Managerial Uses of Post-Completion Auditing of Capital Investments

This study examines the different managerial uses of post-completion auditing (PCA) of capital investments. The empirical data come from the 16 PCA adopters that were identified in face-to-face interviews conducted in all of the 30 largest Finnish manufacturing companies. Although PCAs are reported to be common in large companies, we still have little empirical evidence about the significance of the different managerial uses of PCA. Accordingly, drawing on the concepts of cybernetic control systems, this study assesses the significance of PCA in measuring performance and controlling current investments (assisting correction/abandonment decisions), enhancing the integrity of investment appraisals, and in evaluating personnel. The paper also elaborates and maps the beneficial effects of PCA related to organizational learning. It adds specifically to the extant literature by providing empirical support for maintaining that not only timing-related issues, but also alternate control mechanisms (e.g. quality systems, routine reporting, visits, presentations, and discussions) diminish the relevance of PCA in controlling current investments and enhancing the integrity of investment appraisals. Moreover, the findings provide support for prior studies, which suggest that enhanced organizational learning for future investments is perceived as the major benefit from PCA, whereas PCA's relevance in controlling current investments can be minor