What is the purpose of an audit?

The purpose of an audit primarily revolves around examining financial statements and accounting records to ensure their accuracy and compliance with established standards and regulations. This process involves a systematic evaluation that helps stakeholders, such as investors, regulators, and management, to gain assurance that financial reports are free from material misstatements, whether caused by fraud or error. Through audits, organizations demonstrate transparency and accountability, which are crucial for maintaining trust with stakeholders.

In contrast, the other options focus on different aspects of business operations. Forecasting future financial performance and preparing budgets relates to planning and analysis rather than validating past data. Evaluating employee performance pertains to human resources and management rather than financial accuracy. Lastly, conducting market research is targeted at gaining insights into consumer preferences and trends, which is not aligned with the financial examination that an audit entails.