Answer the following questions using the annual report of Colgate in Appendix A of your textbook. Please develop a 2-3 page APA formatted paper when giving responses.
1. Who is responsible for the preparation and integrity of Colgate’s financial statements and notes? Where is this responsibility stated in the annual report?
2. In which note does Colgate report its significant accounting policies used to prepare financial statements?
3. What type of audit opinion is reported in its annual report and whose opinion is it?
4. Is any of the information in its annual report based on estimates? If so, where does Colgate discuss this?
*Please refer to the Grading Criteria for Professional Assignments on page 24-26 of the syllabus for specific guidelines and expectations.
Founded in 1806, Colgate-Palmolive is an American Multinational Company headquartered in Manhattan, New York City that is involved in serving various consumer products to more than two hundred countries across the world (Colgate-Palmolive World of Care). Under the name of various recognized global brands like Colgate, Palmolive, Lady Speed Stick, Irish Spring, Kolynos, Sanex, etc, the company produces and distributes the personal care, home care, oral care, and veterinary products.
With the objective of making consumers live healthier, the company is dedicated to doing the right things by establishing a certain set of policies so that the company can achieve sustainability and innovation. Some of the different set of policies adopted by the company is:
|Anti-Bribery Policy||Ingredient Safety Policy|
|Code of Conduct||No Deforestation Policy|
|Equal Opportunity Employer Info||Donation Policy|
|Environmental, Occupational Health & Safety Policy Statement||Ethics Line|
The management of the company is held responsible for the preparation as well as the integrity of Colgate’s financial statements and notes. The management of the company generally involves in managing these financial statements for having an effective control & assessment over financial reporting (Daniel W. Collinsb, 2016). This responsibility is stated in the Company’s annual report on the section of Internal Control over Financial Reporting.
The financial statement that has been prepared by the management of the company is audited by the independent auditors outside of the company for getting fair and unbiased results.
For the preparation of Financial Statements, the company reports its accounting policies as “Summary of Significant Accounting Policies” in Note 2. The section of Note 2 consists of various accounting policies which helps in disclosing of the company which is as follow:
• Use of Estimates
• Revenue Recognition
• Cost of Marketing
• Cash & Cash Equivalents
• PPE ( Property Plant and Equipment)
• Goodwill and Intangible
• Income tax, etc.
These accounting policies guide the company as well as provides a step by step framework for carrying out various activities that are required for running the company financially in an efficient manner (Peter Ove, 2009).
The Colgate Company has fairly presented all of its financial statements and annual reports with proper adherence with the GAAP (Generally Accepted Accounting Principles). In the annual report of the company, an Unqualified Audit Opinion is reported and the opinion is provided by the independent auditor of the company who is involved in auditing the reports of the company.
Unqualified Audit is the type of judgment is given by the independent auditor of the company regarding the financial statements of the company that the financial statements of the company are fairly presented in accordance with GAAP (Jerry L. Turner, 2010). The annual report of the company provides qualitative information about strategies and future plans of Colgate Company.
Yes, the company has some of the information in its annual report that is based on estimates as we can see that generally most of the company uses forecasting to prepare their reports. Some of the information that is recorded during the preparation of financial statements of the company as estimates includes pension funds, retirement benefits, stock-based compensation, uncertain tax positions, asset impairment, and tax valuation allowances.
For any of the companies like Colgate, estimates are required to understand the fair market value that will help in a rational judgment regarding the valuation of their financial instruments & retirement plant assets (Baruch Lev, 2010). The actual result does differ from that of the estimates because of the uncertain externalities in the market.
Colgate-Palmolive is an American Multinational Company headquartered in Manhattan, New York City that is involved in serving various consumer products to more than two hundred countries across the world. The management of the company is held responsible for the preparation as well as the integrity of Colgate’s financial statements which is then edited by the independent auditors outside the company. The accounting policies guide the company as well as provides a step by step framework for carrying out various activities that are required for running the company financially in an efficient manner.
In the annual report of the company, and Unqualified Audit Opinion is reported and the opinion is provided by the independent auditor of the company who is involved in auditing the reports of the company. The company has some of the information in its annual report that is based on estimates as we can see that generally most of the companies use forecasting to prepare their reports.
Baruch Lev, S. L. (2010, July 2). The usefulness of accounting estimates for predicting cash flows and earnings. Review of Accounting Studies , 14(3), 779-807.
Colgate-Palmolive World of Care. (n.d.). Retrieved from Colgate-Palmolive: https://www.colgatepalmolive.com/en-us
Daniel W. Collinsb, W. R. (2016, March 9). INTERNAL CONTROL AND COMPLIANCE-CONTROLAS EFFECTIVE METHODS OF MANAGEMENT, DETECTION AND PREVENTION OF FINANCIAL STATEMENT FRAUD. 15(5), 34-37.
Jerry L. Turner, T. J. (2010, June 7). Improving Transparency and Relevance of Auditor Communications with Financial Statement Users. 4(1), 16-21.
Peter Ove, C. J. (2009, December 17). Accounting Policies in Agencies with Moral Hazard and Renegotiation. Journal of Accounting Research, 13(3).