Remember the old adage, Figures don't lie, but liars figure? How many annual reports have you looked at that featured a graph with smoothly escalating earnings for the past 10, 15, 20 years or more? Now, thanks to the Enron disaster, we know what made those earnings so smooth.

The question is, "How many more Enrons are there out there who are on the verge of collapse?" Also, even if most companies are not on the verge of collapse, how many examples of misrepresentation of the numbers are there? How serious are the examples? Will we ever really be able to trust the collective brain trust of general management--financial management--outside audit firm again?

I am reminded of a quote that Warren Buffett made a few years ago when asked what were the most important attributes that he looked for in selecting CEO's for his companies. He said there were three: Energy, Intelligence and Integrity. He added that if his CEO didn't possess the third one that the first two would kill you. Is this what happened at Enron? Did the financial management/audit firm simply use bad judgment or did they lack integrity? I would guess that it was a little of both.

Geoffrey Colvin of Fortune Magazine points out in the March 4 issue that while Enron has drawn most of the attention from the media, there are numerous examples of more serious losses of jobs and value. He lists 10 companies who have lost much more than the $63 Billion value that Enron lost; household names like Microsoft, Lucent, AOL Time Warner. He also lists companies who have laid off lots more than the 4,000 at Enron who lost their jobs; 35,000 at Nortel, 26,000 at Chrysler, and 22,000 at Lucent to name a few.

All of this begs the question...How many more prominent companies are out there with accounting practices that are just as shady or much more shady than those of Enron? That's what is really scary about this whole situation. We are all focused on the tip of the iceberg...those smoothly escalating earnings have got a lot of people more than just a little scared.

We think it might be time to bring in a new kind of auditor to take a look; people with a high level of all three of the things on Mr. Buffett's list, with a real heavy dose of number three, INTEGRITY. Maybe you need to think of a completely new way to build your financial management team, building that team around people who have not spent their career in the Big 5 World; maybe around people with a sound financial foundation coupled with general management experience.

As a CEO, wouldn't it be nice to have an entire financial team that you could trust with your life? Ansley Consulting can help you deal with this issue. Molly Baskin, 847-853-1732.