Identify five inherent risks and the explain the audit concern for each: Your firm is carrying out the audit of the financial statements of Williams Brothers Limited for the year ended $31$ March $2024$ and you are part of the audit team. At the audit team briefing meeting, ahead of the commencement of the final audit procedures, the audit manager confirmed, in accordance with best practice guidelines, that a risk based audit strategy would be adopted.

In addition, the following information was provided:

$1)$ Williams Brothers Limited is a manufacturer of high fashion, high quality ladies clothing. Its head office, central warehousing facilities and main manufacturing factory site are located on a five acre site in Rivendell. It has a smaller factory site with limited warehousing facilities at Moria. The company has a broad customer base comprising several well$-$known high street chain stores, a number of boutique stores, and both domestic and overseas wholesalers.

$2)$ This is your firm$$s fourth year as the auditors of the company, which in previous years is considered to have had a relatively poor control environment. Whilst the directors of the company have sought to improve this, the audit manager has confirmed that in his view there has been only a marginal improvement over the last twelve months.

$3)$ The company is owned by John Williams, who is also its Managing Director. Until his promotion to this role, he had been the company$$s Sales Director, having worked for the company in various sales related roles since leaving school in $1986.$ He inherited $80\%$ of the company$$s share capital and his current role in February $2023,$ immediately following the death of his late father Harold $-$ who in $1964$ had been the sole founder and shareholder of the company. Harold had been the company$$s Managing Director since its formation. The remaining $20\%$ of the shares are owned by John William$$s brothers who play no active role in the running of the buiness, Following on with the tradition of his $($late$)$ father, John has continued with the company$$s policy of paying $120,000$ in ordinary dividends each year, split between John and his brothers.

$4)$ Following Harold$$s death, several of the company$$s directors and managers who had served alongside him for many years decided to retire leaving the way for younger colleagues and new recruits to take over their roles. Two of the retirees were the company$$s Production Director and its Director of Finance and Administration. In March $2023$ John appointed his previous deputy, Sid Jones to the role of Sales Director and in April $2023$ he appointed Kip Li to the role of Production Director and Prya Petty as the company$$s Director of Finance and Administration.

$$ Kip has many years$$ experience of working in production culminating in his most recent role, before Williams Brothers Limited, as the Production Director of Toy Group Ltd $-$ a manufacturer of children$$s toys.

$$ Prya had left school at age $16,$ and worked for four years as a bank cashier before going to university. Following graduation with a first class degree in Accounting and Finance, she studied for and acquired a Master$$s degree in Economics from one of the country$$s premier business schools. She was then appointed to a management role in administration with a competitor of Williams Brothers Ltd and worked there for three years. At her interview for the role at Williams Brothers Ltd$,$ John was particularly impressed with Prya$$s work ethic and her vision for the restructuring and reorganisation of the company$$s finance and administration functions. Prya was particularly keen to move the company forward and to improve the efficiency of its accounting and administration procedures. Already, she firmly believes that she has gone some way to achieving this by introducing a sophisticated computer$-$ based accounting system in January $2024.$

$5)$ Unfortunately in the two years leading up to Harold$$s death the company allowed higher credit limits to some relatively high risk overseas customers. This followed pressure from Harold who wanted the company to break into more overseas markets and so increase sales and profits. The increased credit limits did lead to increased sales, but it also led to very high levels of bad debts due to inadequate credit control procedures. Harold also sanctioned cuts in the company$$s health and safety budget for the Moria factory again following pressure from Harold to increase profits. This led to several shop floor accidents resulting in serious injury to employees, trade union intervention and bad publicity for the company. The health and safety budgets were subsequently increased, but not to their previous levels.

$6)$ The company normally employs in excess of $290$ full time production workers. During the summer season, this work force is augmented with part time casual workers, as production increases to make garments for the following summer. It has four directors, $14$ delivery