Mobile Security, Inc. (MSi) has been an audit client of teo \& Lee ULP for the past 12 years. MSt is a small, publicly traded aviation company based in Cleveland, Ohio, where it manufactures high-tech unmanned aerial vehicles (UAV), also known as drones, and other surveillance and security equipment. MSl's products are primarily used by the military and scientific research institutions, but there is Browing demand for UAVs for commercial and recreational use. MSI must go through an ectensive bidding process for large Bovernment contracts. Because of the sensitive nature of government contracts and military product designs, both the facilities and records of MSI must be highly secured. In October 202.5. MSI installed a new cloud based irventory costing system to replace a system that had been developed in house. The old system could no longer Keep up with the complex and detailed manufacturing costing process that provides information to 4pport competitive bidding. MSI's It department, together with consultants from the software company, implemented the new inventory costing system, which went live on December 1, 2025. Koy operational staff and thut internal audit team from MSI were: significantly engaged in the selection, testing, training. and implementation stages, MSI's fiscal year-end is June 30. The following table shows financal information for the first two quarters of the fiscal year end June 30,2026 lamounts in millions), Note that the financial data listed are for the three month quarter ended (i.e, the second quarter does not include the first-quarter data? The pretax income for the first two quarters is reasonable, with a net proft margin falling between B and 10s of sales. faund an nrior years, pretax income for the third quarter usually holds steady relative to the second quarter, but pretax income for the fourth quarter: typically decreases by 20$ over the third quarter as governments reach the end of their spendins budgets. Gather information: Considering both industry and entity factors, what are the major inherent risks in the MS1 audit