Paul Polishan seemingly dominated Leslie Fay’s accounting and fiscal coverage maps and the persons who were his subsidiaries. What deductions do such fortunes pose for a company’s independent hearers? How should hearers take such fortunes into consideration when be aftering an audit?
My inquiry for the Leslie Fay Companies instance focuses on the actions of Paul Polishan and the consequence his self-constituted dictatorship over the fiscal information of the Leslie Fay Companies would hold on the scrutinizing procedure. Paul Polishan. a 1969 accounting alumnus. was hired by the Leslie Fay Companies right out of college. The Leslie Fay Companies made women’s vesture. peculiarly concentrating on frocks for middle-aged adult females and the rigorous. conservative manners of that epoch. The Leslie Fay Companies was created by Fred Pomerantz after World War II and established in New York City. traveling public in 1952. and going widely known as one of the Prime Minister makers of high-fashion female dress in the United States. The boy of Paul Pomerantz. John Pomerantz was appointed President of the Leslie Fay Companies in 1972. Soon after this assignment and thru his sound relationship with John Pomerantz. Paul Polishan had worked his manner up to the place of Chief Financial Officer and Senior Vice President of Finance of the Leslie Fay Companies. Later. John Pomerantz took over as Chief Executive Officer and Chairman of the Board of Directors of the Leslie Fay Companies in 1982 for the now deceased Paul Pomerantz.
Paul Polishan controlled everything to make with the fiscal information of the Leslie Fay Companies. Paul Polishan ruled harshly over all his subsidiaries making a demanding and fear-driven work environment supported by an grim disciplinary class of action against all those employees who dared to interrupt the ridiculously rigorous policies and regulations he set Forth. Paul Polishan questioned strictly any petitions for any of Leslie Fay’s fiscal informations. no affair who was inquiring for it. even the senior directors of the company. demanding an account as to why they needed the information. It was about as if Paul Polishan had something to conceal. and it became evident that he so did hold something he was concealing.
In early 1993. Donald Kenia. the fiscal accountant of the Leslie Fay Companies came away claiming he was the exclusive plotter behind the major accounting fraud taking topographic point over the last three old ages or more. Finally. it was found that Paul Polishan was. in fact. the chief culprit and strategian of the major deceitful accounting dirt traveling on within the Leslie Fay Companies. In true signifier. Paul Polishan had forced Donald Kenia to accept the recording of several inappropriate diary entries inconsistent with by and large accepted accounting rules that misrepresented existent events and materially exaggerated net income borders for the period in inquiry. The net incomes and fiscal ratios of the Leslie Fay Companies were remarkably stable. and consistent with past public presentation. and better than their closest rivals. in malice of the terrible downswing in the women’s dress market and the overall market recession at that clip. There was besides this enormously turning alteration in manner tendencies from a more fashionable and formal expression to a more insouciant and less formal manner of dressing. such as bluish denims and Jerseies.
From the aforesaid facts. about Paul Polishan and his Fe fist bid over Wilkes-Barre. the Pennsylvania location of the accounting offices for the Leslie Fay Companies. it is really apparent that there were many issues covering with the internal controls of the Leslie Fay Companies or miss thereof. As independent hearers. its is portion of our occupation now to do certain proper and effectual internal controls are in topographic point in a company. every bit good as it is upper management’s duty to describe on the effectivity of their ain company’s internal controls because of the Sarbanes-Oxley Act of 2002. Without proper internal controls. an audit is much. much more hard to execute. It is besides a great trade more dearly-won to all parties. the auditing house and the client because it will be much more clip devouring to look into everything and because of the demand for a much higher grade of thoroughness.
If internal controls are improbably bad or virtually nonexistent. so it is non even worth the clip. attempt. or fuss for an independent hearer to try to scrutinize a company. such the Leslie Fay Companies. There is merely excessively great a hazard for the public accounting house executing the independent audit to take the company on as a client. The threshold will be well lower and a whole batch more grounds will necessitate to be gathered throughout the audit in order to run into this lower threshold. BDO Seidman. the public accounting house who was the independent hearers for the Leslie Fay Companies. unluckily. got the natural terminal of the trade holding been caught up in this major accounting fraud. and subscribing off unqualified sentiments for the Leslie Fay Companies’ falsified fiscal statements during the old ages the accounting fraud was taking topographic point.
The scrutinizing plan for a company such as Leslie Fay would hold to be more carefully planned out. Each measure of the auditing plan would necessitate a high degree of examination and have to be meticulously carried out to program. I would state at that place has to be a focal point on the house enquiry of employees particularly those under a adult male like Paul Polishan and a changeless base of self-independence. non leting the independent hearers to be strong-armed or bullied by the demeanour of Paul Polishan. I would non digest any restrictions of range either. Everything I ask for or want to see better be handed over to me without inquiry. or I would merely walk and give a disclaimer of sentiment. It is obvious that non a batch of people. grown work forces even. stood up or challenged Paul Polishan and that merely should non go on. The inside informations of an audit such as this are of the extreme importance. Overall though. sing the noteworthy deficiency of internal controls such as segregation of responsibilities. and the independency issues. I would object to even taking on a company such as Leslie Fay on as a client.