Enron, Andersen, Worldcom: although these companies have stopped dominating the headlines, the shock waves they sent through the business community in 2002 have not yet subsided. The belief that accounting is an exact science has been shattered, while economic relations are upset by the knowledge that financial information may be untrustworthy. Yet the market economy profoundly requires relevant and reliable information about the activity and financial situation of businesses.

Taking into account the increasing strength of capital markets and international investors, the authors outline the basic elements that could constitute a new, balanced system of accounting that would accompany the necessary changes in capitalism, particularly in France and the rest of Europe.

This book is aimed at practicing accountants, business and corporate finance students, but also at any reader interested in an original and compelling perspective on the use and abuse of accounting in the business community.

Nicolas Véron, a  senior fellow at the Peterson Institute for International Economics in Washington, DC, is the co-founder of the European think tank Bruegel. He authored or co-authored numerous publications on banking supervision, crisis management, and financial reporting.

Matthieu Autret is an economic expert who has worked for the European Commission and the World Bank.

Alfred Galichon is a full professor at the department of economics of New York University and the current director of New York University in Paris. His research interests span across theoretical, computational, and empirical questions. 

1. Cover Page
2. Title Page
3. Copyright Page
4. Acknowledgments
5. Prologue
6. Introduction
7. PART I - Accounting and Its Controversies
   1. CHAPTER 1 - The Common Language of Capitalism
      1. The Origins
      2. From Venice To Houston
      3. Accounts for Whom?
      4. Financial Statements: A Primer
   2. CHAPTER 2 - “Creative Accounting” and the Fairness Conundrum
      1. Enron: “A Culture of Deceit”
      2. The Seven Pillars of Creative Accounting
      3. True and Fair Accounts: Any Such Thing?
   3. CHAPTER 3 - Standard-setting and its Challenges
      1. What Makes Good Accounting Standards?
      2. The Conflicting Interests of Accounts' Users
8. PART II - The Changing World of Financial Reporting
   1. CHAPTER 4 - Capitalism in Flux
      1. The Shifting Fault Lines of Financial Systems
      2. New Forces at Play
   2. CHAPTER 5 - Auditors under Scrutiny
      1. The End of Self-Regulation
      2. More Change Than Meets the Eye
   3. CHAPTER 6 - Power to the Investors?
      1. The Global Rise of Institutional Investors
      2. The Changing Landscape of Intermediaries
      3. Accounts for Investors
   4. CHAPTER 7 - Regulators at the Crossroads
      1. Institutions for the Markets
      2. The Territorial Challenge
9. Conclusion
10. Appendix 1: Financial Statements of Smoke & Mirrors, Inc.
    1. Step 1: Transfer of corporate headquarters
    2. Step 2: Transfer of accounts receivable
    3. Step 3: Change in inventory accounting method
    4. Step 4: Use of interest-rate derivatives (interest rate swap)
    5. Step 5: Reduction of salary for employees and granting of stock options and pension benefits
    6. Summary
11. Appendix 2: Selected Controversial Cases of Corporate Accounting
    1. Ahold
    2. AIG
    3. AOL Time Warner
    4. Crédit Lyonnais
    5. Enron
    6. Fannie Mae and Freddie Mac
    7. Parmalat
    8. Vivendi Universal
    9. WorldCom
    10. Market Intermediaries
12. Abbreviations
13. Notes
14. Bibliography
15. Index
16. Contents