List and explain Three (3) considerations in performing a “Post-Audit” of investment proposals. Explain why performing...

List and explain Three (3) considerations in performing a “Post-Audit” of investment proposals. Explain why performing a “Post-Audit” of investment proposals is important.

Expert Solution

Post Audit refers to an analysis of the outcome of a capital budgeting investment. This analysis is conducted to see if the assumptions incorporated into the original capital proposal turned out to be accurate and whether the project outcome was as expected.

A post-audit involves checking whether or not expected results are truly realized.
This is key to our capital budgeting process. It helps to keep managers honest in their particular investment proposals.
The actual result which can be far out of line with original estimates needs to be carefully reviewed.

The objectives of a project post-audit review are: To identify systematic biases or errors in the cash flow estimates by individuals, departments, plants, or divisions. This analysis enables decision-makers to make better evaluations of investment proposals submitted in the future.

The post-completion audit aims to evaluate the efficiency and effectiveness of the capital budgeting decision that the management has implemented. PCA is one formal control system that is a part of the company's total management control system for the effective delivery of projects in the future.

ekkarill92 answered 1 year ago

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