Several KKD officers were formerly employed by PriceWaterhouseCoopers LLP, the current auditor. All of the following excerpts are from the 12/16/1999 S-1:
J. PAUL BREITBACH has been employed by Krispy Keme since November 1992 as Executive Vice President, Finance, Administration and Support Operations. From 1973 to November 1992, Mr. Breitbach was a partner at the accounting firm of Price Waterhouse, and from 1983 to 1992 was managing partner of that firm's Winston-Salem, North Carolina office. From 1987 to 1992 he was also group managing partner for all Price Waterhouse offices in North Carolina and South Carolina. Mr. Breitbach is a certified public accountant.
RANDY S. CASSTEVENS has been employed by Krispy Kreme since 1993. Mr. Casstevens has served as Senior Vice President, Finance, since April 1998 and as Secretary since November 1995. Prior to joining Krispy Kreme, Mr. Casstevens was employed by Price Waterhouse from 1987 to 1993. Mr. Casstevens is a certified public accountant.
MICHELLE P. PARMAN has been employed by Krispy Kreme since 1993. Ms. Parman has served as Senior Vice President, Corporate Development since April 1998. Previously, she served as Vice President, Strategic Planning. Before joining Krispy Kreme, Ms. Parman was employed by Price Waterhouse from 1984 to 1993. Ms. Parman is a certified public accountant.
well if you were in charge of finance would you take your business to your friends or down the street? To your friends!
No, if I were in charge of finance I most definitely would NOT take the business to my friends. In fact, they would be exkluded because they ARE my friends. This, IMO, is a no-brainer.
Even a whiff of impropriety, whether justified or not, kan ruin a business. If I have nothing to hide, why not just take the business to an auditor where investors kan be more konfident of an unbiased, independent audit?
I guess this sort of behavior is kommonplace in the auditing profession (we're all probably going to learn alot more about that profession (not far removed from the oldest) during the Enron investigations). I assume (and am surprised) that their don't seem to be ethical guidelines for relationships such as this (maybe there are guidelines, but, if so, they're obviously being ignored).
Any CPAs/auditors out there?
C'mon, man. They all worked for P-W eight (8) years ago. Big deal! People grow professionally and move on. I'd be more concerned that present auditors are in bed with KKD, a'la Enron.
You and I agree that KKD stock is way overpriced, but nobody is "tricking" longs into buying here. PE and PEG are well known to any investor with half a brain, which I hope would include even a KKD long. It's a free market, and let the buyer beware, sure; but there's no impropriety in your revelation that several KKD employees worked for P-W eight years ago. Gim'me a break!
It's a free market, and let the buyer beware, sure; but there's no impropriety in your revelation that several KKD employees worked for P-W eight years ago. Gim'me a break!
I never said there's an impropriety. That's the worst case (which I have no evidence of).
In the best case, it looks bad. Breitbach was the managing partner at the Winston-Salem office for 10 years. Do you think he has any clout at the P-W office?
The former P-W's at KKD know the ins and outs of that firm (in addition to the industry); they know what is likely to pass muster and what will not. In that respect, using P-W as the auditor (vs. someone else who they don't know as well), probably lets them breathe a little easier when they try things like
1) not depreciating property and equipment until the next half year after it's put into service
2) keeping the Effingham facility off-balance sheet
Why not just hire someone else? It's not that hard...
You worked in the Navy, right? Let's say your captain of 10 years (he trained you) is promoted to admiral. When he leaves he takes several people with him (your friends). After several more years go by (ok, 8), you are asked by the Navy (as part of a program to evaluate its entire combat group) to certify the combat readiness level of his fleet. Even if you could honestly say that your prior affiliation with the admiral and his subordinated would in no way affect your judgement, I would argue that the appropriate course of action would be assignment to a different fleet.
All SEC audit engagements require the sign-off of a concurring partner.
Is the concurring partner from another office? What activities does he do to "sign-off", e.g. read the report, do spot-checks, make sure the columns add up, etc...
In such circumstances, the local office is required to document the background of the transaction, the specific issue involved, and the proposed resolutions. All consultations with the national office are documented and also included in the workpapers.
That's obviously how it SHOULD work. What happened in the Enron case? What checks and balances are in place to ensure that the auditor is acting professinally and ethically. Some sort of external peer review? In other words, who audits the auditors? How do we KNOW they're doing their job?
Having former audit employees working at a client is not an independence violation.
According to whom, the CPA governing body?
I agree with you on all counts on this string, tarheel. I don't think there's any impropriety and I don't think there's any bad judgement indicated. But I do feel that was the implication in the original post regardless of the disclaimer later published by the original poster. I think it's a red herring the same as Enron's political contribution history is a red herring at this point.
The Democrats had their shot at campaign finance reform but gave it away because they wanted to hold onto their precious labor union support. And the Republicans get to keep big business. So be it. "Quid pro quo" is what the lawyers say, I think. They will NOT get Bush on the Enron deal and KKD is NOT crooked or stupid because they hired some former P-W employees and now continue to use P-W as their auditor. That's just "business as usual" in America. Ain't it great!
It's even greater that we can all disagree agreeably in this free and open forum.
I don't think there's any impropriety and I don't think there's any bad judgement indicated. But I do feel that was the implication in the original post regardless of the disclaimer later published by the original poster.
The original post was a statement of fact. It was excerpted directly from an KKD SEC filing. There was no editorial commmentary.
The disclaimer (as you call it) was with regard to the impropriety, not with regard to bad judgement. I have no evidence of impropriety; I do think they used bad judgement.
Timd99fl-I wanted to tell you how much I appreciate your well thought out reasoning over the past year. I make it a point to read your posts. I have been using a system called Invest Tools to indicate trends and it has been surprisingly accurate. And for only the 2nd time in the last 12 months-Investools has given a clear cut DOWN signal on KKD in regards to MA, Stochastics and MACD. Continued good luck on your option technique.
Wachovia and Pricewaterhouse are no doubt motivated by big fees. The $124k fee to PW for Scott's personal return must have included a very juicy bonus for some partner. As for Randy Casstevens' impending departure, it does seem logical that there's resentment on his part that his pile of options was so relatively thin. Perhaps he will be taking up missionary work in the future. You know, to repent.
for the newbies on the board, the former Pricewater House employees who jumped to kkd are no longer employed by kkd:
Breitbach (CFO) retired, he now runs kkd's philanthropic arm, Krispy Kreme Foundation
Casstevens (CFO) resigned at the end of calendar year 2003
Parman resigned; she has since remarried; her new name is Michelle Livengood
Divursefi's got the story (and you are more than welcome to crib from his notes) on the incestuous relationship between the Winston Salem office of Price Waterhouse Coopers and KKD, the revolving door, the BIG fees, the big perks to Scott Livengood and to Mrs. Livengood (a former employee of that same PWC office). This is just TOO juicy. And no one has ever reported on it. (whoever is talking to Herb, please clue him in on this.)