Part A ABC Ltd is a construction company. Control of the company is in the hands of the ABC family, who have been majority shareholders for more than 20 years. Mr A is chairman and managing director. The other three directors, one of whom is a member of the ABC family, all hold senior positions within the organisation. Seventy per cent of the companys construction contracts are government contracts, with the remaining contracts being small shopping centres or business centres. Mr A has informed you of the following facts concerning the past year and future trends: During the year the company won a major contract to construct a number of buildings on a university campus. The project is particularly interesting as all the facilities must be capable of transmitting and receiving videoconference broadcasts and acting as high-tech virtual classrooms. ABC Ltd has not been involved in this type of work before but believes that it will lead to a lot of similar work in the private sector. Reconciliations of debtors statements to the debtors ledger were performed incorrectly for a three-month period while a clerk was on leave. These reconciliations were approved by the accountant. The errors were detected by the debtors clerk on his return and all errors were corrected. ABC Ltd keeps a small store of building materials in its main warehouse. The warehouse manager is responsible for ordering goods, receipting goods and paying creditors. A bonus incentive scheme was introduced for the supervisors at the construction sites to ensure that buildings would be completed on time.

Based on the above information, identify inherent risk factors for ABC and explain their impact on the financial report.