Final answer:
Compliance with audits is vital for public corporations as it ensures accurate financial reporting and transparency, reinforcing trust with shareholders and investors, and upholding market integrity.The correct answer is option B.
Step-by-step explanation:
It is important for public corporations to comply with audits because compliance with audits ensures accurate financial reporting and transparency. This is essential not only for the shareholders but also for the health of the financial markets.
Audits are conducted by an independent auditing firm hired by the corporation, which evaluates the company's financial records and attests to their accuracy.
The board of directors, which is elected by the shareholders, is the first line of corporate governance and plays a pivotal role in overseeing the executives. Furthermore, audits are of interest to outside investors as well, including those with significant holdings such as mutual funds or pension funds.
In high-profile cases like Lehman Brothers, a failure in corporate governance illustrated the devastating effects that can arise from not providing accurate financial information to investors.The correct answer is option B.