Which of the following statements is true of a post-investment audit?
A) It encourages managers to overstate the expected cash inflows from projects and accept projects they should reject.
B) It helps managers avoid optimistic estimate errors.
C) It does not help senior management to recognize problems in the implementation of the project.
D) It provides managers with feedback about the performance of a project so they can compare the actual results to the costs and benefits expected at the time the project was selected.

Question

Quizplus · Accepted Answer

A post-investment audit provides managers with feedback about the performance of a project so they can compare the actual results to the costs and benefits expected at the time the project was selected. It helps managers identify any optimistic estimate errors and recognize problems in the implementation of the project. It also serves as a tool to learn from past mistakes and improve decision-making for future investments. Therefore, option D is the correct answer. Option A is incorrect as a post-investment audit discourages managers from overstating the expected cash inflows and rejecting projects that should be accepted. Option C is incorrect as a post-investment audit helps senior management to recognize problems in the implementation of the project.

Which of the Following Statements Is True of a Post-Investment