Company Audit Occurs When There Is Need

Company audit occurs when there is need to examine the performance of a big company especially the financial and the accounting records over a given period of time. Professionals such as the certified public accountant always do the auditing. The audit of a company is significant in the verification of accuracy particularly in the accounting records. A company like coca cola will need an audit to help in verifying their financial records because of the large market they are serving. Coca Cola Company is undeniably the world's largest distributor when it comes to beverages, majorly used as refreshment by the consumers. The company enjoys a larger number of distribution countries and in the number of consumers using their products. This paper gives the audit about the coca cola company. In auditing the company, there is need to study some of the agreement that the company had engaged itself in.

The contract between the coca cola company and Dr. Pepper Snapple Group

This agreement was made in the year 2010 involving the company and the Dr. Pepper Snapple Group in which the former was to pay for the distribution of some of the latter's brands. The agreement was that the coca cola company was to pay $715 million in order to take over distribution of the brands (Press Kits 2010). This is just after the company had completed the establishment of The Coca Cola Company planned acquisition of coca cola enterprises (CCE) in the North American Business; consequently, the contract was a continuation of the distribution that was started by the CCE. The distribution was aimed at complementing the action of the CCE. This agreement also involved the latter joining the innovative Coca Cola Freestyle Fountain Dispenser (Press Kits 2010). The coca cola company entered the agreement to complement on the efforts to achieve the 2020 vision of increasing the system revenue twice the present value. This would have made the company to be one of the most powerful distribution company since it would have established a strong distribution network in the world.

The terms involved in the agreement

The coca cola company had to acquire a definite agreement with the CCE in order to continue distributing the DPS's brands. This is as the result of the CCE being the initial distributor of the brands. The definite agreement would have enabled the company to take over the North American bottling business that was at the time being controlled by the CCE. The CCE would in turn acquire the company's Norway and Sweden operation, which were under the control of the latter (Press Kits 2010). The agreement between the company and the CCE could have also affected the budgeting of the company.

The coca cola company was to pay the $715 million at once in order to take over the distribution of the DPS brands. The distribution was especially aimed in the states of America and in some of the territories in Canada. These regions were prior distribution countries for CCE. The distributed brands under the license agreement were Canada Dry, C'Plus and Schweppes in Canada (Press Kits 2010). Under the agreement, the license was to last for 20 years for the initial term (Press Kits 2010). The agreement would also be renewed for 20 years being one of the most renewal periods of a contract in the world. It is also worth noting that the agreement would act as a substitute of the initially existing agreement, which was made between the CCE and DPS in North American bottling business (Press Kits 2010). This would have affected either negatively or positively on the financial position of the company because they had to spend on the agreement.

Apart from the money offered to the DPS, the company was also to offer the latter a place in the fountain accounts of the local regions, which were under the CCE. This agreement also required the company to include the Dr. Pepper and Diet Dr. Pepper in their own Freestyle referred to as the coca cola Freestyle fountain dispenser. The FreestyleTM has a term of 20-year s from the period when the agreement came into existence. The investment of the DPS's in the license agreement is estimated to be at $115 to $135 million (Press Kits 2010). This meant a profit to the partners of the agreement.

Aftermath of the agreement

On the verge of the agreement, Coca Cola Company would have established their roots in the Dr. Pepper trademark bottlers in the states of America (Press Kits 2010). The rate distribution activity of the company will also have increased since there would be uninterrupted distribution of the brands to the current customers who had a direct relation to the CCE. Consequently, the customer the CCF owning the outlets will be having a greater choice of distributing the available brands. This will essentially increase the number of customers associated with CCE.

The acquisition of the CCE was also on the verge of being closed in the last quarter of the year. This would have involved the approval from the shareholders. The CCF dispenser now has an increased capacity of dispensing an increased amount of beverages at the same time and amount. Therefore, the contract have a higher impact on the audits of the company since the company would have increased its investment and the accompanying financial records. The agreement between the company and the GPS proves important in the auditing since the difference in the company's production would have arisen from the contract. This involves the money spent in financing the agreement between the two companies

Section 2

The organizational structure of the Coca-Cola Company is normally divided into dual operating groups namely the Bottling Investments and the Corporate. Moreover, the Coca-Coca Company is also operating in groups that are normally sub-divided through the method of diverse regions that are situated in North America, Africa, Latin America, Eurasia, Pacific and European Union. Every section of these prevailing divisions is further sub-divided into the geographical regions. Through the permission of the prevailing decisions are made on the major numerous local levels that the existing organization can swiftly respond to the drastic alteration of the market demands accompanied by the higher level of the management within the Coca-Cola Company that mainly focus towards the long-term strategy.

Certain prevailing divisions of the Coca-Cola Company that entails finance, innovation, marketing and strategy, human resource and planning are normally centrally situated within the existing corporate division of the Coca-Cola Company. Selective functions of the Coca-Cola Company occur at the lower levels within every regions of the company. However, most of the significant decisions of the company is normally prepared at the top of the hierarchy of the company. The corporate headquarters of the Coca-Cola Company has given the mandate to the prevailing local divisions in undertaking the advertising decisions. This aids every division to exclusively design commercials and advertisements that would attractive to the existing local market.

The Coca-Cola Company is normally categorized as a corporate segment that is entirely responsibility of granting the company an overall direction accompanied by the provision of the support that pertains to the regional structure. The chief strategic decisions within the Coca-Cola Company are normally made through the prevailing Executive Committee that comprises twelve company officers. The twelve member executive committee officers aids in shaping the prevailing six planning priorities that is set out in advance. The existing chairperson of the Executive Committee normally acts as the figurehead of the Coca-Cola Company and normally mandated by the duty of chairing the board meetings. The Executive chairperson is also the Chief Executive Officer and considered as the prevailing senior decision maker. The other existing executives within the company are either normally by major regions or in vital business specialism such as the Chief Financial Officer.

The Coca-Cola Company is also organized into the prevailing regional structures that normally subdivided into the existing combination of the centralization and localization. The prevailing connection is utilized in the determination of the success of the company in the prevailing marketplaces. This is mainly aimed at getting viable connection with the prevailing local consumers. The Company normally functions in six geographical operating segments that are commonly known as the Strategic Business Units accompanied by the prevailing corporate segment, which is the head office.

Every segment that pertains to the local Strategic Business Units is further sub-divided into numerous divisions. For instance the prevailing European Union Strategic Business Units and the United Kingdom Strategic Business Units that is situated within the Northwest Europe division. The prevailing geographical structure of the Coca-Cola Company is utilized in the process of recognition of the existing markets that are normally geographically separated accompanied by the markets that possess diverse stages of advancement. This is also utilized in the determination of the prevailing tastes and lifestyles variation from one location to the other. As normally carry out the existing incomes and the consumptions patterns of the esteem consumers.

Within the prevailing local level of the Coca-Cola Company management, possess numerous numbers of the functional specialism. This management structure is normally more exemplified in Great Britain. The prevailing structure of the Coca-cola Great Britain comprises of the combination of the elements of the centralization and decentralization. The existing divisions and the regions within the Great Britain normally operate as business units teams with every Director reporting to the prevailing General Manager who is most cases is called the division President.

Nevertheless, there exists matrix structure of every function that normally entails the Finance Director within the Great Britain division who reports to the prevailing Great Britain President. The Finance Director within the Great Britain division also reports to the existing Finance Director of North West Europe Division. Moreover, the chief functions within the Coca-Cola Company also operate across the existing geographical boundaries with the major aim of sharing the best available practice.

GB Division

The other existing organizational structure of the Coca-Coca Company that aids in the regional decision-making within the diverse Strategic Business Units entails the region-specific market investigation of the company accompanied by the prevailing advancement of the local advertisement. The local advertisement is normally carried out through the utilization of the existing languages of the states within which the Coca-Cola Company functions. Different countries possess their own marketing structure with the Great Britain possessing the one that is represented within the diagram below.

GB Marketing

Generally, The Coca-Cola Company's configuration is composed of hybrid that entails mutually mechanistic and organic forms. The chief focus point of the Coca-Cola Company is mainly linked to the responsiveness. The prevailing complex integration mechanisms that are discussed above pertain to the features of the organic structure of the Coca-Cola Company. The flow of the information within the company from the top to bottom relies on the surveys and the interviews while the intranet permits the flow of the information laterally. Moreover, the conduction of the survey by the Coca-Cola Company pertains to the follow of the prevailing simplification and standardization. The centralization accompanied by the lofty level of consistency is mainly related with the mechanistic structure.

Section 3

Sharing a 'blank' contract that the Company you are auditing uses. Explain if the contract comes under the jurisdiction of article 2 of the Uniform Commercial Code

The blank contract is essential both for personal and for business agreement. The agreement (contract) is always between the business organization and an individual or company. Coca-Cola Company has entered into blank contract agreements with various business entities. The most attention-grabbing contract involved an agreement signed between Coca-Cola and Dr. Pepper on distribution. The use of blank contract template represents a more reliable and steadfast way of getting started especially in the process of drawing up personal, legal or business documents without having prior knowledge of the correct formatting at individual level. Thus, it is inevitable to understand the contract information thoroughly before settling on the most suitable indenture. Since Coca-Cola is the world's biggest manufacturer of soft drinks and beverages, the agreement is therefore be of great importance to it. A disagreement between the two parties, breach of contract, or negligence of one party may turn out to be upsetting to Coca-Cola Company.

The company would therefore only enter into viable agreements especially with more reliable and trustworthy entities. With hundreds of brands, including fruit juices, soft drinks, sport drinks among other beverages, the company boast of lion's share of soft drinks and beverage industry hence has laid much emphasis on improving quality as well as increasing the level of output. The Company has also ventured into new markets to familiarize its products with potential customers in different parts of the world courtesy of its mega expenditure on advertising. Coca-Cola paid Dr. Pepper over $715 million for distribution rights. The 20-year deal would see Coca-Cola continue accessing Dr. Pepper. Dr. Pepper is a coveted brand, which increased the sales of coveted brand of despite the cutthroat competition in a market characterized by carbonated soft drinks. According to the agreement, Coca-Cola was supposed to sell Dr. Pepper and Diet Dr. Pepper in the high tech Freestyle Fountain machines. This would allow consumers to mix and match beverages to create their own blend. Dr. Pepper renegotiated its contracts on distribution with Coca-Cola and Pepsi Company when both agreed to purchase bottlers.

Apart from the ordinary contracts, there are also other contracts commonly referred to as printable blank contracts. The printable blank contracts include contracts for renting to own, leasing, as well as partnership agreements for starters in business venture or those starting a project with another company. Other printable contracts include car-selling contract, photography service contract, and contracts for services rendered. The article 2 of the Uniform Commercial Code provides contract-based grounds for products liability. The United States have adopted the Article 2 of UCC although the code version may vary from state to state. The merchantability warranty as codified in the article imposes a considerably minimum quality for the goods sold. The warranty of merchantability gives an implication that the entity may use the product for the purpose for its sale. Thus, for the company to enjoy full coverage of Article 2, the regular consumer of the product must have purchased the product from the merchant of that particular item. If Coca-Cola disposed off some of its chain of distribution automobiles to a third party, the article 2 would not cover such transaction. This is because selling cars is not the ordinary business of Coca-Cola Company. Article 2 will provide immune to Coca-Cola Company when it is involved in selling of its products, which are mainly soft drinks and beverages. The article 2 of the Uniform Commercial Code is a clear manifestation of the growing concern to regulate and protect various business enterprises that subscribe to the legislation against defrauding and swindling agreements or contracts. In essence, the section provides basis for growth in sales and stock volume among a number of business organizations and in the end preventing business malpractices that might turn out to be overwhelming and devastating to the organization. Dr. Pepper Snapple already has the capacity to sell many brands of its beverages through Coca-Cola enterprises.

The agreement signed between Coca-Cola and Dr. Pepper has seen Coca-Cola move to great heights in terms of production. Coca-Cola has also reciprocated on the same by ensuring it sells DR Pepper and Diet Pepper in its Fountain machines. By now, Coca-Cola has dozens of the machine in the market by the close of 2011. It is the responsibility of the consumers to provide notice for a breach of contract within a reasonable time. The basis of reasonable time under the Uniform Commercial Code is always dependent on the nature of product as well as the version of various states about the Article 2 provisions. Apparently, article 2 is applicable to all consumer goods sold except those goods for which merchantability warranties implied faces exclusion or modification. The agreement comes under the jurisdiction of Article 2 and both parties must stick to the principles of transparency, integrity and fair play. Any form of mischief may only lead to suspicion and curiosity escalating to levels that would threaten the existing business environment. Coca-Cola Company must adhere to the provisions of Article 2 to avoid Dr. Pepper shying away from the understanding. In the event that a foul play manifest in this kind of association, it is the responsibility of the defaulter to admit to malpractice especially when the allegations are true beyond any reasonable double. Anticipation or actual harm caused by the breach of contract calls for adequate remedy.

Section 4

Every country has a judicial system and that defines its legal environment. For any company to operate within given borders, it is appropriate for it to acknowledge the legal system of the country. Coca Cola is an international brand and it, therefore, requires that it understands the legal systems of the countries it chooses operating in. countries have both state and federal courts and these are responsible for handling legal cases. For the maintenance of jurisdictions for international and state matters, the courts take forefront position of ensuring fair business practice for investors, corporate companies and individuals.

The antitrust laws affect daily lives of customers in a number of ways. The importance of antitrust laws is for the assurance of competitive pricing in the market and provision of high quality goods and services. They promote this through fostering of healthy competition and prevention of anticompetitive business practices and mergers. Antitrust is intricate and complex legal area that companies must comply to; for the avoidance of instances of lawsuits. A company must ensure that it operates within legally jurisdiction nations through contractual bindings without restrictions of conspiracy.

The company must also ensure that it does no for any conspiracy for monopolizing certain sections of the market within certain states. In other words, the Coca Cola Company must ensure that it does not apply any unreasonable restraints to companies it gets into trade with to avoid any criminal or civil penalties. Not all nations have powers for criminal persecution of the violators of the Sherman antitrust Act. This is only the possibility of the Department of Justice in the United States while other states have state criminal authorities governed by antitrust laws of the states.

There are various prohibited acts in the antitrust regulations that strengthen the implementation of the antitrust laws. These ensure that any cases of mergers, which have prohibitive factors for substantial competition face federal antitrust enforcement penalty. On the other hand, the state antitrust laws, help in the enforcement of fair trade within states. Companies have their own laws that are conceptually similar to federal antitrust laws with recitations of acts prohibited within states. There is an expanse in state laws that any company operating within the state must understand to ensure the maintenance of operation within legal provisions.

Activities as bid rigging, group boycotts, and price fixing are illegal and the Coca Cola Company avoid any involvement in such activities. Getting involved in such agreements through verbal, written or any proven means is illegal and cannot be condoned by any state for as long as the later company conduct denies possibilities of fair competition. The Coca Cola Company can avoid price fixing by not conspiring to lower, raise or stabilize price range of its products through agreements with its competitors. There should be no agreement for warranties and financial terms of shipping or discounting costs for its services or products.

It is illegal to get into such agreements, which indirectly or directly affect prices as it has harmful implications on consumers and competition. It is also illegal for the company to rig any bids it is involved in with competitors. This is an undermining aspect for the bidding process and it can take place in the form of competitors conspiring concerning the winner of the bid so they can later receive such favors. For fair competition and avoidance of infringement of the antitrust laws, it is also necessary for the Coca Cola Company to avoid any instances of getting into market and customer allocation agreements. This involves agreements among competitors for no competition for customers and customer share and it divides and allocates the market into territories, assigning customers to specific sellers or reducing output.

Likewise, for the maintenance of legal operations by the Coca Cola Company, it is necessary to avoid any instances of group boycotts. This takes the form of agreements competitors make to engage in concerted conduct. This is like making an agreement for not conducting business with a particular individual or state unless certain conditions and terms are in place. Avoidance of breaking the antitrust laws is also through the observation of not getting involved in any tying arrangements. This is especially illegal when the agreements drafted for the availability of certain goods is on conditional purchase of another item even when they are not components of the required product. Other instances that must be avoid are the rule of reason like creation of restraints within the supply chain and exclusive dealing

A company must always observe and stay committed to the code of conduct when doing business. It must conform to ethical business operations through the observation of regulatory and legal requirements. This is an exceptional practice that a company can take advantage of to save so much time and money used for following up on lawsuits; it is a step that every Coca Cola Company employee must observe. This is to make sure that it conducts its activities within the set standards of conduct guiding the company. This is crucial for the maintenance of the reputation of the company and avoidance of violations on the code of conduct.

Compliance to the code of conduct, regulatory and legal requirements cannot face more emphasis looking at how important it is for the company. Coca Cola Company must maintain this as a priority through professional conduct of its personnel. The reputation of the company is a reflection of the professionalism of the management and employees of coca cola. This reputation is a business asset and shows how integral the company is because of its assurance of honesty, respect and prudence of employees to the business practice of coca cola.

Because failing to comply with the code of conduct can cost a company so much money, it is important that the company take note of every detail to avoid instance of legal inductions on the company. Therefore, the company must maintain ethical and respectful work practices, be customer centric and cost competitive. The company must also maintain safety, progression and inclusive practice all the time. Being environmentally conscious is a plus and that helps in the assurance of corporate awareness for the operators in a technology savvy manner. It is also important for the company to ensure that it verifies the quality of its leadership because they hold the core of business operation. Through a competitive leadership with thin a company, there lies little openings for mistakes and that takes away the dangers of breaching any legal parameters.

The coca cola company must ensure that it abides by the antitrust laws as defined in the United States and that it maintains a legal competitive practice in any location it chooses to do business. Employees must be in a position for the identification of legal and ethical practices. They must maintain a good relationship with customers, suppliers and competitors on all conditions involving lawful agreements, predatory pricing and crimination. Any agreements the company gets into must have an evaluation from a legally competent personnel. Legal advice is important for the growth of the Coca Cola Company and it will ensure that the company operates within legal precepts and avoids any legal complications.