Buska Ltd is a manufacturer of some fast moving consumer goods $($e$.$g$.$ food, beverages, toiletries etc$).$ Your audit firm, ADG Consult, is auditing this company for the first time. As part of understanding the business of the client, you have requested to take a tour of Buska Ltd$$s manufacturing plant and distribution centre. This is to help you assess the potential risk of accounts misstatements. You made the following observations during your tour of the facility;

$1.$ One area of the distribution centre contains some products that seem to have been there for a very long time. They are dusty and the packaging looks old.

$2.$ The receiving area is fairly automated. Many products come packaged in cartons and boxes. The receiving department uses computer scanners to read the contents on a bar code, and when bar codes are used, the boxes or containers are moved immediately to the production area where they are to be used.

$3.$ You observe that there are three separate lines of production for three distinct product lines. Two seem to be highly automated but one seems antique

$4.$ One production line uses just in time inventory for its major component products. These goods are received in rail cars that sit just outside the production area. When production begins, the rail cars are moved directly into production. There is no receiving function for these goods.

$5.$ Another important observation you made is that a large number of machines are sitting idle outside and that a second line of one of the company$$s main products is not in operation.

$6.$ The company uses minimum security procedures at the warehouse. There is a fence around the facilities, but employees and others seem to be able to come and go with ease.

Required

Explain the potential risk$($s$)$ associated with each observation.