purpose of these activities is to assure achievement of strategic and financial objectives of the Group.
Internal audit pre-material, documentation and data are collected before internal audit field work. During the field work further findings are recorded at site. Internal audit reports include key findings, conclusions and recommendations for control improvements. Management of the audit target prepares an action plan to mitigate risks and develop controls to improve recommended audit issues. The implementation of the action plans is followed by the line management and the group internal audit manager.