Research Project Part 3

Research Project and Presentation

PAPER INFORMATION:

You will be looking at Pepsico Inc and Coca Cola Co for the fiscal year ended 2015 and completing a variety of analysis on both of these companies.  You will specifically be using: · Pepsico Inc 2015 annual report · Pepsico Inc 2015 10-K · Pepsico Inc 2015 Def 14A · CocaCola Co 2015 annual report · CocaCola Co 2015 2015 10-K · CocaCola Co 2015 Def 14A

ANALYSIS REQUIREMENTS:

Part III (include parts I and II also in your final paper)

 

o.  What are the key acquisition and inventory cycle accounts for each company?  What are the critical accounting policies for these accounts?  What percent of current assets is tied up in inventory for each company?

 

p.  What are the key long-lived asset and related expenses accounts for each company? What are the critical accounting policies for these accounts?  Calculate and compare cycle-specific ratios (for example, property, plant, and equipment / total assets) that you deem relevant for each company.  What are the implications of these differences that you note?

 

q.  What type of audit report did each company have issued by their auditing firm?  Did you note anything unique about the auditor’s report?  As a reader of the financial statements, would you prefer that each company had the same audit firm?  Why or why not?

 

r.  A significant liability is most often found under pensions and other postretirement benefits.  What is the nature of estimates required to value these liabilities?  What risks do these estimates pose for the audit firm?

 

s.  Some common numerical thresholds and benchmarks for overall materiality judgments are 5% of net income and 1% of assets.  The materiality level at which items are considered clearly trivial-a materiality level where the auditor believes errors below that level would not, even when aggregated with all other misstatements, be material to the financial statements-is generally 5% to 10% of overall materiality.  Calculate these numerical thresholds for each company.  What is the SEC’s position on the use of   numerical thresholds?  What other characteristics of potential misstatements should auditors consider when evaluating their materiality?

The total writing requirement is a minimum 12 pages for week 7 (not including cover page, abstract, references, or exhibits) using APA 6th ed. formatting. You should have a minimum of 6 peer reviewed references and/or authoritative references (FASB Codification System, SOX, COSO, COBIT, etc.) in total.  Parts I and II should be a minimum of 4 pages not including the cover sheet or reference page

The last week you will create and upload a presentation comparing the two companies and in different areas chosen by you.  You will include at least 10 slides for your comparisons not including the cover slide and reference slide.  Post to at least 2 other students with questions or comments on their projects and be prepared to answer any questions from your classmates on your own project.