Which of the following has the least impact upon the reliability of financial statements issued by publicly owned corporations?
A) Federal securities laws.
B) Professional judgment of the accountants who prepare the financial statements.
C) Audits of the financial statements by the Internal Revenue Service.
D) Competence and integrity of the CPAs who perform audits.

Question

Quizplus · Accepted Answer

Audits of the financial statements by the Internal Revenue Service have the least impact upon the reliability of financial statements issued by publicly owned corporations because the IRS is not responsible for auditing financial statements. Their primary focus is on tax compliance, not financial reporting. The other options listed have a significant impact on the reliability of financial statements, with federal securities laws providing regulatory requirements, professional judgment affecting the quality of financial statements, and the competence and integrity of CPAs influencing the accuracy of audits.

Which of the Following Has the Least Impact Upon the Reliability