Consolidated financial statements and auditing: Preparation and financial analysis

This century is characterized by the liberation of economies from the political, social and economic restrictions. The rapid advent of the economic complexes throughout the world necessitated on accounting, just like most other fields, to cope with the swift shifts. The existence of large complexes and their subsidiaries throughout the world and the needs for close monitoring leads makes resorting to consolidation a necessity. Consolidated financial statements (CFS) and auditing, preparation in addition to financial analysis for (CFC) are investigated in this study. CFS are the financial statements of a 'group' presented as those of a single enterprise, where a 'group' refers to a parent structure and all its subsidiaries. A group of companies that are legally independent but economically interconnected and is under the supervision of the parent company. Consolidation is an accounting and technical procedure that aims to provide a more comprehensive view of the financial status of the complex that expresses economic transactions? taxation, financial and social processes. Consolidation is based on a set of techniques controlled by international accounting standards. CFS is also based on domestic regulations in addition to the fundamental accounting conceptions of consolidation. Auditing the consolidated financial statements is not different from that of the individual statements, however it possesses some peculiarities in order to cope with the nature of the consolidated financial statements. As a conclusion, the major strengths of the financial analysis of CFS for Coca-Cola Company (C.C.C.), can be observed as; favorable economic and industry outlook; geographically well-positioned firm to allow for benefitting from the anticipated economic and industrial growth; aggressive marketing and expansion strategies; successful use of financial leverage and solid coverage of debt service requirements; effective control of operating costs ; increased profitability, and positive generation of cash flow from operations. Nevertheless, the weaknesses of C.C.C. were identified as: recent deterioration in management of receivable accounts and inventories, highly sensitive to economic fluctuations and weather conditions.