Auditing forms an integral part of any organizations’ reporting system in the course of ensuring internal controls and limiting the implications of fraud and random allocation of resources within such organizations. The audit process also assists in improving efficiency in the course of operations. The following study focuses on the auditing process with a specific focus on the Coca-Cola Company.

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In the course of planning for an audit, various essential steps are critical. The first is the need to conduct a discussion with the client that focuses on the need to understand the nature of the underlying engagement and the nature of the business and the industry by extension. The second step involves setting aside a specific time where the audit documentation undergoes a process of review, which is critical in the course of developing a plan to accomplish the audit program (Elbardan & Kholeif, 2017). The next step would include the need to ask about the recent developments within the entity that may affect the outcomes of the audit process.

Further, there would be a need to request for interim financial information, which would require analysis and reflection. The interim report forms an integral part of the determination of the audit procedure. The audit process would then need the introduction of non- audit personnel before the introduction of pronouncements and the scheduling with the client. The company would have to cooperate during this process to guarantee successful completion of the audit process.

The rations that this paper will focus on will be the gross margin ratio and the liquidity ratios. The gross margin ratio is among the most common performance ratios that are applicable in the course of assessing a company’s performance. The gross margin ratio is a result of the division of the gross profit divided by the net sales. The gross margin ration is given as a percentage of the net sales. The gross margin ratio compares the net sales in a company to the gross revenue in the specific setting. The other common ratio used in the financial markets is the liquidity ratio (Du, 2017). The liquidity ratio offers an essential premise on which to evaluate the ratio between liquid assets and liabilities within such an organization. The liquidity ration provides a necessary assumption on which to assess a firms’ ability to pay the underlying liabilities vis-à-vis the current assets. The two accounts that would be used in this case are the creditor’s account and the current asset accounts.

The analytical procedures used in this case would include budgets and forecasts. A budget is a financial plan that provides a planned sales forecast for the entities revenues. The budget provides the firm with essential information on the cash flows in comparison to the liabilities that underlie. The other analytical procedure is the use of the forecast as a critical path towards important information in accounting. The estimate is a valuable planning tool that assists the auditors in the course of achieving the requisite knowledge that would reduce uncertainties in the future (Benis, 2015). The forecast focuses on the past data and analytical trends that would assist in providing a forecast for future accounting procedures. The management uses past familiarity, knowledge, and findings from past trends to make estimates on future success in the industry.

The income statement and the balance sheet in the case of the Coca-Cola Company present specific essential ratios and trends that may indicate the company’s financial position in the current setting. The total current assets in the last quarter mean 89,593,000 and liability of 7,127,000 (Coca Cola, 2018). The two figures may be applicable in the course of providing an accurate position of the entities liquidity ratio. Total current assets equal 6,681,000, and the total current liabilities total current liabilities are 1,818,000. The liquidity ratio is 3.6, which is a positive indicator of the financial status of the company. On the same note, the gross profit margin may be obtainable using the gross profit and the net sales.

The net sales in the case of the Coca-Cola Company were $ 14,653,000 in the second quarter of 2018, and a gross profit of $ 22,154,000. The gross profit, in this case, is 1.5. The results show a healthy financial position (Coca Cola, 2018). The audit collection method in the course of assessing the income statements would be the examination of records. The focus would be on the actual results with the intention of finding conclusive information on the financial position of the company. The results would also provide information on the ability of Coca-Cola to meet the financial liabilities that the firm needs to deal with in a given fiscal year.

The audit risk model is a relevant model that applies in the course of assessing the extent of risk associated with the audit process. The audit risk model is a combination of the control risk multiplied by the detection risk increased with the inherent risk. The multistage random sampling procedure would be the most recommended approach because of the need to combine some sampling techniques in the course of providing the most accurate results (Law, 2012). The various random sampling methods may be utilized. In the case of the unqualified report, the auditor has the responsibility to advise the company about the judgment that the financial statements presented are reasonably and appropriately prepared to the satisfaction of the underlying accounting standards.