What is the purpose of a financial audit?

The purpose of a financial audit is to evaluate the accuracy of financial statements and assess compliance with regulations. This process involves a thorough examination of a company’s financial records, accounting practices, and internal controls. The goal is to determine whether the financial statements present a true and fair view of the company’s financial position, in accordance with applicable accounting standards and legal requirements.

Conducting a financial audit helps to ensure transparency and reliability in financial reporting, which is crucial for stakeholders such as investors, creditors, and regulatory bodies. By confirming that the financial statements are free from material misstatement, an audit enhances the credibility of the financial reporting process.

The other options address different aspects that do not directly relate to the primary function of a financial audit. For instance, increasing overall profitability is a business goal that may be influenced by financial practices but is not the focus of an audit. Ensuring compliance with marketing laws pertains to regulatory aspects that fall outside the financial statement auditing scope. Predicting future income trends involves forecasting based on historical data and market analysis rather than the retrospective assessment provided through an audit.