Post-auditing capital projects

Abstract This article argues the importance of the post-auditing phase in the overall capital budgeting system, despite the relatively low utilization of such procedures in the U.K. compared to the U.S.A. However, there are substantial problems with post-auditing which may act as a deterrent to firms adopting this approach to ‘back-checking’ investment projects. These problems are discussed but are set in context by presentation of the results of an empirical study conducted by the authors which demonstrate that firms who do post-audit enjoy substantial benefits there from, in particular the improvement in the evaluation of subsequent investment proposals. In the light of questionnaire and interview findings, the authors are able to present a ‘check-list’ of issues which need to be addressed by an enterprise instigating a post-auditing system, while recognizing that no one ‘set of rules’ is likely to be suitable for all firms.