Describe the purpose, features and benefits of a post investment audit for a capital budgeting ...

A post investment audit compares the predictions of investment costs and outcomes made at the time the project was selected to the actual results. It provides management with feedback about the investments performance.

Care should be exercised when performing a post investment audit. It should be done only after project outcomes have stabilized. Doing an audit early may give a misleading picture.

Post investment audits of capital projects require information about project-specific costs and benefits. It can be extremely costly, however, to disentangle these actual outcomes as if they were independent from, instead of interdependent with, overall corporate outcomes.

The absence of post investment audits can lead managers to overstate project cash inflows and to accept projects that should never have been undertaken. Implementation problems, such as not achieving budgeted revenues or exceeding budgeted costs, are a concern because the returns from the project will then be inadequate. Post investment audits can point to these areas of implementation that need improvement (such as better quality-control processes).