The Leslie Fay Companies Essay

1885 Words Feb 15th, 2012 8 Pages
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
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These financial statements do not give the whole picture of the individual company, in fact, the statements reflect all the companies as a whole.

If I was preparing to do this audit, the first thing I would obtain is a copy of the Balance
Sheets and Income Statements from 1987-1991 of all the companies that were combined in the
Consolidated Balance Sheet and the Consolidated Income Statement. Because we are dealing with a manufacturer here in The Leslie Fay Companies, the Balance Sheet should represent the
Raw Materials, the Work in Process, and the Finished Goods. The Income Statement should show the Cost of Goods Sold, the Cost of Goods Available for Sale, how much the manufacturing costs were, along with the beginning and ending Inventory amount to arrive at the
Gross Margin amount. Then you would subtract out the rest of the expenses.

You would then have the whole picture of the companies presented as far as Inventory going out and coming in, in addition, any costs (expenses) going out and coming in, thereby understating or overstating inventory would most likely not happen.. The company should also have a
Schedule of the Cost of Goods Manufactured, which would show exactly where the amount came from for the costs manufactured amount on the Income Statement.

By obtaining the

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