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Enronitis, witch-hunts and financial hypochondria

Enronitis is spreading fast. How virulent it proves to be, and how quickly the contagion can be contained, is anyone's guess. But its chief symptom - the fear that companies have been systematically misrepresenting their accounts through off-balance-sheet financing, special purpose entities and minimal disclosure - will not be easily suppressed. US regulators hope a fresh dose of rules will provide a remedy. Others say more rules will only mean more loopholes and that what is needed is a complete overhaul of the requirements for company reporting, auditing, governance and analysis worldwide. Only then can confidence in the system be restored, they say.

Krispy Kreme wasn't at the top of many lists of companies most likely to get caught in the accounting fallout from Enron's collapse. But its experience in mid-February offered a near-perfect demonstration of Enronitis at work.

The Winston-Salem, North Carolina-based doughnut maker is an all-American success story. It has been selling its popular range, headed by the signature Hot Original Glazed, to the snackers and dunkers of north America since 1937.

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