The Leslie Fay Companies
The Leslie Fay Companies, which is a manufacturer of women’s apparel, was founded by Fred
Pomerantz. The company is based out of New York, and Fred Pomerantz made the company public in 1952. However, Fred Pomerantz ended up taking the company back to a private entity for a few years in the 1980’s due to a buy out from his son John Pomerantz. The Leslie Fay
Companies became public again in 1986. After John Pomerantz had taken over the company, profits started skyrocketing even though the market for women’s apparel was going downhill due to the recession from the 1980’s through the 1990’s.
By looking at these financial statements, one can see there is a huge, constant increase of net income from
1987–1991. According to Auditing and Assurance Services by Alvin A. Arens, Randal J. Elder, and Mark S. Beasley, the auditor needs to have knowledge of the company which includes being knowledgeable of what industry the company is in (such as fashions, food, etc.), knowledge of the company’s creditors, suppliers, customers, in addition, knowledge of how other companies producing “like kind merchandise” is doing (15).
The knowledge of knowing about the company falls under the Standards of Field Work under GAAS, statement #2, “The auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures” (35). The Leslie Fay Companies, according to Michael C. Knapp,
Contemporary Auditing, “The Leslie Fay Companies” was reporting “impressive sales and earnings throughout the late 1980s and early 1990s” (66).
I begin this research paper by explaining the history behind The Leslie Fay Companies and in doing so, I found an article on the web, “The Leslie Fay Company, Inc. -- Company
History”, this explains the history
Pomerantz. The company is based out of New York, and Fred Pomerantz made the company public in 1952. However, Fred Pomerantz ended up taking the company back to a private entity for a few years in the 1980’s due to a buy out from his son John Pomerantz. The Leslie Fay
Companies became public again in 1986. After John Pomerantz had taken over the company, profits started skyrocketing even though the market for women’s apparel was going downhill due to the recession from the 1980’s through the 1990’s.
By looking at these financial statements, one can see there is a huge, constant increase of net income from
1987–1991. According to Auditing and Assurance Services by Alvin A. Arens, Randal J. Elder, and Mark S. Beasley, the auditor needs to have knowledge of the company which includes being knowledgeable of what industry the company is in (such as fashions, food, etc.), knowledge of the company’s creditors, suppliers, customers, in addition, knowledge of how other companies producing “like kind merchandise” is doing (15).
The knowledge of knowing about the company falls under the Standards of Field Work under GAAS, statement #2, “The auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures” (35). The Leslie Fay Companies, according to Michael C. Knapp,
Contemporary Auditing, “The Leslie Fay Companies” was reporting “impressive sales and earnings throughout the late 1980s and early 1990s” (66).
I begin this research paper by explaining the history behind The Leslie Fay Companies and in doing so, I found an article on the web, “The Leslie Fay Company, Inc. -- Company
History”, this explains the history
Cited: Arens, Alvin A., Elder, Randal J., and Beasley, Mark S. Auditing and Assurance Services. 13th ed. New Jersey: Pearson Education, Inc., 2010. Print. Knapp, Michael C. “The Leslie Fay Companies." Contemporary Auditing: Real Issues and Cases: 7th Edition. Mason, Ohio: South - Western Cengage Learning, 2009. 63-73. Print. "The Leslie Fay Company, Inc. -- Company History." Find Funding with Banks, Investors, and Other Funding Sources | Funding Universe. 1-6. Web. 06 Nov. 2011. .