Make Sure The Year End Sales Are Not Traveling In A Truck Around I-275 and By the Way What Is Really Wrong With Krispy Kreme Doughnuts? It was.. let's just say it was awhile ago and I was new member of the audit staff of Arthur Andersen assigned to a manufacturing company that was an international public company. They made large high tech pieces of equipment that were sold to paper mills, tobacco companies and other. One sale could mean the difference in making profit forecasts or not. One of my assignments was to make sure there was clear documentation for a sale including an  executed contract and the receipt of the equipment by the customer. If any shipments left the shipping dock on or near December 31st., I was to do whatever was necessary to verify the customer agreed there was a sale. I recalled my work on that account  when I was ready the story in the Wall Street Journal about Krispy Kreme Doughnuts and specifically the insinuations that the company's accounting had not been as tight as it should have been during the "high flying" days. I took note of the allegation that equipment was sold to franchisees before it was wanted or needed.  In one case equipment was sold and profits were recorded then apparently the parent company bought the franchisee and in essence bought the profit in the equipment. I must say the if you sell a piece of equipment and there is a clear sales agreement and the terms of sale are met, you book it as revenue. If later on the company you sold it to is for sale and you buy the company at fair value including assets which include the equipment you sold to it - so be it. Now if you had a plan to inflate earnings by orchestrating this type of transaction then that is wrong. The article didn't mention intent on inflating earning by that transaction. It just said - the franchisee wasn't ready for the equipment. That can be like me buying a home and everyone agreeing to a closing date and then my professional schedule is such that I am mentally not ready to close. Well I agreed to close, it is funded and guess what - it closes. Now that and the references to using the company jet and all of that was interesting but the report hghligts in the WSJ did not say anything about what was going on with the donut business in that same period. What were the same store sales? What was the strategy long-term considering there was no way that people could keep coming back in droves to the same location just because the hot now being served sign was on. So the issue seems to circle around a $25 million accounting problem. But look deeper Steve Cooper has been running the business and still there have been no financial statements in a year. Folks this is a donut business. What the hell is the problem here?   Steve Pohlit is a CPA has his MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue in profits by at least 30% in the next 90 days, please visit www.StevePohlit.com  All articles published by Steve unless specifically restricted may be freely published with this resource box in tact.