What compliance procedure should an auditor perform regarding laws impacting financial statements?

Performing a risk assessment is vital for an auditor as it helps identify and evaluate the risks of material misstatement in the financial statements due to non-compliance with laws and regulations. This is essential because certain laws can significantly affect how financial transactions are recorded and disclosed, leading to potential misstatements.

During the risk assessment, the auditor gathers information about relevant laws and regulations that could impact the financial statements. This process may involve understanding the entity's environment, assessing compliance with applicable laws, and identifying areas of higher risk that may require more thorough testing or additional procedures. The auditor can therefore determine the strategies needed to mitigate these risks and ensure that compliance is adequately addressed in the audit.

In contrast, preparing annual financial forecasts, conducting management interviews alone, or simply presenting findings externally do not focus on the proactive identification and evaluation of risks associated with compliance. While these activities may be part of an overall audit process, they do not specifically address the necessity for assessing the risk of non-compliance which is crucial in forming a reliable opinion on the financial statements.