RESEARCH 2 (THESIS WRITING)/4-BSACT

HOMEWORK NO. 1
CAÑERO, KURT VON RAVEN M. JUNE 25, 2018

THE EFFICIENCY OF INTERNAL AUDITING AS A TOOL FOR IMPROVING

MANUFACTURING COMPANY’S PERFORMANCE (COCA COLA CO.)
CHAPTER ONE
INTRODUCTION
Companies nowadays, employ various techniques in improving their company. Such
as increased security and control management, QC system, well rounded staff distribution, up-to-
date software, and lots of alternative strategies and techniques. To prosper, an organization must
be in touch of the progressive evolution of business tactics to effectively compete with other
companies. As the era of modernization comes forth in this generation, alternative strategies and
approaches are being developed and constructed in the goal of being beneficial for the company.
Companies who still abide to the traditional strategies and approach cannot fully compete with
those who are already on the ride of modernization. Thus, a company must be progressive with the
developments and updates available today.
Internal Auditing is a vital part in a company’s framework, because it diagnoses the
ill weaknesses of the company, as well as its strong points by providing a competitive efficient
system that makes it grow over time. The companies are conducting several researches that
improves their performance, by conducting several tests, research & development, and feedback
analysis. With a strong foundation of Internal Auditing inside a company, will give a firm impact
on how it will produce results positively. That is why in this study, it is focused on how Internal
Auditing will play as a key factor for an organization.

1.1 BACKGROUND OF THE STUDY AND ORGANIZATIONAL PROFILE

Coca Cola Co. being the #1 non-alcoholic beverage company in the world, is one of the
most famous manufacturer and among the top beverage brands this day. It was incorporated on
September 5, 1919, and up till this day, it still continues to grow as time goes. As of December 31,
2016, the Company owned or licensed and marketed over 500 non-alcoholic beverage brands. The
Company's non-alcoholic beverage brands include Minute Maid, Diet Coke/Coca-Cola Light,
Coca-Cola Zero, Powerade, Sprite, and others. The Coca Cola’s headquarters are currently located
at Atlanta, Georgia. Today, daily servings of Coca-Cola beverages are estimated at 1.9 billion
globally. The company operates one of the world’s prevalent distribution system, providing nearly
400 beverage products in more than 200 countries worldwide. Nearly 70 percent of its sales are
generated outside North America, followed by: North America, 30 percent; Europe, Eurasia, and
the Middle East, 31 percent; Asia, 24 percent; Latin America, 10 percent and Africa, 4 percent.
Although being one of the top beverage brands across the world, it still experiences disadvantages
and business risks. With the progressive accounting techniques and business management, may be
easy for the company due to its vast operation coverage. Thus, being available in lots of
opportunities for them to maximize its profits. In this study, our goal is to find if the auditing
system of Coca Cola Company is effective, efficient and competitive hence, its Internal Auditing
System.

1.2 STATEMENT OF THE PROBLEM

Coca Cola Company’s net operating revenue from 2013 up to 2017 is consistently
decreasing about 2-3 % every year. This study tackles how Coca Cola Company can employ an
effective strategic approach that can reverse its constant depression of income and revenue with
the help of an Internal Audit aimed to provide a solution to various problems inside and outside
the company. We seek to find out if the current Internal Audit System of Coca Cola Company is
effective and critically analyze its position.
In order to increase Coca Cola’s sales, it already took too many measures. Which produces more
risks and eventually, losses to the company. By analyzing Coca Cola Company’s situation, we aim
to reduce the business risks on its operations as well as mitigate the losses it incurs every year due
to its reckless decision making.

1.3 RESEARCH OBJECTIVES

The objectives of this study seeks to provide an effective solution for Coca Cola
Company’s consistent decrease of revenue and income. This research aims to answer the following
objectives:

1. To assess and analyze what is the reason behind its consistent decrease of income and
revenue.
2. To be able to provide a solution to its conflicts and problems inside and outside the
company by performing an audit analysis.
3. To be able to construct a critical and efficient Internal System Control that can make the
company produce positive results and put their company in the right track towards success.

1.4 RESEARCH QUESTIONS

The research aims to analyze the Coca Cola Company’s position in the market by
answering the following questions that can provide sufficient information to achieve the objectives
of this study:

1. What are the factors affecting the Coca Cola Company? Both Positive and Negative.
2. What are the weaknesses of the company and how does its Internal Audit Process go?
3. What necessary approach can the company take to gain an upper-hand in the market?
1.5 SIGNIFICANCE OF THE STUDY
 The significance of this study is to perform a broad analysis and employ efficient
control system and strategies that will make the Coca Cola Company achieve an increase on its
profits. Our target is to conduct and Internal Audit effective enough to produce results which can
help the company gain a better outcome in the ever-progressing market. We seek to create and
develop an approach strong enough to beat its competitors as well as maximize its profits by
utilizing all the necessary factors and information present in the company.

1.6 SCOPE OF THE STUDY

The study chooses to focus on conducting an Internal Audit to the company mainly on
its, controls, management, as well as its operations. So that we can find out its weaknesses along
with its strong points by mitigating business risks and loss as much as possible. So that in the end
of this study, we can create a system that will be applied on its manufacturing and distribution
system.

1.7 LIMITATIONS OF THE STUDY

This only focuses on Internal Auditing at Philippines. Therefore, Coca Cola Companies
abroad cannot effectively apply this study because of the fact that it is not the same as of Coca
Cola Company Philippines. Also, this study focuses on Internal Auditing as its main subject, thus,
any departments such as Human Resource and those that are not connected in auditing are not
broadly explained.