Capital budget audits are often undertaken to ensure the accuracy of cash flow estimates.

Question

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Capital budget audits are important tools to verify the accuracy of the cash flow estimates for the proposed investments. These audits often involve reviewing the assumptions and projections used to calculate cash flows, as well as assessing the quality of data supporting these estimates. By identifying and correcting any errors or inconsistencies in cash flow projections, capital budget audits can help managers make more informed investment decisions and minimize the risk of financial problems down the road.

Capital Budget Audits Are Often Undertaken to Ensure the Accuracy