An Accounting Procedures Manual

In the mid-1980s Coke management saw that its international operations were increasing significantly and that the nature of its business had changed since its last accounting manual had been written. It needed a comprehensive, easy-to-reference accounting manual to help maintain strong financial controls over operations. Management felt that a better accounting manual would help the firm acquire reliable information about units all over the world in order to help local subsidiaries operate at peak efficiency and generate corporate wide reports consistently.

A team consisting of a project manager and three senior accountants worked for eight months to develop an entirely new accounting manual. A universal chart of accounts was set up so that each account in the balance sheet and income statement would be consistent around the world. Based on the chart of accounts, definitions of each account were written and policies and procedures governing the use of each account and the flow of information into the financial statements were developed. A separate section was written describing how to translate financial statements from local currencies into U.S. dollars. Drafts of the report were given to audit, legal, and tax managers for their comments, and other field accounting managers were asked for their input before a final draft was completed.

Questions

1. Explain how the changing value of the dollar has affected sales and earnings of Coca-Cola.

2. Describe how Coca-Cola translates its financial statements into U.S. dollars. How do you think transactions and translation gains and losses are recognized in the financial statements?

3. What are some of the major problems that Coca-Cola might have confronted in writing a uniform accounting policy manual?

4. What would you recommend that management do in order to resolve some of these problems?

New words

revenue, income - доход

increase - повышать

beverage, soft drinks - безалкогольный напиток

percentage – процентное соотношение

annual report – годовой отчет

division - разделение

international sales – международные продажи

transaction – сделка, договор

designate – объявлять, назначать

net investments – чистые инвестиции

hedge – барьер, преграда

accounting – бухгалтерский учет

income statement – декларация о доходах

balance sheet – бухгалтерский баланс

tax - налог