Post-investment audits prevent managers from overstating the expected cash inflows from projects and accepting projects they should reject.

Question

Quizplus · Accepted Answer

Post-investment audits are conducted to evaluate the accuracy of pre-investment estimates and to ensure that the actual results are consistent with projected outcomes. By preventing managers from overstating cash inflows and accepting projects they should reject, post-investment audits help to improve decision-making and reduce the risk of financial losses. Therefore, option A is correct.

Post-Investment Audits Prevent Managers from Overstating the Expected Cash Inflows