Final Word from Thursday, May 30, 2002

Roman Weil, an accounting professor at the University of Chicago Graduate School of Business, said in Prague last week at a seminar of the U.S. Business School that accounting is easy. It's just a record of cash in and cash out over time. Managers whose fate depends on results tend to want to report the good news (cash in) now and the bad news (cash out) later, he said, so Enron and others cook their books. Related-party transactions help them to do this. In the CR, such transactions are often referred to as tunneling. Finance Minister Jiří Rusnok said this week that it's not clear how fast the national debt will grow in the future, because not all the bad loans (left over from the tunneling jobs) have shown up on the state's books yet. Clever Czech accountants have been able to delay the bad news for so long that we still haven't heard some of it.


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