Which of the following is a benefit of audits for small owner-managed businesses?

The benefit of audits for small owner-managed businesses being independent scrutiny by professionals is significant. This scrutiny enhances the credibility and reliability of the financial statements. When an auditor reviews the financial records, they provide an objective perspective, ensuring that the financial statements are free from material misstatement, whether due to fraud or error. This independence is crucial because it assures stakeholders, such as investors, banks, and suppliers, that the financial information presented is accurate and trustworthy.

Moreover, this independent verification can uncover discrepancies or inefficiencies in accounting practices, leading to improved financial management. It also fosters transparency, which can enhance the business's reputation and stakeholder trust. The results of the audit may provide valuable insights and recommendations for improving financial operations, which is particularly beneficial for small businesses that might lack the resources for robust internal controls.

In contrast to this beneficial aspect, audits do not simplify tax reporting, do not eliminate the need for financial statements, and generally are associated with costs rather than reducing operational costs. Thus, the primary advantage of audits lies in their ability to offer an objective, professional examination of financial reports, contributing to greater confidence in the accuracy of those reports.