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CS Executive · Corporate Accounting and Financial Management · Capital Budgeting

Under the capital budgeting process, which statement about a post-completion audit (performance review) is correct?

A post-completion audit compares the actual performance of an implemented project with the original estimates. It occurs after implementation and helps identify forecasting errors and improve future capital budgeting decisions. It is not a pre-approval check or a statutory audit.

  1. AIt compares actual results of an implemented project with the original estimates to improve future decisionsCorrect
  2. BIt is done before the project is approved to decide its acceptance
  3. CIt is concerned only with the statutory audit of annual accounts
  4. DIt is needed only for projects that were rejected

Explanation

A post-completion audit is the final stage, comparing actual cash flows and costs with forecasts. It highlights forecasting errors and improves future appraisals. It is not a pre-approval step, a statutory audit, or applied to rejected projects.

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