SlideShare utilise les cookies pour améliorer les fonctionnalités et les performances, et également pour vous montrer des publicités pertinentes. Si vous continuez à naviguer sur ce site, vous acceptez l’utilisation de cookies. Consultez nos Conditions d’utilisation et notre Politique de confidentialité.
SlideShare utilise les cookies pour améliorer les fonctionnalités et les performances, et également pour vous montrer des publicités pertinentes. Si vous continuez à naviguer sur ce site, vous acceptez l’utilisation de cookies. Consultez notre Politique de confidentialité et nos Conditions d’utilisation pour en savoir plus.
• Audit is generally defined as an examination of documents
and results to find out whether they are in the desired order.
• Capital expenditure plans and control do not end with
project construction but rather there is a last phase known as
• PCA is an attempt at assessing the actual profile of a given
project in terms of results vis-à-vis the intended profile
besides focusing on whatever matters the senior
• Usually a PCA is pursued as the major vehicle for project
• There are three types of audit
1. Statutory audit – it is for financial accounts of
companies registered under the Companies Act,2002.
2. Cost audit – mandatory for some industries
3. Internal audit – voluntary for the verification of actions
against prescribed rules and procedures.
• PCA is part of internal audit but goes beyond
comparison of actual against laid down rules.
• Any audit can be classified into two groups:
a) Propriety audit
Aims at checking if the action and decision are in
coordination with objectives.
The auditor is allowed to question the policies, rules
and regulations instead of just comparing with the
The purpose is to find the cause of deviation so as to
overcome the same problem in the future.
b) Efficient audit.
Involves the comparison of actual with target.
Target are not questioned.
The difference between the propriety and efficient audit
is that efficient audit can be performed by middle level
personnel while propriety audit needs to be performed by
the senior and well informed personnel with an open mind
and analytical ability.
PROJECT CONTROL PCA
Refers to the periodic comparison of
expected and actual expenditure
before the completion of the capital
Usually conducted after the project
construction is complete.
Aims at checking whether the project
in question remains within acceptable
Mainly aims at improving the
effectiveness next time a new project
Is more of a routine activity alongside
the progress of the project, and hence
it normally involves the lower level of
It is not a routine activity and is
specific to the project.
It is efficient audit It is Propriety audit
PCA must accomplish at least four primary objectives.
1)Financial control mechanism –
helps in evaluating Financial and non financial impact of
the project to the company (positive or negative)
How the actual results of the project compare to data and
assumptions included in the program request.
Future actions that are necessary or expected regarding
2) Provide information for future capital expenditure
3) Removing certain psychology and political
impediments usually associated with asset control and
4) Psychological impact on the individuals proposing
It helps provide a check on personal biases
It improves the quality of estimates
It improve the productivity as estimates becomes goals.
It helps to identify limiting factors.
Recognition to those involved in capital expenditure
• The person or team to perform PCA needs to be
identified at the planning stage
i. The group that evaluate the project
ii. The project team
iii.A team representing the planning group, execution
group and neutral members
iv.An external agency can be entrusted with the task.
• Depends on the type of assets.
Example strategic projects should be post audited more
frequently than operating capital projects.
The riskiness of an asses should also determine the
frequency of post audit.
The size of the project
Stake involved in the project
Scope of the project
Strategic importance of the project for the organization
Should not be shared, Why?
It will affect the morale of the project team if the
results are not good.
1) Collection of appropriate information.
Starting point – project completion report.
Compare the projected data with the accounting data
collected through the regular MIS.
The auditor needs to collect information about the
incremental cash flows rather than the total cost
2) Recasting data.
Collected data should be recast/ reorganized before they
The collected data must be first adjusted with external
factors like inflation before it is compared.
3) Comparison of projected financial parameters with
The comparison is a starting point from which the real
audit begins by comparing the comparable data.
4) Establish the possible causes of variance.
Once variance figures are calculated, if they are
significant the possible causes for the same are explored.
5) Final recommendations.
Once the causes are ascertained the PCA can give
recommendations based on which the manager may take
decisions for cash flow forecasting to reinvest or abandon
the ongoing project.
• There are four techniques of PCA, namely:
1) Cost variance analysis.
In this method only the project cost (actual and estimate)
2)Profit variance analysis
Profit analysis is carried out by the auditor, and the
estimated gain adjusted with the inflationary effect is
compared with actuals.
3) Cash flow and financial criteria variance analysis.
This method is developed around four schedules that can
provide the management with the information it needs to
find engineering, operational and administrative costing
faults of past projects.
a)Profit variance analysis schedule
b) Cash flow and financial criteria variance analysis
This is used to illustrate project cash flow and return
variances between the projected and actual results.
c) Project cash flow schedule (projected and actual)
These are used to show the projected and actual cash
flows of the project.
Each cash flow entry is made according to the time it was
projected to be incurred or was actually incurred
d) Supplementary schedule: these schedules explain for
the significant variances
4) Present value Depreciation Technique (PVD)
Calculation of year wise NPV and IRR.
Is defined as the decline in the present value of the
expected future cash flow during the year using IRR as
the discount rate.
Stemar associates deals with sport items. Recently they
have set up a manufacturing facility. The abstract of the
capital budget and the actual cash flow in the first two
years are given below. PCA has estimated the
subsequent two years cash low. The estimate life of the
project is four years. Initial cash outlay is Tshs.
Year Cash flow
Budgeted Actual Projected
1 30,000 25,000
2 50,000 40,000
3 70,000 50,000
4 70,000 50,000
The company’s cost of capital is 15%. Calculate:
1.NPV, IRR and uniform annual series of the project.
2.Present value of Depreciation
3.Year wise NPV and year wise IRR for planned figures.
4.Year wise NPV and year wise IRR for the first two years
actual and next years project cash flows
5.Show NPV and IRR variance over the period