Bowers Holdings plc has recently acquired a controlling interest in Shaldon Engineering plc,…

Bowers Holdings plc has recently acquired a controlling interest in Shaldon Engineering plc, which produces

high-quality machine tools for the European market. Following this acquisition, the internal audit department

of Bowers Holdings plc examined the financial management systems of the newly acquired company and produced a report that was critical of its investment appraisal procedures.

The report summary stated:

Overall, investment appraisal procedures in Shaldon Engineering plc are very weak. Evaluation of capital

projects is not undertaken in a systematic manner and post-decision controls relating to capital projects are

virtually non-existent.

Required

Prepare a report for the directors of Shaldon Engineering plc, stating what you consider to be the major

characteristics of a system for evaluating, monitoring and controlling capital expenditure projects.

(Certified Diploma)

What procedures should a business adopt for approving and reviewing large capital expenditure projects?