Discussion Requirements
1. Answer the following questions.
What is the name of the auditor? Looking at their signature, what city do you see? ‘The first page of the SEC 10-K is very standard and lists two key locations. Using this information, post the state of incorporation and the city and state of the corporate headquarters for your SEC 10-K. Returning to Item 8, near the auditor’s report (this is the letter they sign, giving their opinion on whether the financial statements are fairly present in adherence with U.S. GAAP), locate the letter regarding internal control. ‘This letter is signed by the company’s management. What are their names and titles? Some companies list all officers whereas others list only the chief executive officer (CEO) and the chief financial officer (CFO). The SEC only requires the signatures of the CEO and CFO. List the topic headings from the auditors’ report on Critical Audit Matters. Examples might be Internal Control or Inventory or Goodwill Impairment. Critical Audit Matters are near the end of the report. The report is actually a letter from the audit firm to the company’s Board of Directors.
Topic: WK4 SEC 10-K Key Reports and Information
Critical Audit Matters (CAM) is a note mentioned in the SEC 10-K report under Item 8 where any issues arising from the financial statements prepared by the Financial Team were required to be conveyed to the Audit team. This report is prepared and presented by the Audit Committee for the Investors. It helps the investors to make judgments about the company’s internal control. It includes the transitions recorded in the Financial Statements and involves any critical or challenging judgment. Charlotte, North Carolina (PricewaterhouseCoopers LLP) has served as the company’s auditor of Coca-Cola Consolidated since 1972. The company’s auditor checked regarding the procedures followed, fairness, and efficiency in the financial statements. It also suggests if any changes are required in the preparation of the financial report (Hollie, 2020, p.49).
Coca-Cola Consolidated was registered and its state of incorporation is in Delaware. Its headquarters is situated in Charlotte, N.C. which is in the U.S. state of North Carolina. The Auditor Report of the company says that there is no need for any change or challenges regarding the financial report. The Audit Committee stated that the financial statements are fairly prepared and displayed. This report is evaluated and signed by the company’s management including Chief Financial Officer(CFO) and Chief Executive Officer(CEO), their names are respectively F. Scott Anthony and J. Frank Harrison, III.
The Critical Audit Matters (CAM) is prepared at the end of the audit report to the Board of Directors of the company. It is the letter to the higher management about the fairness of the financial statements, it also includes the changes or challenges related to the financial statements. A company’s Internal Control is the process that reflects the correctness and effectiveness of the financial reports. It considers the accounting principles and regulations in the financial report. The company uses inventory management to reduce its costs and increase sales, Coca-Cola Consolidated uses the FIFO method for beverages (Finished goods) and it uses the Average method for plastic bottles, cans, and other inventories (sec.gov, 2022).
Reference List:
Hollie, D. (2020). Early evidence on the AS 3101 critical audit matters disclosure. Hollie, Dana, 45-54.
sec.gov (2022) COCACOLA CONSOLIDATED, INC. ANNUAL REPORT ON FORM 10K retrieved from https://www.sec.gov/ix?doc=/Archives/edgar/data/317540/000031754021000006/coke-20201231.htm [Retrieved on: 9th February, 2022]
