Hollate Company Essay

814 Words 4 Pages
The analyzed case study refers to the Hollate Manufacturing company, which belonged to the home construction industry since 1950s. The company operated in the United States and Canada with 14 divisions spread throughout the countries. Hollate’s performance was significantly better than its peers, resulting in $1 billion sales. The company maintained its growth over the years due to growth-through-acquisition strategy. However, the home construction industry suffered downturn in recent years. Hollate manufacturing faced a problem with audit as far as with personnel. Four suggestions are given along with answer to the question how to avoid alike situations.
Problem statement
After initial public offering Jack Brennahan
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What is more the CEO did not want to make huge cuts due to downturn, as he believed it would end soon and wanted to be prepared for quick return to full capacity production, therefore, personnel was worried of losing their jobs due to tough competitive climate. Due to continuous downturn in the industry Hollate’s performance started to slip. Previously taken $150 million credit line to finance acquisitions was violated as the company failed to meet covenants. As fourth quarter earnings were to be announced the new external audit company LPS LLC started to ask questions about unexplained accounting transactions to which they did not receive answers nor from controller nor from Blackburt, who was believed to know everything about Hollate’s financials. This was a serious situation as figures in the journals turned out to be significant and Blackburt acted with anger and frustration, which was not common for him.
Solutions to the problems:
The CEO should organize the accounting course for all those in the board, who are unfamiliar with accountancy rules and make sure the audit committees are fully capable of understanding it and it sources.
Additionally, more personnel in the internal audit should be hired to assure its tasks being completed correctly and in the full extent. Moreover, it has to be assured that controllers always respond to external auditors

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