The North Face,Inc
The Leslie Fay Companies
4. 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?
Implications and something needs attention
1. The unusual relationship between CEO and CFO, especially when they are close to each other.
2. Accountant in charge doesn’t want anyone else to see the financial information.
3. Accounting personnel takes the full responsibility for fraud instead of management.
4. The inverse relationship between the industry ratios and client ratios.
5. The chief financial officer’s integrity.
6. The relationship between accountant in charge and subordinates, especially when employees are afraid of their superior.
1. Paul Polishan struck up a relationship with John Pomerantz, who became Leslie Fay’s president and assumed responsibility for the company’s day-to-day operations in 1972. Over the next few years, Polishan became one of John Pomerantz’s most trusted allies and the company’s chief financial officer.
Auditors should pay attention to the relationship between the CEO and CFO when they are close to each other. There is a higher possibility of fraud in the circumstance.
2. Polishan was so strict and autocratic that he ruled the Wilkes-Barre site with an iron fist. Polishan didn’t want anyone else to overlook the financial information, so he asked the senior managers in the headquarters office who requested financial information to explain why they needed the information.
It’s an implication that the CFO controlled the financial information so strictly. The most possible reason is that he didn’t want anyone else to find the fraud in the financial statements.
3. Donald Kenia, Polishan’s top lieutenant, took full responsibility for a large accounting fraud revealed to the press by John
4. 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?
Implications and something needs attention
1. The unusual relationship between CEO and CFO, especially when they are close to each other.
2. Accountant in charge doesn’t want anyone else to see the financial information.
3. Accounting personnel takes the full responsibility for fraud instead of management.
4. The inverse relationship between the industry ratios and client ratios.
5. The chief financial officer’s integrity.
6. The relationship between accountant in charge and subordinates, especially when employees are afraid of their superior.
1. Paul Polishan struck up a relationship with John Pomerantz, who became Leslie Fay’s president and assumed responsibility for the company’s day-to-day operations in 1972. Over the next few years, Polishan became one of John Pomerantz’s most trusted allies and the company’s chief financial officer.
Auditors should pay attention to the relationship between the CEO and CFO when they are close to each other. There is a higher possibility of fraud in the circumstance.
2. Polishan was so strict and autocratic that he ruled the Wilkes-Barre site with an iron fist. Polishan didn’t want anyone else to overlook the financial information, so he asked the senior managers in the headquarters office who requested financial information to explain why they needed the information.
It’s an implication that the CFO controlled the financial information so strictly. The most possible reason is that he didn’t want anyone else to find the fraud in the financial statements.
3. Donald Kenia, Polishan’s top lieutenant, took full responsibility for a large accounting fraud revealed to the press by John