Question: Four years ago March Hall decided to invest in a

Four years ago March Hall decided to invest in a project. At that time, she had projected annual net cash inflows would be $54,000. Over its expected four-year useful life, the project had produced significantly higher cash inflows than anticipated. The actual average annual cash inflow from the project was $63,000. Hall breathed a sigh of relief. She always worried that projects would not live up to expectations. To avoid this potential disappointment she tried always to underestimate the projected cash inflows of potential investments. She commented, “I prefer pleasant rather than unpleasant surprises.” Indeed, no investment approved by Ms. Hall had ever failed a postaudit review. Her investments consistently exceeded expectations.

Explain the purpose of a postaudit and comment on Ms. Hall’s investment record.

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  • CreatedFebruary 07, 2014
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