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The following risk factors were identified by various audit teams during the audit of their clients. 1. The client has a strong control environment and good controls over the existence of inventory. 2. The client is in an industry that has both significant regulatory oversight and complex regulations. 3. The client has recently experienced turnover in it's information technology group, resulting in decreased segregation of duties and a deterioration of computer general controls. 4. The client is a private university with primarily full-time students, a small amount of receivables at year-end, and good internal controls over revenues. 5. A companys business plans are dependent on the success of entering new foreign markets with existing products. 6. The client has used significant borrowing to fund expansion in a competitive industry and has a narrow tolerance range regarding debt covenants. 7. Analytical procedures for a manufacturer show significant increases in both profit margins and inventory turn days. 8. Inventory items are small in size and high in value. 9. The telecommunications client is in a capital-intensive industry, and fixed assets additions involve complex accounting issues. 10. The audit team has experienced several attempts by management to justify marginal or inappropriate accounting on the basis of immateriality. 11. Analytical procedures for a manufacturer show significant increases in both revenue growth and accounts receivable turn days. Required For each risk factor (a) identify the type of misstatement that can occur (b) an audit strategy that is relevant to the risk factor.

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