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Hello
Why would an auditor need to look at an approved budget for capital expenditure?
Im asking because im thinking that if approval was given for $100, 000 but then as the project goes on additional necessary costs are incurred then those costs and payments would need to be approved by the same individuals/positions who approved the budget in the first place. So if thats the case shouldnt the auditor just look at the approval for those costs related to the addition (and other project related capital expenditure)?
Budgeting is part of internal controls within a company – without it there would be no control in that area and massive overspends could be incurred
I agree that, where a project expense exceeds budgets, there needs to be further approval but it’s the action of budgeting itself that gives the control
The auditor may wish to enquire as to the reasons for the overspend but that’s in addition to the examination of the original budgeting exercise
OK?
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