There are four conditions that give rise to the need for independent audits of financial statements. One of these conditions is complexity. In this context, complexity relates to all of the following except complexity:
A) of the accounting process.
B) in evaluating the quality of financial statements.
C) of financial statement preparation.
D) of the subject matter, or GAAP.
E) of the decision process.

Question

Quizplus · Accepted Answer

Complexity in the decision process is not directly related to the need for independent audits of financial statements. Independent audits are primarily concerned with the complexity of the accounting process, the evaluation of financial statement quality, the preparation of financial statements, and the complexity of the subject matter or Generally Accepted Accounting Principles (GAAP). Complexity in the decision process refers more to the internal decision-making within a company, which is not a direct reason for the need for independent audits.

There Are Four Conditions That Give Rise to the Need