You have recently been hired to perform the year-end audit for Coleman Co., a manufacturer of inexpensive jewelry items for sale at mall kiosk and costume jewelry outlets. Among the results of your preliminary planning are the following:

a. Management is compensated based on an aggressive, earnings-based plan.

b. Coleman's markets are concentrated primarily in Midwestern U.S. states, particularly Michigan.

c. Coleman's most valuable asset is a warehouse full of costume jewelry.

d. The board of directors has no audit committee.

e. Gross margins in this industry are usually small, and Coleman is no exception.

f. Many of the sales contracts with Coleman's distributors allow for return of unsold items in exchange for credit.

g. Although the senior management is mostly experienced, the \(\mathrm{CFO}\) is new on the job. She is the third CFO in the past two years.

Discuss the ramifications for your audit plan of the preceding items. Specifically, address the effects of these items on your assessments of client, engagement, and audit risks and the business processes within Coleman from which more evidence should be gathered, paying special attention to the interactions among these items.