What is a post audit? What are the advantages and disadvantages of the post audit?
A post audit compares the actual benefits with the estimated benefits and actual operating costs with the estimated operating costs. It evaluates the overall outcome of the investment and proposed corrective action if necessary.
Advantages:
1.Post audits help ensure that resources are wisely used. If the project is going well, it may useful to add funds to the project. If the project is going poorly, then corrective action may be needed.
2.Post audits hold managers accountable for the results of a capital investment decision. It may make them more likely to act in the best interests of the firm.
3.Post audits provide feedback to managers to help future decision making.
Disadvantage - post audits are costly. In addition, it is necessary to consider changes in the operating environment from the time the decision was made to the time in which it was carried out.
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