You are an experienced staff accountant working on the audit of RB Johnson Electric Company (the Company) as of and for the year ended December 31, 2022. All of the outstanding common stock of the Company is owned by Barry and Sam Johnson, who are brothers. The Company is engaged in commercial electrical construction on the East Coast of the United States. The Company was formed on January 1, 1947, and has been in continuous operation since that date. The Company employs approximately 100 people and has normal revenues between \$25 and \$35 million. The Company's bonding needs and its line of credit agreement, with Truist, require the financial statements to be audited. The Company has a very good Chief Financial Officer, who was at one time a manager with your firm. Your firm has audited the financial statements for the last 10 years. Adam Silvia is the engagement partner and Joey Sykes is the engagement manager. Based on some staffing issues, you have effectively been assigned the role of engagement senior on this client and you are excited to be working with Joey and having a number of increased responsibilities. The audit has been completed and you and Joey are getting ready to transmit the completed file to Adam for his review. The Company uses the accrual method of accounting and recognizes revenue on the percentage completion method of accounting. The Company's recent adoption of ASC 606 did not materially impact the Company's revenue recognition. The Company's trial balance, as of and for the year ended December 31, 2022, follows. Prepare a summary of your follow up conversation with Jacob relative to his discovering this error or to describe to him his misunderstanding of the nature of your firm's audit of the Company. Problem 8 (Risk Assessment) As noted in the information given, the Company's CFO was a former manager with your firm and is a very qualified and capable individual. During your planning meeting, the current engagement manager compliments the CFO's abilities and takes a moment to describe for the engagement team the issues that were often present in prior years before the Company hired the new CFO; including the fact that there were often dozens of required adjustments and long delays in getting the audit completed as a result of the many non-accounting related responsibilities of the Company's prior accounting staff. He also indicated that under the leadership of the new CFO that the control environment had been significantly improved. Required By reference to SAS 145 , including A275, indicate the type of risk of material misstatement that may have existed under the prior accounting leadership of the Company