Question

To partially eliminate the problems that are associated with the short-term focus of return on investment, residual income, and EVA, the performance of a division's major investments is commonly evaluated through: Select one: a. horizontal analysis. b. segmented reporting. c. performance operating plans. d. sensitivity analysis. e. postaudits.

Answer 1

To partially eliminate the problems that are associated with the short-term focus of return on investment, residual income, and EVA, the performance of a division's major investments is commonly evaluated through (E) post audits.

What are post audits?

• The post-audit procedure establishes a formal process (feedback) for assessing whether existing initiatives should be continued, extended, or discontinued.
• That is, the post-audit gives useful information that can be used to fix problems before an investment's performance is jeopardized.
• The purpose of the post-audit review process is to ensure that management has addressed all of the recommendations given in the Audit Report.
• The Post-Audit Review occurs shortly after the agreed-upon implementation deadline, which management committed to in the management response.

Therefore, to partially eliminate the problems that are associated with the short-term focus of return on investment, residual income, and EVA, the performance of a division's major investments is commonly evaluated through (E) post audits.

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