Which statement best describes financial audits?

Financial audits are primarily concerned with the accuracy and compliance of financial statements. This process involves an independent evaluation of an organization's financial reports and records, ensuring that they present a true and fair view of its financial position and performance in line with applicable accounting standards.

During a financial audit, auditors examine the financial statements, assess the internal controls, and verify the accuracy of the information reported. The goal is to provide an opinion on whether the financial statements are free from material misstatement, whether due to fraud or error. This level of scrutiny is essential for maintaining the integrity of financial reporting, which is crucial for stakeholders, including investors, creditors, and regulatory bodies.

While the other options touch on relevant aspects of financial reporting or other financial services, they do not encapsulate the primary focus of financial audits as effectively as the understanding of compliance and accuracy in financial statement reviews. Evaluating historical performance and assisting with tax preparation are important but are not the main objectives of a financial audit. Similarly, predicting future cash flows falls outside the scope of what a financial audit entails, as audits focus on historic transactions and their reporting.