Leslie Fay Companies

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Leslie Fay Companies

Paul Polishan apparently dominated Leslie Fay's accounting and financial reporting functions and the individuals who were his subordinates. What implications do such circumstances pose for a company's independent auditors? How should auditors take such circumstances into consideration when planning an audit?

My question for the Leslie Fay Companies case focuses on the actions of Paul Polishan and the effect his self-established tyranny over the financial information of the Leslie Fay Companies would have on the auditing process. Paul Polishan, a 1969 accounting graduate, was hired by the Leslie Fay Companies right out of college. The Leslie Fay Companies made women's clothing, particularly focusing on dresses for middle-aged women and the strict, conservative styles of that era. The Leslie Fay Companies was created by Fred Pomerantz after World War II and established in New York City, going public in 1952, and becoming widely known as one of the premier manufacturers of high-fashion female apparel in the United States. The son of Paul Pomerantz, John Pomerantz was appointed President of the Leslie Fay Companies in 1972. Soon after this appointment and thru his sound relationship with John Pomerantz, Paul Polishan had worked his way up to the position 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 do with the financial information of the Leslie Fay Companies. Paul Polishan ruled harshly over all his subordinates creating a demanding and fear-driven work environment supported by an unrelenting disciplinary course of action against all those employees who dared to break the ridiculously stringent policies and rules he set forth. Paul Polishan questioned rigorously any requests for any...
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