Phillip Adams (audit partner) is planning the audit of a new client, Winston Electronics Limited (Winston) a publicly listed company that manufactures digital transformers. Winston has invested heavily into research and development over the past five years' and this has resulted in the production of some very profitable sales. Recent growth in international sales has placed some strain on its operations. To reduce the risks associated international sales Winston has negotiated several hedging contacts Because of the complexities of the underlying accounting associated with the hedging contracts, Winston has recently employed two experienced accountants into the accounting department. Adams discussions with the predecessor auditor revealed that the client has experienced some difficulty in correctly tracking existing plant and equipment items. This largely involves plant and equipment located at its multiple production facilities. During the recent year, Winston acquired a regional electronics company, which further expanded the number of production facilities. Adams plans to staff the audit engagement with several members of the firm who have experience in auditing electronics companies. Adams is concerned about the complexities associated with this new client and intends to carry out an extensive review of key accounts. Required: Based on the above information: (a) Identify factors that affect the risk of material misstatement in the financial statements of Winston Electroni