Why might an organization undergo a financial audit?

An organization might undergo a financial audit primarily to verify compliance with accounting standards. This process involves a thorough examination of the company's financial statements and practices to ensure they align with generally accepted accounting principles (GAAP) or other relevant regulatory frameworks. Adhering to these standards is vital for maintaining transparency and credibility in financial reporting, which supports stakeholders' understanding of the organization’s financial health.

A financial audit can also help to identify any discrepancies or irregularities in financial records, enhancing overall accountability within the organization. By confirming compliance with these standards, the organization can reassure investors, regulators, and other stakeholders that it is accurately reporting its financial performance and position. This not only helps to build trust but also minimizes the risk of fraudulent activities.

The other options, while potentially relevant in different contexts, do not directly capture the primary purpose of a financial audit. Reducing expenses or avoiding tax penalties may be indirect outcomes of better financial management, but they are not the core reasons for conducting an audit. Attracting investors might be a benefit of having audited statements, but the fundamental goal remains compliance verification.