Distribution of Power within the Political Community

Distribution of Power within the Political Community In Max Webers Distribution of Power within the Political Community, he discusses three concepts: class, status and parties. Weber begins by arguing power is the fate of men that try to grasp their will, even against that of others within the same society. He discusses two types of power: economic and social. Economic being the ability to determine what is to be done with materials and commodities, regarding production, consumption, etc. Social power overlaps with economic power, but also includes legal and political power. This concept, however according to Max Weber means, the way in which social honor is distributed in a community between typical groups participating in this distribution.(247). Therefore, the distribution of power within a community is based on three important aspects: class, status, and parties. This paper will summarize Webers main points; include a comparison of ideas with an author previously discussed in lecture, and my interpretation of what Max Weber is argu ing in his 1914 excerpt. Sociologist Max Weber first begins his article by discussing class. When identifying class there are three points Weber outlines. These points consist of 1) a specific casual ingredient of peoples fate (in terms of living conditions, materialistic possessions to see the level of power and wealth one has) among various actors, 2)is based on economic interests and wealth, and 3) is represented under the conditions of the labour market. Therefore, class situation ultimately signifies a situation where people are found with the same characteristics in regards to class. According to Weber, in society, there are two types of people, property owners and property-less. Quite apparent would be the fact that property owners are of course privileged, while the property-less live day-to-day trying to sell their services in the market. Wages and skill level are dependent on the service being provided. This depends on communal action (oriented on basis of shared belief or affiliation). In oppositi on, societal action deals with adjusting ones interests-not to sense a shared purpose, but to recognize shared interests. In order for either action to occur, everyone has to be familiar with the differences between wealth and opportunity, but must be seen as a result of property distribution and economic power. In the excerpt it says something along the lines of class antagonism is a simple state of affairs that has frequently been decisive for the role of class situation has played in formation of political parties. The second aspect Weber argues is status. Status, according to him means communities, unlike class. Status is defined as the likelihood that your fate is determined by social honor, also known as prestige. The common link of status group is a similar life style which is established based on wealth and income. According to Weber, there are social restrictions that are reflected in prestige-marriage patterns and residence. Rituals are a big deal within a caste. Members are prohibited from having any contact with any other group that is considered lower than that of their own-especially when the differences are ethnic. In caste structure, ethnic distinctions have become functional distinctions within the political association.(253) Weber also touches upon social stratification, which according to him, goes hand in hand with a monopolization of ideal and material goods or opportunities (253) Of course those stratified above others are more privileged and oppose the distribution of power that is regulated through the labour market and based on wealth. When economic stratification barely changes, changes regarding status tend to increase. Thirdly, Max Weber discusses parties. Parties as said by him are organized power. They are a mixture of both class (economic order) and status (social order). Parties aim to influence social action and aim to enforce their goals within both a legal and political realm. A party is never just associated with a class situation or status. A party puts in a great effort in order to achieve political control, and it all depends on how a community is classified-by status or class. Though this paper is about Max Weber, it is important to compare sociologists to one another based on their concepts and ideas. One author discussed in lecture was Karl Marx. Marx and Webers theories are not quite different from one another. Marx also believed that classes refer to economy but in a different sense. Marx saw class as being connected with means of production, in contrast Weber linked class to the factors previously discussed: prestige, wealth, and most importantly power. Both men had agreed that the more skills one has, the higher there wage is. Weber however, supposed that the differences in peoples wages suggested ones material conditions, hence why there are different types of social action. Also, Marx saw the divisions of class as an important source in society in regards to social conflict unlike Weber. In his article, Distribution of Power within a Political Community, one may accept as true what Max Weber had to say. In order for a political party to be formed, one must be wealthy, therefore prestigious, and ultimately have the power to dominate. Though one may face obstacles due to the fact that there are others competing for the same position who share the same status, or class, also known as communal action. Weber does an excellent job in distinguishing the differences among class and status, though when mixed may influence the formation of a political party. Unlike other authors discussed in lecture, Max Weber, I have found to be the easiest to comprehend and definitely agree with.

Limitation of Ratio Analysis

Limitation of Ratio Analysis Limitation of Ratio Analysis Learning Objective Explain to the participants on the limitation of ratio analysis. Important Terms Creative accounting. Accounting Policies. As we have alredy discussed, it is important to compare in order to be able to analyse and to be able to comment and subsequently recommend in order that a business is as efficient as possible. Limitations of Ratios Accounting Information Different Accounting PoliciesThe choices of accounting policies may distort inter company comparisons. Example IAS 16 allows valuation of assets to be based on either revalued amount or at depreciated historical cost. The business may opt not to revalue its asset because by doing so the depreciation charge is going to be high and will result in lower profit. Creative accounting The businesses apply creative accounting in trying to show the better financial performance or position which can be misleading to the users of financial accounting. Like the IAS 16 mentioned above, requires that if an asset is revalued and there is a revaluation deficit, it has to be charged as an expense in income statement, but if it results in revaluation surplus the surplus should be credited to revaluation reserve. So in order to improve on its profitability level the company may select in its revaluation programme to revalue only those assets which will result in revaluation surplus leaving those with revaluation deficits still at depreciated historical cost. Information problems Ratios are not definitive measuresRatios need to be interpreted carefully. They can provide clues to the companys performance or financial situation. But on their own, they cannot show whether performance is good or bad.Ratios require some quantitative information for an informed analysis to be made. Outdated information in financial statementThe figures in a set of accounts are likely to be at least several months out of date, and so might not give a proper indication of the companys current financial position. Historical costs not suitable for decision making IASB Conceptual framework recommends businesses to use historical cost of accounting. Where historical cost convention is used, asset valuations in the balance sheet could be misleading. Ratios based on this information will not be very useful for decision making. Financial statements certain summarised informationRatios are based on financial statements which are summaries of the accounting records. Through the summarisation some important information may be left out which could have been of relevance to the users of accounts. The ratios are based on the summarised year end information which may not be a true reflection of the overall years results. Interpretation of the ratioIt is difficult to generalise about whether a particular ratio is good or bad. For example a high current ratio may indicate a strong liquidity position, which is good or excessive cash which is bad. Similarly Non current assets turnover ratio may denote either a firm that uses its assets efficiently or one that is under capitalised and cannot afford to buy enough assets. Comparison of performance over time Price changesInflation renders comparisons of results over time misleading as financial figures will not be within the same levels of purchasing power. Changes in results over time may show as if the enterprise has improved its performance and position when in fact after adjusting for inflationary changes it will show the different picture. Technology changesWhen comparing performance over time, there is need to consider the changes in technology. The movement in performance should be in line with the changes in technology. For ratios to be more meaningful the enterprise should compare its results with another of the same level of technology as this will be a good basis measurement of efficiency. Changes in Accounting policyChanges in accounting policy may affect the comparison of results between different accounting years as misleading. The problem with this situation is that the directors may be able to manipulate the results through the changes in accounting policy. This would be done to avoid the effects of an old accounting policy or gain the effects of a new one. It is likely to be done in a sensitive period, perhaps when the businesss profits are low. Changes in Accounting standardAccounting standards offers standard ways of recognising, measuring and presenting financial transactions. Any change in standards will affect the reporting of an enterprise and its comparison of results over a number of years. Impact of seasons on tradingAs stated above, the financial statements are based on year end results which may not be true reflection of results year round. Businesses which are affected by seasons can choose the best time to produce financial statements so as to show better results. For example, a tobacco growing company will be able to show good results if accounts are produced in the selling season. This time the business will have good inventory levels, receivables and bank balances will be at its highest. While as in planting seasons the company will have a lot of liabilities through the purchase of farm inputs, low cash balances and even nil receivables. Inter-firm comparison Different financial and business risk profileNo two companies are the same, even when they are competitors in the same industry or market. Using ratios to compare one company with another could provide misleading information. Businesses may be within the same industry but having different financial and business risk. One company may be able to obtain bank loans at reduced rates and may show high gearing levels while as another may not be successful in obtaining cheap rates and it may show that it is operating at low gearing level. To un informed analyst he may feel like company two is better when in fact its low gearing level is because it can not be able to secure further funding. Different capital structures and sizeCompanies may have different capital structures and to make comparison of performance when one is all equity financed and another is a geared company it may not be a good analysis. Impact of Government influenceSelective application of government incentives to various companies may also distort intercompany comparison. One company may be given a tax holiday while the other within the same line of business not, comparing the performance of these two enterprises may be misleading. Window dressingThese are techniques applied by an entity in order to show a strong financial position. For example, MZ Trucking can borrow on a two year basis, K10 Million on 28th December 2003, holding the proceeds as cash, then pay off the loan ahead of time on 3rd January 2004. This can improve the current and quick ratios and make the 2003 balance sheet look good. However the improvement was strictly window dressing as a week later the balance sheet is at its old position. Ratio analysis is useful, but analysts should be aware of these problems and make adjustments as necessary. Ratios analysis conducted in a mechanical, unthinking manner is dangerous, but if used intelligently and with good judgement, it can provide useful insights into the firms operations.

Amazement and Wonder in Peter Weir’s Fearless :: Movie Film Essays

Amazement and Wonder in Peter Weir’s Fearless Roger Ebert writes, â€Å"Fearless is like a short story that shines a bright light, briefly, into a corner where you usually do not look. It makes you realize how routine life can become: how it is actually possible to be bored despite the fact that a universe has evolved for eons in order to provide us with the five senses by which we perceive it. If we ever really fully perceived the cosmic situation we are in, we would drop unconscious, I imagine, from shock.† What the filmmaker, Peter Wier, is attempting to make a statement about, is that we (1) cannot live our lives in boredom of life in general and its monotony because there are far to many wonderful things that go unnoticed, and (2) that we also cannot live our lives in fear of dying from flying on a plane or not engaging in a sport due to the risk of injury. Fearless accomplishes this sense of amazement and wonder in several ways, the most prominent of which are the actions of Max Klein. The earliest of examples to that end occurs when Max drives the car to see his friend in the beginning of the film. ON the way he stops out in the middle of nowhere and sits against his car on the side of the road, rubbing dirt between his fingers. This is a demonstration of Max's intrigue with something as ordinary as dirt on the side of the road, a gratitude and appreciation for the basics of what makes up all of life on earth. In addition, Max finds a new love for strawberries, partially newly discovered excitement in simplicity and partially as a test of his state of being. After all, Max is allergic to strawberries prior to the plane crash. He is also absorbed with work and caught up in the monotony of everyday life, until he experiences such a traumatic event. Max is also afraid to fly, and goes on this flight against his so called better judgment. The incident of the crash transforms Max Klein into an individual with a changed view of life. It is a realization that he, or anyone for that matter, may die at any given moment, and this realization also makes him take initiative in doing something which he always meant to do.

Search for Self-fulfillment by Charlotte Perkins Gilman and Kate Chopin :: Biography Biographies Essays

Search for Self-fulfillment by Charlotte Perkins Gilman and Kate Chopin      Ã‚  Ã‚   In the last half of the nineteenth century, Victorian ideals still held sway in American society, at least among members of the middle and upper classes. Thus the cult of True Womanhood was still promoted which preached four cardinal virtues for women: piety, purity, submissiveness, and domesticity. Women were considered far more religious than men and, therefore, they had to be pure in heart, mind, and, of course, body, not engaging in sex until marriage, and even then not finding any pleasure in it. They were also supposed to be passive responders to men's decisions, actions, and needs. The true woman's place was her home; "females were uniquely suited to raise children, care for the needs of their menfolk, and devote their lives to creating a nurturing home environment." (Norton, 108). However, the tensions between old and new, traditional and untraditional, were great during the last years of nineteenth century and there was a debate among male and female writers and social thinkers as to what the role of women should be. Among the female writers who devoted their work to defying their views about the woman's place in society were Charlotte Perkins Gilman and Kate Chopin.    Charlotte Perkins Gilman (1860-1935) was a social activist and theorist of the women's movement at the turn of the twentieth century. She developed her feminist ideals in her novels, short stories and nonfiction books such as Women and Economics. Charlotte Perkins Gilman is best known for her short story The Yellow Wallpaper, (1892) which is based on her own experience.    As the story begins, the woman-whose name we never learn- tells of her depression and how it is being treated by her husband and brother who are both doctors. These two men are unable to see that there is more to her condition than just a stress and depression and prescribe for her rest as a cure. The narrator is taken to a summer house to recover form her condition where she is not allowed to do anything but rest and sleep. Furthermore, she cannot do one thing that she loves the most: writing. " I must put this away, -he hates to have me write a word." She spends most of her time in a room with yellow wallpaper and very little to occupy her mind with.

Definition Essay - What is Wisdom? -- Expository Definition Essays

What is Wisdom? If one asks the majority of people what the word wisdom means, most will answer vaguely that it is the knowledge gained during a lifetime. However, wisdom is much more than just knowledge gained; it signifies the accumulation of knowledge, the application of learning, and the personification of God's will in the creation of the universe (according to the American Heritage Dictionary, 6th ed.). The abstract nature of the word wisdom allows for broad interpretation of its context. To limit the vagueness of the definition, many interpret wisdom as the accumulation of knowledge. In Greek mythology, the goddess Athena was known for her wisdom. Additionally, the personification of animals as possessing wisdom also heavily influenced Greek lore. Owls, for example, are synonymous with wisdom; likewise, foxes, with their cunning nature and ability to outsmart their prey, are considered insightful animals. Age plays a prominent part in the accumulation of learning. In many societies the elderly receive top status as preservers of both culture and knowled...

The Invention of Blue Jeans

In 1873 blue jeans were invented by a well known man named Levi Strauss. Blue jeans became popular for farmers and workers, because they were tougher and less likely to rip. Many Americans wore jeans for comfort, too. A 24-year-old German immigrant named Levi Strauss departed from New York with  little supply of dry  materials. He also had the intention of opening  an extension  of his brother's New York business that he was bringing to San Francisco.Strauss did not want to be a prospector, so he decided he would make enough money by selling supplies to the miners. First, Strauss sold cloth, textiles, and sewing supplies to the miners, but he didn't earn much profit by doing that. Then he heard the miners complaining about how easily they ripped their pants, so Strauss decided to use some of his heavy canvas fabric to make the miners pants to wear. The first jeans were made of a material called ‘duck’, but this fabric was not particularly comfortable.Then Strauss made the jeans using fabric called denim. Denim is a tough, cotton fabric which is made by passing under two or more threads. This fabric made jeans much more popular for everyone to wear, not just workers. In 1873, Jacob Davis wrote him a letter saying that he could make durable pockets with metal rivets for the pants. But Davis didn't have enough money to share his idea, so he offered to give his idea to Strauss if Strauss agreed to pay his patent. Strauss agreed, and from then on blue jeans had metal rivet pockets.Then the idea for jeans was to dye them with indigo, to make jeans blue. After that, blue jeans were considered perfect. Blue jeans changed the style of dressing later in history. After they were invented, blue jeans were typically only used for protection. But soon after Strauss changed the fabric to denim, they became comfortable and stylish. American’s then thought of new ideas for jeans, and the styles changed to all different kinds of jeans like skinny jean s, straight leg, boot cut, etc.They initially changed the way of dressing, and the future style of Americans. Blue jeans became popular for farmers and workers, because they were tough, strong, durable pants that everyone could rely on not ripping. They became the apparel that changed America’s style of dressing too, and the most popular type of pants. Jeans are still largely popular, and they will continually be modified to fit the changing style of America.

Coca Cola Auditing Project

AIM 6334 Auditing and Assurance Service Research Project [pic] Li-chung Lee Kung Ya Cheng Jui-Ping Lin Table of Contents I. Introduction:†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. P. 3~4 II. Ch 1: The client acceptance/continuation process, including establishing an understanding with the client†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦P. 4~5 III. Ch2: Obtaining an understanding of the entity and its environment, including internal control. †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦P. 5~6 IV. Ch3: Preliminary Engagement Activities†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ P. 6 V. Ch4: Assess Risk and Establish Materiality†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. P. 7~8 VI. Ch5: Consider Internal Control†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦P. 9~11 VII. Ch6: Plan the Audit†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. P. 11~14 VIII. Ch7: Complete the Audit†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. P. 15 IX. Ch8: Evaluate results and issue an audit report†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. P. 16 X. Reference†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â ‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦P. 17 XI. Attachments†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. P. 18~23 I. Introduction: The Coca-Cola Company (Symbol: KO) was incorporated in September 1919 under the laws of the State of Delaware and succeeded to the business of a Georgia corporation with the same name that had been organized in 1892. The Company is the manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. Finished beverage products bearing its trademarks, sold in the United States since 1886, are now sold in more than 200 countries. Along with Coca-Cola, the Company markets nonalcoholic sparkling brands, including Diet Coke, Fanta and Sprite. It manufacture beverage concentrates and syrups, which the Company sells to bottling and canning operations, fountain wholesalers and some fountain retailers, as well as finished beverages, which the Company sells to distributors. The Company owns or licenses more than 450 brands, including diet and light beverages, waters, enhanced waters, juices and juice drinks, teas, coffees, and energy and sports drinks. The Company is one of numerous competitors in the commercial beverages market. Of the approximately 53 billion beverage servings of all types consumed worldwide every day, beverages bearing trademarks owned by or licensed to the Company account for approximately 1. 5 billion. [1]The reason we chose this company is because it has enormous market share in countries around the world. In order to expand its market share, The Coca-Cola Company cooperated with the major fast food chain company. Today, The Coca-Cola Company become a well known and globalization company. We want to know how it can be sustainability and venerability company in the world. From its reports, we also found out it has tremendous benefit from its advertising. In this paper, we concern that how the auditors build a good audit plan in such large company and such complex business. II. Ch1: Understanding of the client There are five major reasons that we consider to accept The Coca Cola Company to be out client. 2] Management Integrity Based upon assertions of management ranging from the existence of an element in the financial statements to disclosures of information regarding that element, we examines The Coca Cola Company financial statements that are no responsible practitioner would knowingly place reliance on assertions of a client's management which had questionable integrity. Relationshi ps with Other Professionals We will follow the GAAS requirement to communicate with the predecessor auditor prior to committing to provide audit services to The Coca Cola Company. Matters of interest include the opinions issued by the predecessor auditor, resignation of the prior auditor or the refusal to stand for reelection, disagreements between the prior auditor and management regarding accounting principles or auditing procedures and any â€Å"opinion shopping† issues. Inquiry of other professionals having dealings with the client should, however, not be limited to the predecessor auditors. Furthermore, we will ask bankers, lawyers, and other professionals can provide important valuable information about The Coca Cola Company and its management. Risk of Association 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 financial statement, we believed that its financial is stability and liquidity. Technical Competence The auditors who will perform 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 work or risk potential liability or damage to reputation. Professional Fees Audit fees charged to The Coca Cola Company will base on commensurate with the risks to the providing the services requested. The fees will cover adequately the cost of the services provided. III. Ch2: Obtaining an understanding of the entity and its environment In the 21st century, the beverage industry has been become one of the fastest developing industries and the competition in this industry become significantly. Even in this market share campaign, The Coca Cola Company still remains its leader position 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 key areas: workplace, marketplace, 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 internal control, the company follows the independent and experience requirement of NYSE and SEC for many years. And the audit committee has been composed entirely of non-management directors. [4] IV. Ch3: Preliminary Engagement Activities Every member in our audit team 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 make sure that he/she will not take a position in the The Coca-Cola Company in two years 2. We will not hire 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 material adverse effect on our client. To be an auditor, we assess client’s RMM (risk of material misstatement) with understanding the client entity and industry. After audit risk is set, we go further to assesses inherent and control (environment) risks. In addition, assessing client’s inherent and control risks which can influence the level of detection risk directly. Base on the case, we make 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 | â€Å"Audit risk on most engagements is much lower than 5%. [5]According to conservative assumptions that we decide inherent risk is assessed at moderate (50%). The Coca-Cola Company is a multinational company, so there are not only lots of accounts receivable which come from different branches in the world, but also lots of inventories which were made or stored in different factories and warehouses in the world. As the reasons above, The Coca-Cola Company may face some risks, such as is there reason to believe that receivables include significant balances in foreign currencies? Is there reason to believe that the existence of the accounts receivables which generate from different oversea branch companies or subsidiaries? Are there significant foreign currency inventories balance? Are manufactured inventories transferred between locations, divisions, or subsidiaries within a consolidated 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 read the predecessor auditor’s report and our client’s past 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 detection risk in moderate level. Besides, in our client’s 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 inventory to make sure there are no major accounting schemes or fraud that will mislead the presentation of financial statements. Materiality â€Å"Materiality includes both the nature of the misstatement, as well as the dollar amount of misstatement, and must 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. Account |Accounts receivable |Inventory | |Materiality | | | |Nature |1. Recognize revenue in wrong period |1. Easy to thief | | |2. The existence of the A/R |2. Hard to count the ending balance | | |3. Risk of foreign currency exchange | | |Dollar amount |In our firm’s policy, in manufacture industry we adopt the 10% of net income after|The same as left column. | | |tax to decide the materiality. For example, the net income 2007 multiply 10% | | | |$5,981M*10%=600M | | VI. Ch5: Consider Internal Control 1. Define Internal Control: According to the COSO’s definition of internal control, â€Å" a process, effected by an entity’s board of directors, management, and other personnel designed to provide reasonable 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. Identify some controls that would be relevant to the audit. Account |Accounts receivable |Inventory | |Control | | | |Authority |Inquire about credit procedure for new customers (Valuation) |When shipping the Inventory to vendor or supplier, the | | |From a population of approved sales orders (and returns), select a|warehouseman should get the proper authority shipping | | |sample and examine documents for evidence of credit check |document. | |(Valuation) | | |Custody |Prepare daily cash summa ry (copy to A/R and Accounting) |Observe physical controls over inventory. | | |Segregation of duty: Mailroom & cashier |Segregation of duty: Warehouse & Shipping | |Recording keeping |Trace 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 reconciliation 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 standard, and monitoring 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 duty | | |Recording keeping | |Information and Communication |Our client has good information and communication function including initiating, authorizing, recording, | | |processing, and reporting entity transactions, conditions, and events. |Monitoring |Our client use computer accounting software 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 obtaining 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. Assess the risk of material misstatement. C. Design the nature, extent, and timing of further audit procedures. 5. Access Control Risk We should assess the inherent risk in moderate level. On the basis of our experience, after we read the predecessor auditor’s report and our client’s 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 company’s financial |Auditors must provide their opinion on the effectiveness of | | |statements (Section 302), management must also report on |client’s internal control. | | |the company’s 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 com puter audit experts who can help our firm to make sure that our client’s 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 made by management or employees. | |receivables which generate from different oversea branch companies or |If the sales don’t get proper credit authority, there will be huge 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 company’s ending inventory or| | |COGS. | |Are manufactured inventories transferred between locations, divisions,|The management may use complicated relat ed party transaction to generate fake | |or subsidiaries within a consolidated entity? |sales or ending inventory. | | |The employees may have chance to steal the 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. Conduct preliminary analytical procedures. |Accounts Receivable |Inventory | |Compare with industry rate to make sure our client’s A/R turnover rate and |Compare with industry rate to make sure our client’s inventory turnover | |days are reasonable. |rate and days are reasonable. | |Compare our client’s allowance for doubtful account policy with competitors’|Make sure the change in our client’s inventories is reasonable without | |policy to make sure the bad debt expenses are reasonable estimated. |material misstatement. |Make sure the change in our client’s A/R is reasonable without material | | |misstatement. | | 5. Consider additional value added services. After we obtain and understand our client’s internal control, we should detect our client’s internal control. We can prepare a feedback report to our client and help our client to improve their internal control or accounting system. Besides, when our client’s face s ome problems about new accounting standards, we could help our clients to train their accountants 6. Audit Plan and Audit program. Receivables | |Name of Client: | |Period: | | | |Estimated audit hours: | |Audit procedures | |Sign and date by | |Working paper Ref. | | | |auditors | | | |01. TEST PROPRIETY OF REVENUE RECOGNITION POLICIES AND PROCEDURES – Receivables [Validity, | | | | | |Cutoff] | | | | | |02. CONFIRM RECEIVABLES [Validity, Completeness, Recording, and Cutoff] [Q04 – No] | | | | | |03. TEST THE ALLOWANCE FOR DOUBTFUL ACCOUNTS AND BAD DEBT EXPENSE [Valuation] | | | | | |04. TEST PRESENTATION OF RECEIVABLES [Presentation] | | | | | |05. TEST LATE CUTOFF OF SALES [Cutoff] [Q01A – Sales Invoices] | | | | | |06. TEST LATE CUTOFF OF SALES [Cutoff] [Q01A – Initial Records] | | | | | |07. ROLL-FORWARD TEST FOR RECEIVABLES TESTED PRIOR TO YEAR END [Validity, Completeness, | | | | | |Recording, Cutoff] | | | | | |08. TEST RECEIVABLES TO SUBSEQUENT CASH 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] | | | | | |Reviewer : | |Sign: | |Date | 6. Audit Plan and Audit program. |Inventory | |Name 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 INVENTORY COMPILATION [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 CUTOFF OF DEBIT NOTES [Cutoff] | | | | | |07. TEST BOOK TO PHYSICAL ADJUSTMENTS [Validity, Completeness, Recording] | | | | | |08. ROLL-FORWARD TEST FOR INVENTORIES PRICE TESTED PRIOR TO YEAR END [Validity, Completeness, | | | | | |Recording, Cutoff] | | | | | |09. TEST ELIMINATION OF INTERCOMPANY PROFIT [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 auditor’s responsibilities during the completion stage of the audit: â€Å"Before issuing the audit report, the auditor needs to: 1. Perform 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 auditor’s 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 sure 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 lose the litigation about merger in oversea. It will cause a |Note disclosure: | |huge loss for our client. |On January  8, 2009, our Company sold substantially all of our interest in | | |Vonpar Refrescos S. A. (â€Å"Vonpar†), a bottler headquartered in Brazil. Total| | |proceeds from the sale were approximately $238  million, and we recognized | | |a gain on this sale of approximately $71  million. Prior to this sale, our | | |Company owned approximately 49  percent of Vonpar's outstanding common | | |stock and accounted for the investment using 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 client signs purchase and sale commitments with its | | |supplier, it may get a huge loss in the future. | | | |Other important investments which will change our client’s accounting | | |principle similar as above. | IX. Ch8: Evaluate results and issue an audit report Independent Auditor’s Report The Board of Directors and Stockholders The Coca-Cola Company: We have audited the consolidated balance sheets of the Coca-Cola Company and subsidiaries (the â€Å"Company†) as of December 31, 2007 and 2008, and the related consolidated statement of income, stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2008. These consolidated financial statements are the responsibility of the Company’s 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 Public Company Accounting Oversight Board (United States). Those standards 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 used 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 Company’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO), and our report dated March 14, 2009 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Lee &Cheng &Lin LLP Dallas, U. S. A. March 14, 2009 X. References †¢ â€Å"The company description,† Market watch < http://www. marketwatch. om/tools/quotes/profile. asp? symb=ko> †¢ Deppe, Larry A. , â€Å"Client acceptance: what to look for and why. (Tips for accountants on deciding which new clients to accept) (Cover Story)†, The CPA Journal , May 1992, †¢ â€Å"Strategic vision†, The Coca Cola Company website à ¢â‚¬ ¢ â€Å"2008The proxy statement†, The Coca Cola Company website, †¢ Chris, Linsteadt, â€Å"2008 Audit Class Slides† †¢ Rittenberg, Schwieger, Johnstone. Auditing, A Business Risk Approach. Thomson&South-Western Publishing. 6th,2008 †¢ â€Å"SEC filing† The Coca Cola Company website Retrieved from the World Wide Web: XI. Attachment (Financial Statements) Consolidated Balance Sheet COCA COLA CO | | | | | |10-K | | | | | |02/28/2008 | | | | | |? | | | | | |Balance Sheet | | | | | |December 31, |2007. 00 |2006. 0 | |(In millions except par value) |? | |? | | |ASSETS |? |? |? |? | |CURRENT ASSETS |? |? |? |? | |Cash and cash equivalents |$4,093 |$2,440 | |Marketable securities |? |215 |? |150 | |Trade accounts receivable, less allowances |? |3,317 |? 2,587 | |of $56 and $63, respectively | | | | | |Inventories |? |2,220 |? |1,641 | |Prepaid expenses and other assets |? |2,260 |? |1,623 | |TOTAL CURRENT ASSETS |? |12,105 |? |8,441 | |INVES TMENTS |? |? |? |? | |Equity 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 joint 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 SHAREOWNERS 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 stock, $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 comprehensive income |? |626 |? |(1,291) | |(loss) | | | | | |Treasury stock, 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 COLA CO | | | | | |10-K | | | | | |02/28/2008 | | | | | |? | | | | |Income Statement | | | | | |Year Ended December 31, |2007. 00 |2006. 00 | |(In millions except per share data) |? | |? | | |NET OPERATING REVENUES |$28,857 |$24,088 | |Cost of goods sold |? |10,406 |? 8,164 | |GROSS 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 | |Interest income |? |236 |? |193 | |Interest expense |? |456 |? 220 | |Equity income net |? |668 |? |102 | |Other income (loss) net |? |173 |? |195 | |Gains on issuances of stock by equity method |? |? |? |? | |investees | | | | | |INCOME BEFORE INCOME TAXES |? |7,873 |? |6,578 | |Income taxes |? |1,892 |? 1,498 | |NET INCOME |$5,981 |$5,080 | |BASIC NET INCOME PER SHARE |$2. 59 |$2. 16 | |DILUTED NET INCOME PER SHARE |$2. 57 |$2. 16 | |AVERAGE SHARES OUTSTANDING |? |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 |? |? |? |? | |Net 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 | |Net change in operating assets and liabilities |? |6 |? |(615) | |Net cash provided by operating activities |? |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 investing 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 | | | | | |EFFECT 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 year |? |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 SHAREOWNERS#146; 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 SURPLUS |? | ? |? |? | |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 | |Adjustment for the cumulative effect on |? |(65) |? |? | |prior years of the adoption of Interpretation | | | | | |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 COMPREHENSIVE INCOME |? |? |? |? | |(LOSS) | | | | | |Balance at beginning of year |? |(1,291) |? |(1,669) | |Net foreign currenc y 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. html [4] http://www. thecoca-colacompany. com/investors/proxies. html [5] Rittenberg, Schwieger, Johnstone, p105 [6] Rittenberg, Schwieger, Johnstone, p101 [7] Chris, Linsteadt, â€Å"2008 Audit Class Slides Ch6† [8] http://ir. thecoca-colacompany. com/phoenix. zhtml? c=94566&p=irol-sec&se