Question

List the purpose of each of the following three paragraphs using Relevant auditing standards for questions related to Coca-Cola’s auditor’s opinion include AS 3101, AS 2201, AS 2820.

We have audited the accompanying consolidated balance sheets of The Coca-Cola Company and subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, shareowners' equity, and cash flows for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Coca-Cola Company and subsidiaries at December 31, 2014 and 2013, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.

Answer 1

The first paragraph, i.e. where the auditors have mentioned that the financial statements are the responsibility of the management and the auditors are only responsible to express their opinion on the financial statements is the scope of audit paragraph. In this paragraph the auditors have clearly outlined the scope of the audit and made it clear that the financial statements have been prepared by the management and they have conducted audit on these statement to express their opinion on these statements.

As per AS 3101 in case an auditor expresses unqualified opinion on the financial statements of an organization then necessary explanation shall be provided to justify the expression of opinion. In the second paragraph the auditors have explained how they have conducted the audit in accordance with Public Company Accounting Oversight Board to plan and preform the audit efficiently. Using the evidence collected during the course of audit of the financial statements of the company according to the auditors shows that the financial position and performance of the company have been fairly represented in the financial statements of the company. Further the accounts are not materially misstated. Thus, according to AS 3101 the auditors have expressed unqualified opinion on the financial statements.

AS 2820 requires the auditors to evaluate consistency of financial statements however, since nothing specifically have been mentioned by the auditors on this aspect of the financial statements it can be assumed that the company has followed accounting policies and principles consistently to prepare and present its financial statements over the years. AS 2201 requires an auditor to audit the internal controls of an organization to check whether these have worked efficiently throughout the intended period of audit considering no weaknesses have been mentioned by the auditors in the internal controls of the organization and have expressed an unqualified opinion on the financial statements of the company it is clear that the internal controls are effective and have worked effectively throughout the intended period of reliance.