Postaudits are an important part of capital budgeting.Required:A. What is a postaudit of a capital investment project?B. What are the benefits of a postaudit?C. A manager prepared an unsuccessful proposal for a capital project, as her firm decided not to fund and pursue the project. The manager observed, "The company's postaudit process will show that this project should have been funded." Comment on the manager's understanding of the postaudit process.
What will be an ideal response?
A. A postaudit is a review of the actual cash flows generated by a project and a comparison of the actual net present value with the original, anticipated net present value (or IRR).
B. The postaudit provides an opportunity to identify problems in the implementation of a project, changes in the project's environment, errors in the estimation of cash flows, or weaknesses in the process by which the project was developed. Hopefully, an organization will learn from the postaudit and, if appropriate, change its ways so that past errors are not repeated.
C. The manager's understanding of the postaudit process is flawed. The postaudit is applied to projects that are funded/implemented. It is not a mechanism to show what might have happened if a rejected project had been accepted.
You might also like to view...
When the goal is to show complicated relationships between multiple ideas, it is most appropriate to use a(n)
A) slide deck. B) indirect format. C) linear format. D) nonlinear format. E) narrative flow.
EBIT break-even analysis indicates the projected EBIT level such that EPS is identical under two different debt-equity mix scenarios
Indicate whether the statement is true or false
In a payroll system logical DFD, all of the following processes likely would provide updates to the general ledger except for:
A. reconcile hours worked B. distribute labor costs C. pay employees D. accrue employer taxes
WedSafe is the name of one of several companies that provide wedding insurance. For example, in the event that a wedding is called off, the couple can insure themselves against loss of their nonrefundable deposits. If WedSafe's primary marketing effort is satisfying its customers, the company is in which stage of the customer relationship evolution?
A. Leads B. Prospects C. Acquaintances D. Associate E. Friends