As a tech company, Microsoft likes to constantly invest in the future. Windows 10 asking you to buy more Onedrive space may not seem like it will sell that well NOW, but Microsoft believes cloud services are the future and invests heavily in them - hoping that someday your "cloud bill" will be as commonplace and essential as your internet bill is today - and thus earning Microsoft Macrobucks. Naturally, this is a risk as it's possible paid cloud services won't take off, or that they end up losing too much marketshare to dropbox or google drive.
In fact, tech companies are naturally rapidly changing companies as well. Looking at the income statement we can identify some trends for Microsoft.


The net income increase is almost solely attributable to this expense's decline.
This shows that rather large swings in revenue and expenses are rather common for Microsoft and that misstatement cannot be assumed solely from a large change. However, this means that proper documentation must be obtained proving these changes in transactions actually occurred, and proper testing will be a part of my audit plan – specifically in "Impairment, integration, and restructuring" to get more than just management’s word on this.
Microsoft has never been a company that is free of legal troubles. First of all - Microsoft flat out admits "We may not be able to adequately protect our intellectual property rights" because in this era software piracy is so rampant, easy to do, and difficult to catch that I would be genuinely amazed if at least half this class hadn't committed piracy at some point, weather aware or unaware of it. 


I’m here to audit Microsoft, not debate the morals of Piracy. But it is important that I be aware of the risks Microsoft takes, knowing they cannot always defend their property rights and to properly preform substantive tests that will confirm whether or not this poses risk of material misstatement.
Microsoft is no stranger to getting sued. Note 17 of the SEC 10-K is devoted entirely to legal proceedings all over the world for various divisions of the company, so Microsoft frequently has its day in court - and it is fairly common for Microsoft to have loss contingencies relating to these matters. However, while they do consider their odds in court, they do not consider these losses (or gains) until they have occurred. 

Microsoft is also no stranger to tax audits.

This can of course have an effect on Microsoft's financial statements.  Both the IRS and similar governmental agencies in other nations can determine that Microsoft owes more (or less, though that's one honest government to admit to Microsoft making an error in their favor) than they believe they did and this could easily result in a material misstatement. As the auditor, I must maintain standards and ensure that Microsoft has properly included legal fines and penalties in their statements into the proper accounting periods once they have occurred, as failure to do so could easily result in material misstatement.
