srt510 business case studies auditing it investment performance
TRANSCRIPT
SRT510 Business Case Studies
Auditing IT Investment Performance
NPV Analysis Estimates
Provide the following for a project:Costs (cash outflows)Benefits (cash inflows)Timing of outflows and inflows
Example
Intermec Inc (note—some numbers are fictitious)
Project PUltra secure wireless networkNPV $14.02M after 5 years at 15%; IRR 22%
How do you measure accuracy of estimates? Outflows (costs)
Balance sheet; cash flow statementTypically quarterly
Inflows (benefits)Balance sheet; income statementTypically quarterly
Example
Intermec Inc. (note—some numbers are fictitious)
Financial statementLarge differences in actual:expected!
Audit Plan
Take yearly projections and divide into quarters ($ are not necessarily equal—think of differences between businesses; think seasonality)
Add expected values As real numbers come in, calculate
difference
Adjustments
Part of your audit:How do you respond to differences between
expected and actual?What if expected targets are not being met?
When do you plan for audit?
Part of Project ManagementPlan your audit (closing phase?)
Who? How? – what fields? What variance?...