Krispy Kreme Ethics Paper

KRISPY KREME ETHICS PAPER

Irene S. Galvante

Brandman University

Krispy Kreme Ethics Paper

Introduction

Krispy Kreme, the famous doughnut chain, is a newly public company. According to the Wall Street Journal (2005), "The Krispy Kreme story is one of a newly public company, experiencing rapid growth, that failed to meet its accounting and financial reporting obligations to its shareholders and the public,"  This paper will briefly describe the company “Krispy Kreme” and, the accounting scandal, Sabarnes-Oxley Act. An explanation how to prevent a similar scandal from happening in the future will also be discussed.

Analysis

Company Synopsis

In July 13, 1937 in Winston-Salem North Carolina, Krispy Kreme opened its first store when Vernon Randolph bought a secret yeast raised doughnut recipe from a New Orleans French chef. He rented a building in Winston-Salem North Carolina now called “Historic Old Salem”. The Krispy Kreme doughnuts were first sold at the local grocery stores. (Krispy Kreme). Passers-by smelled the aroma of cooking doughnuts and they would stop to inquire if they could purchase hot doughnuts. As a result, Vernon Randolph cut a hole in an external wall and began selling the hot Original Glazed doughnuts to the clients on the sidewalk. Krispy Kreme has grown progressively through Krispy Kreme Fundraising which is a special business for churches, schools, clubs and other organizations in 1955. In 1973 Krispy Kreme had 60 shops in the southeastern chain. In December 2014, the first International store was opened in Canada, outside of Toronto. In 2013, it opened the new store in Cancun Mexico and celebrated “Mexico’s 100th Krispy Kreme location”. (Krispy Kreme)

Krispy Kreme Accounting Scandal

“Former executives at Krispy Kreme Doughnuts Inc. who oversaw its rise from a regional chain to a highflying sensation used improper, even "egregious," accounting to satisfy Wall Street's hunger for growth, according to a comprehensive internal...