Coca Cola Auditing Project

rank 6334 scrutiniseing and Assurance Service Research Project pic Li-chung Lee Kung Ya Cheng Jui-Ping Lin Table of contents I. Introduction. P. 34 II. Ch 1 The lymph node acceptance/ sequel process, including establishing an understanding with the lymph glandP. 45 III. Ch2 Obtaining an understanding of the entity and its environment, including internecine retain. P. 56 IV. Ch3 Preliminary Engagement Activities P. 6 V. Ch4 quantify stake and build corporality.. P. 78 VI.Ch5 Consider Internal constraintP. 911 VII. Ch6 Plan the canvass.. P. 1114 VIII. Ch7 Complete the Audit.. P. 15 IX. Ch8 Evaluate results and hump an natesvass narrative. P. 16 X. abduceP. 17 XI. Attachments.. P. 1823 I. Introduction The coca- pinhead familiarity (Symbol KO) was incorpo treadd in September 1919 under the laws of the State of Delawargon and succeeded to the short letter of a Georgia toilet with the same name that had been organized in 1892.The corporation is the retracer, distri h oweveror and v annulor of nonalcoholic drink concentrates and syrups in the world. Finished beverage products bearing its trademarks, inter reassign in the United States since 1886, argon now exchange in more than than 200 countries. Along with Coca-Cola, the union markets nonalcoholic sparkling brands, including Diet Coke, Fanta and Sprite. It compensate beverage concentrates and syrups, which the caller sells to bottling and canning operations, fountain wholesalers and or so fountain retailers, as healthy as finished beverages, which the Company sells to distributors.The Company owns or licenses more than 450 brands, including fare and light beverages, waters, enhanced waters, juices and juice drinks, teas, coffees, and energy and sports drinks. The Company is one of legion(predicate) competitors in the commercial beverages market. Of the virtually 53 billion beverage servings of all told types consumed worldwide every day, beverages bearing trademarks owned by or a uthorise to the Company circular for approximately 1. 5 billion. 1The spring we chose this society is beca mapping it has awful market share in countries around the world.In golf club to set forth its market share, The Coca-Cola Company cooperated with the major fast food chain company. Today, The Coca-Cola Company become a well whopn and globalization company. We want to know how it can be sustainability and venerability company in the world. From its constitutions, we in addition found turn up(a) it has trem hold backous benefit from its advertising. In this paper, we concern that how the meeters build a tidy audit device in much(prenominal) large company and such complex concern. II. Ch1 Understanding of the customer There are five major reasons that we consider to accept The Coca Cola Company to be out client. 2 Management Integrity shewd upon assertions of perplexity ranging from the existence of an element in the fiscal statements to disclo authentics of i nformation regarding that element, we examines The Coca Cola Company pecuniary statements that are no responsible practitioner would knowingly place reliance on assertions of a clients management which had questionable integrity. Relationships with oppositewisewise headmasters We provide fol minor the GAAS indispensableness to communicate with the predecessor auditor prior to committing to provide audit service to The Coca Cola Company.Matters of interest include the touchs issued by the predecessor auditor, endurance of the prior auditor or the refusal to stand for reelection, disagreements between the prior auditor and management regarding accountancy principles or auditing cognitive operations and any opinion shopping issues. interrogation of other professionals having dealings with the client should, however, non be limited to the predecessor auditors. Furthermore, we will ask bankers, lawyers, and other professionals can provide important priceless information about The Coca Cola Company and its management. danger of crosstie The Coca Cola Company engaged in legitimate business activities that do not violate the laws of the jurisdiction where the company is headquartered or carries on its business. After reviewing its fiscal statement, we believed that its financial is stability and liquidity. Technical Competence The auditors who will carry through the auditing are well trained due to the complexities of the modern business world. And also, the auditors have the necessary technical competence to perform the required change by reversal or pretend potential liability or damage to reputation.Professional Fees Audit fees charged to The Coca Cola Company will introduction on commensurate with the risks to the providing the services requested. The fees will c everywhere adequately the damage of the services provided. III. Ch2 Obtaining an understanding of the entity and its environment In the 21st century, the beverage application has been become one of the fastest developing industries and the competition in this fabrication become world-shatteringly. Even in this market share campaign, The Coca Cola Company still remains its leader specify in the beverage industry.The Coca-Cola Company and six of their largest bottling partners developed a strategy for sustainability in 2002. That plan focuses on the role and impact of the Coca-Cola system in four tell areas workplace, grocery, environment and community. Furthermore, The Coca-Cola Company uses this strategy to guide the approach to sustainability issues and to report the progress. 3 In last year, when lots of companies in the industry are going down, The Coca-Cola Company still delivering consistent performance.For its native control, the company fol imp all overisheds the independent and experience exigency of NYSE and SEC for many years. And the audit committee has been composed wholly of non-management directors. 4 IV. Ch3 Preliminary Engagement Acti vities Every member in our audit group is well trained and performs follow by the conduct of AICPA and SEC. Regarding to the ethical and independence matter, we has three major requirements. 1. Our auditor have to sign the contract to bring up sure that he/she will not take a position in the The Coca-Cola Company in two years 2.We will not drive the auditor who uses to work in The Coca-Cola Company. 3. We required the auditor to report to the partner who has special relationship with the The Coca-Cola Company. V. Ch4 Risk and Establish Materiality The Coca-Cola Company is a globalization company it faces various issues. For example, Obesity concerns, water scarcity and poor quality, increased competition, and evolving consumer preferences are risks having the potential to have a sensible adverse effect on our client.To be an auditor, we assess clients RMM (risk of square misstatement) with understanding the client entity and industry. After audit risk is set, we go further to assesses intrinsical and control (environment) risks. In addition, assessing clients infixed and control risks which can influence the level of spotting risk directly. Base on the case, we imbibe an assumption in order to maintain the audit risk. The following table shows numerical and non-numerical example of audit risk. Audit Risk RMM DR IR CR 5% 50% 20% 50% low moderate low moderate Audit risk on intimately engagements is much lower than 5%. 5 jibe to conservative assumptions that we decide inhering risk is assessed at moderate (50%). The Coca-Cola Company is a multinational company, so on that point are not only lots of accounts receivable which come from incompatible parentagees in the world, but also lots of inventories which were do or stored in different factories and warehouses in the world. As the reasons above, The Coca-Cola Company whitethorn face some risks, such as is on that point reason to believe that receivables include operative balances in for eign currencies?Is there reason to believe that the existence of the accounts receivables which stupefy from different oversea branch companies or subsidiaries? Are there significant foreign gold inventories balance? Are manufactured inventories transferred between locations, divisions, or subsidiaries within a consolidate entity? Are there material-inventories owned by the client but held by others (e. g. , on consignment with customers)? Therefore, we should assess the inherent risk in moderate level.On the basis of our experience, after we call for the predecessor auditors report and our clients by annual report. We presumed that our client has well internal control so that we can assess the control risk in low level. Overall, in order to keep the audit risk in low level, we decided our observeion risk in moderate level. Besides, in our clients industry there are some companies that try to inflate their revenue and assets so in our audit we will focus on operating cycle.In other words, we will put emphasis on auditing accounts receivable and behave list to make sure there are no major accounting schemes or fraud that will mislead the presentation of financial statements. Materiality Materiality includes both the nature of the misstatement, as well as the long horse cast along of misstatement, and mustiness be judged in importance by financial statement users. 6 In our engagement, we will use the nature and dollar amount to decide what materially is for our client as the follow chart. key out Accounts receivable Inventory Materiality Nature 1. Recognize revenue in ill-treat period 1. Easy to thief 2. The existence of the A/R 2. tough to count the ending balance 3. Risk of foreign currency transposition Dollar amount In our firms policy, in manufacture industry we adopt the 10% of lettuce income afterThe same as left column. tax to decide the materiality. For example, the net income 2007 multiply 10% $5,981M*10%=600M VI. C h5 Consider Internal Control 1. Define Internal Control According to the COSOs definition of internal control, a process, effected by an entitys board of directors, management, and other personnel designed to provide bonnie self-assurance regarding the achievement of objectives in the following categories (1) reliability of financial reporting, (2) compliance with applicable laws and regulations, and (3) effectiveness and efficiency of operations. 7 2. severalise some controls that would be pertinent to the audit. Account Accounts receivable Inventory Control Authority Inquire about assent procedure for upstart customers (Valuation) When exile the Inventory to vendor or supplier, the From a population of approved sales orders (and returns), select awarehouseman should get the proper authority shipping sample and examine documents for curtilage of book of facts hit document. (Valuation) Custody Prepare daily hard cash summary (copy to A/R and Accounting) Obse rve physical controls over store. Segregation of duty Mailroom & sever Segregation of duty Warehouse & Shipping Recording belongings depict a sample of shipping documents (selection from pre-numbered The perpetual records should reconcile to the general shipping documents) to sales invoice, sales journal, and A/R ledger. master file (Completeness) The expiation of Inventory and the Lower or market Match remittance advices and check deposit summary price valuation should be review by proper accounting manager or management. 3. Discuss the components of Internal Control Control environment After we understand the internal control procedure and policy, we ensure that our client has ideal control procedure, high ethical ideal, and monitor processes. Risk assessment Risk exist in the oversea marketplace (in failures to merge China companies) In failures to accurately record and report financial information. Control activities Authority Custody Segregation of dut y Recording keeping Information and Communication Our client has good information and communication give-up the ghost including initiating, authorizing, recording, processing, and reporting entity transactions, conditions, and events. Monitoring Our client use computer accounting software system and system to assess the quality of other transaction and operational controls over time. It includes the periodic assessment of both the design and operation of controls on a timely basis. 4. The elements involved in regaining an understanding of Internal Control We should obtain an understanding of the five components of internal control sufficient to A. Evaluating the design of relevant controls and determining whether they have been implemented. B. valuate the risk of material misstatement. C. Design the nature, extent, and clock of further audit procedures. 5. Access Control Risk We should assess the inherent risk in moderate level.On the basis of our experience, after w e film the predecessor auditors report and our clients internal control procedures. We can presume that our client has well internal control so we can assess the control risk in low level. 6. Managements Responsibilities and the auditors responsibilities under Section 404. Managements The auditors Laws or standards Sarbanes-Oxley Act of 2002 ( for publicly traded Second standard of fieldwork companies) 2. PCAOB Auditing Standard No. (AS 5) Responsibilities In addition to certifying the companys financial Auditors must provide their opinion on the effectiveness of statements (Section 302), management must also report on clients internal control. the companys internal control over financial reporting (Section 404). (Chris Linsteadt, 2008 Audit Class Slides ch6) VII. Ch6 Plan the Audit 1. Assess the need for specialists In our case, we should hire some computer audit experts who can help our firm to make sure that our clients accounting system is sate and correct. 2. Assess the possibility of illegal acts. Risk The possibility of illegal acts Is there reason to believe that the existence of the accounts There were some fake transactions which were make by management or employees. receivables which generate from different oversea branch companies or If the sales dont get proper trust authority, there will be abundant bad debt subsidiaries? expense in the future Are there material-inventories owned by the client but held by others The management may try to inflate the sales in the end of year so he may try to (e. g. , on consignment with customers)? recognize consignment as sales revenue. The management may use consignment to control the companys ending inventory or COGS. Are manufactured inventories transferred between locations, divisions,The management may use complicated related party transaction to generate fake or subsidiaries within a consolidated entity? sales or ending inventory. The employees may have chance to steal th e coke formula or inventories. 3. Identify related parties After we discussed with the management and checked the related party transactions, there is no material related party transaction in this engagement. 4. portion out preliminary analytical procedures. Accounts Receivable Inventory Compare with industry rate to make sure our clients A/R perturbation rate and Compare with industry rate to make sure our clients inventory turnover geezerhood are reasonable. rate and days are reasonable. Compare our clients allowance for doubtful account policy with competitors secure sure the change in our clients inventories is reasonable without policy to make sure the bad debt expenses are reasonable estimated. material misstatement. Make sure the change in our clients A/R is reasonable without material misstatement. 5. Consider additional prise added services. After we obtain and understand our clients internal control, we should detect our clients internal control. We can prepar e a feedback report to our client and help our client to improve their internal control or accounting system. Besides, when our clients face some problems about new accounting standards, we could help our clients to train their accountants 6. Audit Plan and Audit program. Receivables form of Client Period Estimated audit hours Audit procedures indicate and date by Working paper Ref. auditors 01. TEST PROPRIETY OF REVENUE RECOGNITION POLICIES AND PROCEDURES Receivables Validity, Cutoff 02. verify RECEIVABLES Validity, Completeness, Recording, and Cutoff Q04 No 03. TEST THE ALLOWANCE FOR DOUBTFUL ACCOUNTS AND BAD DEBT EXPENSE Valuation 04. TEST presentment OF RECEIVABLES Presentation 05. TEST novel CUTOFF OF gross sales Cutoff Q01A Sales Invoices 06. TEST LATE CUTOFF OF SALES Cutoff Q01A Initial Records 07.ROLL-FORWARD TEST FOR RECEIVABLES TESTED PRIOR TO course of instruction END Validity, Completeness, Recording, C utoff 08. TEST RECEIVABLES TO SUBSEQUENT hard currency RECEIPTS Validity, Completeness, Recording, Cutoff 09. TEST ALLOWANCES FOR SALES RETURNS AND DISCOUNTS Valuation 10. TEST PRESENTATION OF RELATED-PARTY RECEIVABLES Presentation 11.TEST VALUATION OF FOREIGN CURRENCY RECEIVABLES Valuation referee Sign Date 6. Audit Plan and Audit program. Inventory key of Client Period Estimated audit hours Audit procedures Sign and date by Working paper Ref. auditors 01. OBSERVE AND TEST-COUNT INVENTORIES Validity, Completeness, Recording, Cutoff, Valuation 02. TEST THE FINAL scroll digest Validity, Completeness, Recording, and Cutoff 03. TEST MARKET VALUATION RESERVES Valuation 04. TEST PRESENTATION OF INVENTORY Presentation 05.TEST LATE CUTOFF OF INVENTORY PURCHASES Cutoff Q05A Recorded Purchases 06. TEST early(a) CUTOFF OF DEBIT NOTES Cutoff 07. TEST BOOK TO PHYSICAL ADJUSTMENTS Validity, Completeness, Recordin g 08. ROLL-FORWARD TEST FOR INVENTORIES price TESTED PRIOR TO YEAR END Validity, Completeness, Recording, Cutoff 09.TEST ELIMINATION OF INTERCOMPANY fee Valuation 10. TEST BALANCES DENOMINATED IN FOREIGN CURRENCIES Valuation 11. TEST PRESENTATION OF RELATED-PARTY BALANCES Presentation Reviewer Sign Date VIII. Ch7 Complete the Audit The auditors responsibilities during the completion stratum of the audit Before issuing the audit report, the auditor needs to 1. arrange a final review of the audit to be sure the financial statements are fairly presented and the audit documentation supports the audit report 2. Assess the ability of the client to continue as a going concern, and 3. Make a final review of the auditors assessment of internal control based on evidence gathered and any material misstatements identified in the financial statement audit. In addition, we should get the management representation letter and letter of audit inquiry to make s ure there are no material contingent liabilities and events subsequent to the financial statements and keep communicating with the audit committee. The follow data are made by assumption Contingent Liabilities Subsequent events Our client may tolerate the litigation about merger in oversea. It will cause a Note disclosure huge loss for our client. On January8, 2009, our Company sold substantially all of our interest in Vonpar Refrescos S. A. (Vonpar), a bottler headquartered in Brazil. sum proceeds from the sale were approximately $238million, and we recognized a gain on this sale of approximately $71million.Prior to this sale, our Company owned approximately 49percent of Vonpars outstanding common furrow and accounted for the investment use the equity method Our client is a multinational company so it may have the threat of expropriation of assets in a foreign country. Our client may get loss in the highly competitive nonalcoholic beverages industry.If our cl ient signs purchase and sale commitments with its supplier, it may get a huge loss in the future. Other important investments which will change our clients accounting principle similar as above. IX. Ch8 Evaluate results and issue an audit report Independent Auditors Report The mature of Directors and Stockholders The Coca-Cola CompanyWe have audited the consolidated balance sheets of the Coca-Cola Company and subsidiaries (the Company) as of declination 31, 2007 and 2008, and the related consolidated statement of income, parenthoodholders equity and cash flows for to each one of the years in the three-year period ended December 31, 2008. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements bases on our audits. We conducted our audits in accordance with the standards of the everyday Company Accounting solicitude Board (United States). Those standa rds 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 utilise and significant presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements refereed to above present fairly, in all material respects, the financial position of the Coca-Cola Company and subsidiaries as of December 31, 2007 and 2008, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Companys internal control over financial reporting as of December 31, 2008, based on criteria realized in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO), and our report dated demo 14, 2009 expressed an unqualified opinion on the effectiveness of the Companys internal control over financial reporting. Lee &Cheng &Lin LLP Dallas, U. S. A. March 14, 2009 X. References The company description, Market watch http//www. marketwatch. om/tools/quotes/profile. asp? symb=ko Deppe, Larry A. , Client acceptance what to manner for and why. (Tips for accountants on deciding which new clients to accept) (Cover Story), The CPA Journal , May 1992, strategic vision, The Coca Cola Company website 2008The proxy statement, The Coca Cola Company website, Chris, Linsteadt, 2008 Audit Class Slides Rittenberg, Schwieger, Johnstone. Auditing, A Business Risk Approach. Thomson&South-Western Publishin g. 6th,2008 SEC filing The Coca Cola Company website Retrieved from the World capacious Web XI. Attachment (Financial Statements) Consolidated equalizer Sheet coca sens CO 10-K 02/28/2008 ? offset Sheet December 31, 2007. 00 2006. 0 (In millions unpack par value) ? ? ASSETS ? ? ? ? up-to-the-minute ASSETS ? ? ? ? Cash and cash equivalents $4,093 $2,440 Marketable securities ? 215 ? 150 disdain accounts receivable, less allowances ? 3,317 ? 2,587 of $56 and $63, singly Inventories ? 2,220 ? 1,641 Prepaid expenses and other assets ? 2,260 ? 1,623 TOTAL up-to-the-minute ASSETS ? 12,105 ? 8,441 INVESTMENTS ? ? ? ? truth method investments ? ? ? ? Coca-Cola Enterprises Inc. ? 1,637 ? 1,312 Coca-Cola Hellenic Bottling Company S. A. ? 1,549 ? 1,251 Coca-Cola FEMSA, S. A. B. de C. V. ? 996 ? 835 Coca-Cola Amatil Limited ? 806 ? 817 Other, principally bottling companies ? 2,301 ? 2,095 and adjunction ventures Cost method investments, principally ? 488 ? 473 bottling companies TOTAL INVESTMENTS ? 7,777 ? 6,783 OTHER ASSETS ? 2,675 ? 2,701 PROPERTY, PLANT AND EQUIPMENT net ? 8,493 ? 6,903 TRADEMARKS WITH INDEFINITE LIVES ? 5,153 ? 2,045 GOODWILL ? 4,256 ? 1,403 OTHER INTANGIBLE ASSETS ? 2,810 ? 1,687 TOTAL ASSETS $43,269 $29,963 LIABILITIES AND circumstancesOWNERS EQUITY ? ? ? ? CURRENT LIABILITIES ? ? ? ? Accounts payable and accrued expenses $6,915 $5,055 Loans and notes payable ? 5,919 ? 3,235 Current maturities of long-term debt ? 133 ? 33 accrued income taxes ? 258 ? 567 TOTAL CURRENT LIABILITIES ? 13,225 ? 8,890 LONG-TERM DEBT ? 3,277 ? 1,314 OTHER LIABILITIES ? 3,133 ? 2,231 DEFERRED INCOME TAXES ? 1,890 ? 608 SHAREOWNERS EQUITY ? ? ? ? Common bourgeon, $0. 25 par value Authorized 5,600 ? 880 ? 878 shares Issued 3,519 and 3,511 shares, respectively Capital surplus ? 7,378 ? 5,983 Reinvested earnings ? 36,235 ? 33,468 Accumulated other compr ehensive income ? 626 ? (1,291) (loss) Treasury caudex, at cost 1,201 and 1,193 ? ? shares, respectively TOTAL SHAREOWNERS EQUITY ? 21,744 ? 16,920 TOTAL LIABILITIES AND SHAREOWNERS EQUITY $43,269 $29,963 Consolidated Income Statement COCA dumbbell CO 10-K 02/28/2008 ? Income Statement family Ended December 31, 2007. 00 2006. 00 (In millions except per share data) ? ? NET run REVENUES $28,857 $24,088 Cost of goods sold ? 10,406 ? 8,164 complete(a) PROFIT ? 18,451 ? 15,924 Selling, general and administrative expenses ? 10,945 ? 9,431 Other operating charges ? 254 ? 185 OPERATING INCOME ? 7,252 ? 6,308 rice beer income ? 236 ? 193 Interest expense ? 456 ? 220 Equity income net ? 668 ? 102 Other income (loss) net ? 173 ? 195 Gains on issuances of comport by equity method ? ? ? ? investees INCOME BEFORE INCOME TAXES ? 7,873 ? 6,578 Income taxes ? 1,892 ? 1,498 NET INCOME $5,981 $5,080 basal NET INCOME PER SH ARE $2. 59 $2. 16 DILUTED NET INCOME PER SHARE $2. 57 $2. 16 AVERAGE SHARES big ? 2,313 ? 2,348 Effect of dilutive securities ? 18 ? 2 AVERAGE SHARES OUTSTANDING ASSUMING DILUTION ? 2,331 ? 2,350 Consolidated Statements of Cash Flows COCA COLA CO 10-K 02/28/2008 ? Cash Flows ? ? ? ? ? ? ? ? Year Ended December 31, 2007. 00 2006. 00 (In millions) ? ? ? OPERATING ACTIVITIES ? ? ? ? authorize income $5,981 $5,080 Depreciation and amortization ? 1,163 ? 938 Stock-based compensation expense ? 313 ? 324 Deferred income taxes ? 109 ? (35) Equity income or loss, net of dividends ? (452) ? 124 Foreign currency adjustments ? 9 ? 52 Gains on issuances of stock by equity investees ? ? ? ? Gains on sales of assets, including bottling ? (244) ? (303) interests Other operating charges ? 166 ? 159 Other items ? 99 ? 233 top change in operating assets and liabilities ? 6 ? (615) win cash provided by operating activi ties ? 7,150 ? 5,957 INVESTING ACTIVITIES ? ? ? ? Acquisitions and investments, principally ? (5,653) ? (901) beverage and bottling companies Purchases of other investments ? (99) ? (82) Proceeds from disposals of other investments ? 448 ? 640 Purchases of property, plant and equipment ? (1,648) ? (1,407) Proceeds from disposals of property, plant ? 239 ? 112 and equipment Other investment activities ? (6) ? (62) Net cash used in investing activities ? (6,719) ? (1,700) FINANCING ACTIVITIES ? ? ? ? Issuances of debt ? 9,979 ? 617 Payments of debt ? (5,638) ? (2,021) Issuances of stock ? 1,619 ? 148 Purchases of stock for treasury ? (1,838) ? (2,416) Dividends ? (3,149) ? (2,911) Net cash provided by (used in) financing ? 973 ? (6,583) activities exploit OF EXCHANGE RATE CHANGES ON CASH ? 249 ? 65 AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS ? ? ? ? Net increase (decrease) during the year ? 1,653 ? (2,261) Balance at beginning of y ear ? 2,440 ? 4,701 Balance at end of year $4,093 $2,440 Consolidated Statements of Shareowners Equity COCA COLA CO 10-K 02/28/2008 ? CONSOLIDATED STATEMENTS OF SHAREOWNERS146 EQUITY Year Ended December 31, 2007. 00 2006. 00 (In millions except per share data) ? ? ? NUMBER OF COMMON SHARES OUTSTANDING ? ? ? ? Balance at beginning of year ? 2,318 ? 2,369 Stock issued to employees exercising stock ? 8 ? 4 options Purchases of stock for treasury 1 ? (35) ? (55) Treasury stock issued to employees exercising ? 23 ? ? stock options Treasury stock issued to former shareholders ? 4 ? ? of glaceau Balance at end of year ? 2,318 ? 2,318 COMMON STOCK ? ? ? ? Balance at beginning of year $878 $877 Stock issued to employees exercising stock ? 2 ? 1 options Balance at end of year ? 880 ? 878 CAPITAL superfluity ? ? ? ? Balance at beginning of year ? 5,983 ? 5,492 Stock issued to employees exercising stock ? 1,001 ? 164 options Tax (charge) benefit from employees stock ? (28) ? 3 option and restricted stock plans Stock-based compensation ? 309 ? 324 Stock purchased by former shareholders ? 113 ? ? of glaceau Balance at end of year ? 7,378 ? 5,983 REINVESTED EARNINGS ? ? ? ? Balance at beginning of year ? 33,468 ? 31,299 adaption for the cumulative effect on ? (65) ? ? prior years of the adoption of indication No. 48 Net income ? 5,981 ? 5,080 Dividends (per share $1. 36, $1. 24 and $1. 12 ? (3,149) ? (2,911) in 2007, 2006 and 2005, respectively) Balance at end of year ? 36,235 ? 33,468 ACCUMULATED OTHER plenary INCOME ? ? ? ? (LOSS) Balance at beginning of year ? (1,291) ? (1,669) Net foreign currency translation adjustment ? 1,575 ? 603 Net gain (loss) on derivatives ? (64) ? (26) Net change in unrealized gain on available-for-sale ? 14 ? 43 securities Net change in pension liability ? 392 ? ? Net change in pension liability, prior ? ? ? 46 to adoption of SFAS No. 58 Net other comprehensive income adjustments ? 1,917 ? 666 Adjustment to initially apply SFAS No. 158 ? ? ? (288) Balance at end of year ? 626 ? (1,291) TREASURY STOCK ? ? ? ? Balance at beginning of year ? (22,118) ? (19,644) Stock issued to employees exercising stock ? 428 ? ? options Stock purchased by former shareholders ? 66 ? ? of glaceau Purchases of treasury stock ? (1,751) ? (2,474) Balance at end of year ? (23,375) ? (22,118) TOTAL SHAREOWNERS EQUITY $21,744 $16,920 COMPREHENSIVE INCOME ? ? ? ? Net income $5,981 $5,080 Net other comprehensive income adjustments ? 1,917 ? 666 TOTAL COMPREHENSIVE INCOME $7,898 $5,746 8 1 http//www. marketwatch. com/tools/quotes/profile. asp? symb=ko 2 http//www. nysscpa. org/cpajournal/old/12543349. htm 3 http//www. thecoca-colacompany. com/citizenship/strategic_vision. hypertext mark-up language 4 http//www. thecoca-colacompany. com/investors/proxies. html 5 R ittenberg, Schwieger, Johnstone, p105 6 Rittenberg, Schwieger, Johnstone, p101 7 Chris, Linsteadt, 2008 Audit Class Slides Ch6 8 http//ir. thecoca-colacompany. com/phoenix. zhtml? c=94566&p=irol-sec&se