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To: 1st.mate who wrote (2644)	11/30/2001 2:58:55 PM
From: Vitalsigns	Read Replies (1) \| Respond to of 2773

By Michael Rapoport A Dow Jones Newswires Column (This story was originally published Thursday.) NEW YORK (Dow Jones)Enron Corp.'s (ENE) stunning and rapid collapse from market giant to edge of insolvency in about six weeks may be the first and most momentous of its kind. But I'm willing to bet it won't be the last. At the heart of the Enron debacle, after all, is a company that apparently was willing to push the edge of the envelope in its accounting, shifting things around with the result that the company looked much healthier and stronger than it actually was. And there's a lot of that going around lately. So much so that it's not a matter of whether another major company will get hammered once it comes out that its finances aren't all they're cracked up to be. It's a matter of who, and when. Over the past couple of years, it's become increasingly difficult for investors to trust in the accuracy of the figures that companies tout for their earnings and financial condition. We've seen "pro forma" earnings that can magically transform a loss under conventional accounting standards into a profit that companies can boast about. We've seen entirely legal but eyebrowraising accounting maneuvers like using pension income to boost operating income. We've seen outright accounting shenanigans of questionable legality to obscure things that companies don't want investors to see. How many companies do one or another of these things to put a gloss on their results? Nobody knows. Hundreds, at least. Maybe more. The issue has certainly gotten prevalent enough to catch the attention of the Securities and Exchange Commission, which has filed an increasing number of cases in recent years based on misleading financial disclosure. The SEC is also investigating cases in which it believes a company's "pro forma" earnings may be misleading investors; SEC Chairman Harvey Pitt called pro forma earnings "unstructured and undisciplined" in a speech Thursday. And while Enron's is an extreme case, it defies belief to think there aren't more time bombs like it out there, ready to blow up more companies whose financial statements and balance sheets don't tell the whole truth about what kind of shape the company is in. This points to the need, now more than ever, for comprehensive, transparent financial reporting a full accounting by companies, in every sense of that word. That's something we didn't see in Enron's case, as the company moved assets and debt off its balance sheet into a maze of outside limited partnerships thus both making its finances look better than they were and creating such a Gordian knot of a financial structure that few were able to cut through it to see Enron's true condition before it was too late. Mind you, this is something different from saying that Enron's fall is going to take other companies down with it something that appears not to be the case. Rather, the assertion here is that other companies, in a variety of industries, may have hidden financial problems the same way Enron did. Who will go down, and how will it happen? There's just no telling. History tends to repeat itself, but rarely with exactitude. It may be a company that isn't yet on anyone's radar screen, that as yet has evinced no sign of funky accounting or other trouble. There are thousands of public companies; the relatively small number of accounting watchdogs, analysts, financial journalists and others interested in such things can't catch every trick that every company is trying to pull. But there are probably more bombs out there and to catch them before they explode, investors are going to have to be vigilant. Comb through regulatory filings. Ask annoying questions, and take appropriate steps to protect your portfolio if you don't get a satisfactory answer from the company. Yes, it's going to require investors to put in a lot more time and effort. Ask anyone who's held Enron stock through the past six weeks if it's worth it. By Michael Rapoport, Dow Jones Newswires; 2019385976; michael.rapoport@dowjones.com (END) DOW JONES NEWS 113001